20111219Volume III Technical Hearing.pdf

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IN THE MATTE1RTlJ)F11 æHiti.AJP;P,ì.¿¡ÛATION
OF IDAHO POWER COMPANY FOR
AUTHORITY TO INCREASE ITS
RATES AND CHARGES FOR ELECTRIC
SERVICE IN IDAHO
)
)CASE NO. IPC-E-l1-08
)
)
)
)
BEFORE
COMMISSIONER MARSHA H. SMITH (Presiding)
COMMISSIONER MACK A. REDFORD
COMMISSIONER PAULKJELLANDER
.PLACE:Commission Hearing Room
472 West Washington
Boise, Idaho
DATE:December 5, 2011
VOLUME III - Pages 10- 158
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CSB REPORTING
Constance S. Bucy, CSR No. 187
23876 Applewood Way * Wìlder,Jdaho 83676
[phone] * [phone]
Email csb~heritagewifi.com
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1 APPEARANCES
2 For the Staff:
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6 For Idaho Power Company:
Donald L. Howell, II, Esq.
and Karl T. Klein, Esq.
Deputy Attorneys General
472 West Washington
Boise, Idaho 83720-0074
Lisa D. Nordstrom, Esq.
and Jason B. Williams, Esq.
Idaho Power Company
Post Office Box 70
Boise, Idaho 83707-0070
RICHARDSON & 0' LEARY
by Peter J. Richardson, Esq.
Post Office Box 7218
Boise, Idaho 83702
Benjamin J. Otto, Esq.
Attorney at Law
Idaho Conservation League
Post Office Box 844
Boise, Idaho 83701
RACINE, OLSON, NYE, BUDGE
& BAILEY
by Eric L. Olsen, Esq.
Post Office Box 1391
Pocatello, Idaho 83204-1391
Brad M. Purdy, Esq.
Attorney at Law
2019 North 17th Street
Boise, Idaho 83702
HOLLAND & HART LLP
by Thorvald A. Nelson, Esq.
and Fred Schmidt, Esq.
6380 S. Fiddlers Green Circle
Suite 500
Greenwood Village, CO 80111
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8
9
For Industrial Customers
of Idaho Power:
For Idaho Conservation
League, the Northwest
Energy Coalition and the
Snake River Alliance:
For Idaho Irrigation
Pumpers Association:
For the Community Action
Partnership of Idaho:
For Micron Technology,
Inc. :
CSB REPORTING
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APPEARANCES
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1 A P PEA RAN C ES (Continued)
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3 For Hoku Materials, Inc.:McDEVITT & MILLER
by Dean J. Miller, Esq.
Post Office Box 2564
Boise, Idaho 83701-2564
BOEHM, KURTZ & LOWRY
by Jody M. Kyler, Esq.
36 E. Seventh Street
Suite 1510
Cincinnati, Ohio 45202
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6 For The Kroger Company:
(Of Record)
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8
9
CSB REPORTING
[phone]
APPEARANCES
1 I N D E X.2
3 WITNESS EXAMINATION BY PAGE
4 Stace Campbell Statement 14
( Public)Mr.Williams (Cross)17
5 Commissioner Kjellander 18
Commissioner Redford 19
6
Timothy Tatum Ms.Nordstrom (Direct)29
7 (Idaho Power)Prefiled Direct Testimony 31
Mr.Richardson (Cross)42
8 Mr.Howell (Cross)46
Commissioner Redford 48
9 Mr.Williams (Redirect)52
Commissioner Redford 56
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11 Theresa Drake Ms.Nordstrom (Direct)57
(Idaho Power)Prefiled Rebuttal Testimony 59
12 Mr.Otto (Cross)82
Mr.Purdy (Cross)91
13 Mr.Miller (Cross)114.Ms.Kyler (Cross)116
14 Mr.Howell (Cross)120
Mr.Purdy (Recross)128
15 Commissioner Redford 130
Ms.Nordstrom (Redirect)133
16
Warren Kline Mr.Williams (Direct)136
17 (Idaho Power)Prefiled Rebuttal Testimony 138
Mr.Richardson (Cross)152
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24.25
CSB REPORTING INDEX
(208 )890-5198
1 EXHIBITS.2
3 NUMBER DESCRIPTION PAGE
4 FOR IDAHO POWER COMPANY:
5 49.Attachment A to CAPAI' s Premarked
Response to IPCO' s
6 Production Requests
7 50.Idaho Rider Forecast Premarked
8 51.Customer Relationship Index Premarked
9
10 FOR THE STAFF:
11 104.CAPAI Service Areas Identified 120
12
13 FOR THE INDUSTRIAL CUSTOMERS OF IDAHO POWER:.14 309.Letter from Boise State Identified 156
to IPUC,dated 12/2/11
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23
24.25
CSB REPORTING
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EXHIBITS
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1 BOISE, IDAHO, MONDAY, DECEMBER 5, 2011, 9:30 A. M.
2
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4 COMMISSIONER SMITH: Good morning, ladies
5 and gentlemen. This is the time and place set for a
6 hearing in Idaho Public Utilities Commission Case No.
7 IPC-E-11-08. It is also further identified as in the
8 matter of the application of Idaho Power Company for
9 authori ty to increase its rates and charges for electric
10 service in Idaho.
11 For those of you who haven't been here
12 before, the three of us are the Public Utilities
13 Commission. On my left is President Paul Kj ellander, and
14 on my right is Commissioner Mack Redford. l'm Marsha
15 Smith and I'm Chairing this hearing.
16 We'll begin by taking the appearances of
17 the parties, beginning with the Applicant.
18 MS. NORDSTROM: Thank you. Good morning.
19 My name is Lisa Nordstrom and I am representing Idaho
20 Power, and seated with me is my co-counsel, Jason
21 Williams.
22 COMMISSIONER SMITH: Thank you. Mr.
23 Otto.
24 MR. OTTO: Good morning. This is Benjamin
25 Otto with the Idaho Conservation League, and with me at
CSB REPORTING
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10 COLLOQUY
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1 the table are Nancy Hirsh with the Northwest Energy
2 Coali tion and Ken Miller from the Snake River Alliance.
3 COMMISSIONER SMITH: Thank you.
4 Mr. Howell.
5 MR. HOWELL: Donald Howell, Deputy
6 Attorney General, and Karl Klein, Deputy Attorney
7 General, representing the Commission Staff today.
8 COMMISSIONER SMITH: All right,
9 Mr. Purdy.
10 MR. PURDY: Thank you. Brad Purdy on
11 behalf of the Community Action Partnership Association of
12 Idaho and with me today is Ms. Teri Ottens, CAPAI' s
13 witness.
14 COMMISSIONER SMITH: Mr. Olsen?
15 MR. OLSEN: Yes, Eric Olsen with the Idaho
16 Irrigators Pumpers Association.
17 MR. NELSON: Good morning. Thor Nelson
18 and Fred Schmidt back here with the law firm of Holland &
19 Hart on behalf of the Micron Technologies.
20 COMMISSIONER SMITH: Mr. Richardson.
21 MR. RICHARDSON: Thank you, Madam Chair.
22 Peter Richardson with the firm Richardson & 0' Leary here
23 on behalf of the Industrial Customers of Idaho Power, and
24 wi th me are my witnesses Dr. Don Reading, Del Butler, Don
25 Sturtevant, and also with the Industrial Customers here
CSB REPORTING
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11 COLLOQUY
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1 this morning is Eric Erickson with Amalgamated Sugar and
2 Jim Bergan with Glanbia Foods.
3 COMMISSIONER REDFORD:What was the last
4 one, please?
5 MR. RICHARDSON: Jim Bergan with
6 Glanbia.
7 COMMISSIONER SMITH: Mr. Miller.
8 MR. MILLER: Thank you, Madam Chairman.
9 Dean J. Miller With the firm McDevitt & Miller on behalf
10 of Hoku Materials, Inc. I'm here unaccompanied.
11 COMMISSIONER SMITH: How sad, and I notice
12 they've strategically denied you a microphone.
13 MR. MILLER: That was probably good
14 thinking on somebody' s part.
15 COMMISSIONER SMITH: Okay, is there anyone
16 here appearing on behalf of Kroger?
17 MS. KYLER: Yes, that's me.
18 COMMISSIONER SMITH: Okay.
19 MS. KYLER: Jody M. Kyler with the firm
20 Boehm Kurtz & Lowry on behalf of The Kroger Company, and
21 with me is my witness Kenneth C. Higgins.
22 COMMISSIONER SMITH: And Ms. Kyler, could
23 you please spell your last name?
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25
MS. KYLER: K-y-l-e-r.
COMMISSIONER SMITH: Thank you.
CSB REPORTING
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12 COLLOQUY
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1 Where are youCOMMISSIONER REDFORD:
2 from?
3 MS. KYLER: Cinncinati, Ohio.
4 Is that part ofCOMMISSIONER REDFORD:
5 the United States?
6 COMMISSIONER SMITH: All right, the only
7 other -- that is the appearances by all the parties who
8 are on my Notice of Parties list, except for the
9 Department of Energy. I would note that the DOE has sent
10 a letter requesting to be excused from the hearing and
11 noting their participation in the development of the
12 stipulation and its support for that, so the attorneys
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for the Department of Energy are excused from today' s
hearing.
15 Before we begin with preliminary matters,
16 I believe we have one person who is a member of the
l7 public who is not available to be at our public hearing
18 tonight and wishes to testify, so we will take him first,
19 wherever he is.
20 Our procedure for public witness testimony
21 is you come up here, President Kjellander will ask you to
22 raise your right hand and swear you in, and Staff counsel
23 will ask you a couple of questions to get you on the
24 record correctly and then you'll be able to give your
25 statement.
CSB REPORTING
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13 COLLOQUY
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1 STACE CAMPBELL,
2 appearing as a public witness, having been duly sworn,
3 was examined and testified as follows:
4
5
6
7 BY MR. HOWELL:
8 Q
EXAMINATION
Good morning, sir. Could you state your
9 full name and spell your last for the record, please?
10 A My name is Stace James Campbell,
11 C-a-m-p-b-e-l-l.
12 Q
13 by?
14 A
And Mr. Campbell, whom are you employed
McCain Foods, USA.
And you are presenting public testimony on
16 their behalf tonight?
15 Q
Yes, I am.
Or today, and please give the Commission
Okay, thank you. I'm here on behalf of
21 McCain Foods in concern of the FCA facility charges that
17 A
22 are tied to distribution facilities. A couple of things
18 Q
23 that we wanted to comment on, especially to the
19 your statement.
20 A
24 Commission, is the DFIR costs associated with equipment
25 on our properties in Idaho, and our concern is that the
CSB REPORTING
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14 CAMPBELL
Public
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1 facili ty charges aren't in line, are not actually
2 representative of the risk for which Idaho Power faces
3 with those, and the charges and the percentage rate for
4 which they are billing us at are not in line with what we
5 would expect.
6 I want to state some examples. After a
7 pretty tough time of getting the information out of Idaho
8 Power, we were able to pull a report that shows that we
9 have transformers on our property, one of which is 56
10 years old, has a stated value of $904. It costs us $184
11 a year in facility charges. It's $10,327.30 over the
12 lifetime that it's been there that we have been charged
13 for and it could have been replaced 11 times.
14 The risk for Idaho Power is very low, very
15 minimal in regard to these transformers as 50 percent of
16 our transformers are over 20 years old. 70 percent are
17 over 15 years old. The risk of failure is quite low;
18 however, we're told on a repeated basis by Idaho Power
19 that those charges are there to mitigate the costs of
20 replacement and maintenance on our facilities. However,
21 in the same conversation, they discussed that they're
22 limiting their ability to support us via TSA' s and are
23 reducing their scope of work that they'll provide in our
24 facili ty, so we question why we're billed monthly over
25 $8,900 a month, why we pay over $107,157 a year in
CSB REPORTING
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15 CAMPBELL
Public
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1 facili ty charges and why that is an impact of us that
2 reduces our competitive edge in the market.
3 For us to be competitive, we have to keep
4 our costs low. This is a cost that we feel is an added
5 cost of the ownership of the property that results in an
6 unnecessary revenue extreme for Idaho Power that costs
7 jobs. We have nearly 700 direct employees at that
8 facility. With this average annual charge, we could add
9 two additional employees which would reflect at least an
10 additional 1.75 in direct jobs. For us to remain
11 competi ti ve, we have to keep our costs low. We feel that
12 this is an impact that needs to be looked into by the PUC
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and we do not agree with it.
COMMISSIONER SMITH: Does that conclude
15 your statement?
16 THE WITNESS: It does.
17 COMMISSIONER SMITH: Let's see if there
18 are any questions for you.
19 MR. WILLIAMS: Yes, Madam Chairman, just a
20 couple. Jason Williams on behalf of Idaho Power.
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CSB REPORTING
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16 CAMPBELL
Public
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1 CROS S - EXAMINAT I ON
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3 BY MR. WILLIAMS:
4 Q Mr. Campbell, are you aware that Idaho
5 Power does not keep a single penny of the facility charge
6 revenue it collects?
7 A I'm not completely clear on how the entire
8 program even functions and what its actual purpose is.
9 It's been explained in various different fashions to us
10 and our executive management team.
11 Q So that's a no, you don't know?
12 A No.
13 Q Okay. The other question is are you aware
14 that Idaho Power as part of its rebuttal case in this
15 proceeding is proposing an option whereby facility charge
16 customers like McCain Foods can acquire ownership of
17 those facilities?
18 A I am aware of that.
19 MR. WILLIAMS: No further questions,
20 Madam Chair.
21 COMMISSIONER SMITH: Anyone else? Mr.
22 Richardson.
23 MR. RICHARDSON: Thank you. Madam Chair,
24 I just want to be clear. Mr. Campbell, McCain Foods is
25 not a member of the Industrial Customers of Idaho Power;
CSB REPORTING
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CAMPBELL (X)
Public17
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1 is that correct?
2 THE WITNESS: That's correct.
3 MR. RICHARDSON: Thank you. That's all I
4 have.
5 COMMISSIONER SMITH: Anyone else?
6 Commissioners, any questions?
7 COMMISSIONER REDFORD:I have a couple.
8 Go ahead.
9 COMMISSIONER SMITH: Commissioner
10 Kj ellander.
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12
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15
EXAMINATION
BY COMMISSIONER KJELLANDER:
Q Mr. Campbell, you talked about being
16 competitive within your industry. I'm assuming that
17 you're a member of groups wi thin the Northwest that are
18 similar to you in terms of what you produce and you are
19 competitors; is that correct?
20
21
A Yes.
Q How do your overall bills compare in
22 relationship to your competitors wi thin the region? Is
23 it higher? Is it lower? And not breaking it down from
24 line item by line item, just where does it fit in?
25 Wi th our sister facilities, we have 67A
CSB REPORTING
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18 CAMPBELL (Com)
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1 facili ties across the globe and we have some in this
2 particular market. Our facility is not the lowest cost
3 wi thin this particular region in Burley. We have others
4 in this region that are lower cost.
5 Your overall bills, though?Q
6 Our overall bills? Our overall bills areA
7 competitive in regard to our utilities ; however, there is
8 room for improvement there.
9 COMMISSIONER KJELLANDER: Okay, thank
10 you.
11 COMMISSIONER SMITH: Commissioner
12 Redford.
13
14
15
EXAMINATION
16 BY COMMISSIONER REDFORD:
17 Q Yes, sir, how long has this particular
1B plant that you i re referencing been there?
19 Under various ownership, it's changedA
20 hands over the years, as far as McCain, it's been since
21 the mid '90s; however, the facility was initially
22 producing potatoes back in the 1950s. The first
23 transformer that we have on site that is still under a
24 facility charge was placed in 1955.
25 When you were doing your due diligence forQ
CSB REPORTING
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19 CAMPBELL (Com)Public
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1 your purchase of this plant, did you take a look at or
2 review the tariffs of Idaho Power that would be
3 applicable to you?
4 A I was not employed at McCain at the time
5 during that purchase; however, under due diligence on my
6 part and acquiring data, it was not clear even at that
7 time what the facility charges represented, and that
8 information is very hard to extract from Idaho Power.
9 Q So how long did it take you to extract
10 that information?
11 A Multiple requests, and over a three-week
12 period of almost constant daily requests, I finally did
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recei ve the data.
Q Doesn't your invoice or your statement
15 provide a line item for facilities charges?
16 A It provides a line item that shows a
17 single dollar amount. You get a summary report that
18 breaks it down into four categories, but you do not know
19 what those assets are unless you actually request that
20 data from Idaho Power. They pull a report which lists
21 the asset by its value, its location, its description and
22 year of service.
23 Q Can you work back through the numbers that
24 you get on your invoice to gain any of that information
25 or do you have to get it directly from Idaho Power?
CSB REPORTING
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20 CAMPBELL (Com)Public
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1 You have to get it directly from IdahoA
2 Power. It is not exposed on your bill or any billing
3 statement.
4 Okay, well, the question I have is, it'sQ
5 my understanding that when whoever your predecessor was
6 started using Idaho Power that the schedule provided for
7 facili ties charges, and for special contracts like yours,
8 it did not provide for ownership by your company; is that
9 correct?
10 That's my understanding is that theA
11 original ownership, which was IPPI and Atlantic and
12 Pacific corporations, the initial facility charges were
13 laid out. From what I've been able to ascertain from
14 employees that have 40 plus years of experience at the
15 facility and were involved in this over the years,
16 there's never been really a clear description of the
17 facili ty charge structure. It's not even there isn't
18 even any documentation that exists as far as when a piece
19 of equipment is brought in what that equipment is valued
20 at, what that facility charge is going to be. It's a
21 post event, so after that equipment is put in or
22 replaced, then the evaluation of it is given to the
23 customer, and I just verified that recently. We did
24 place two new transformers. I did not get the DFIR
25 report which showed that increase for 90 days.
CSB REPORTING
( 2 0 8 -) 8 90 - 519 8
21 CAMPBELL (Com)
Public
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1 How many times has a transformer over theQ
2 years that you've been involved with that been
3 replaced?
4 I did investigate into that and over theA
5 years there are no recorded instances of transformer
6 direct failures on that facility, and as I stated, one of
7 the original transformers from 1955 is still there.
8 There have been replacements due to load increases.
9 There have been removals due to load reductions, but they
10 have not had a direct failure of a transformer on that
11 facility.
12 Well, it seems to me like that's prettyQ
13 darn good insurance that you have, that you know very
14 well that in the event a transformer goes down that Idaho
15 Power will be right there or wi thin a reasonable period
16 of time to replace the transformer.
17 I don't feel as though it's an insuranceA
18 policy. We don't feel as though it's an insurance policy
19 due to the fact that some of our transformers they don i t
20 even have readily available for us and we are actually
21 required to keep a spare of our uniques on our property
22 and they GPS it there which we're paying a facility
23 charge on so that they can support a failure if it were
24 to occur.
25 In addition to that, with the rare event
CSB REPORTING
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22 CAMPBELL (Com)
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1 of a failure, Idaho Power has recently brought to light
2 wi th this that they are no longer supporting our TSA
3 agreements, so therefore, we are relying upon contractors
4 to provide those services.
5 And these facilities charges are stillQ
6 going on?
7 The facility charges have not beenA
8 affected at all.
9 It seems to me that there are othersQ
10 similarly situated, do you belong to an organization that
11 monitors things like this?
12 A Our particular facility, I am the
13 reliability engineer for the facility and it's under my
14 information-gathering and under my direction to feed that
15 information to some of our corporate guidance; however,
16 we're not a member, as we stated we're not a member, of
17 the rest of the group that's here. We're independent.
18 Q It just seems to me that and the question
19 is have you approached Idaho Power about maybe
20 negotiating out either a new facilities charge or a
21 purchase of these facilities?
22 A Yes. In fact, that conversation has gone
23 on for more than two years now and I have discussed this
24 directly with our large power customer representative Sam
25 Golay and his direct management Stephen Mews. We've
CSB REPORTING
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23 CAMPBELL (Com)
Public
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1 discussed it with the power quality group and we have not
2 been able to make any forward steps with that discussion.
3 Our facility is a mixed-use facility, I
4 should clarify that, to where McCain Foods owns the
5 maj ori ty of the distribution on the facility and Idaho
6 Power owns the transformers and some of the fuse cutouts
7 and a few of the structures on the property, however,
8 very limited. It's a unique arrangement and we have
9 tried to obtain ownership of that, but it falls on deaf
10 ears.
11 But nevertheless, it's in the tariff andQ
12 it's in the contract. I'm just wondering if you and
13 others need to make another last effort and if that
14 doesn't work out to come back to the Commission and have
15 the Commission make some resolve of this. I realize that
16 we're not constrained for time, but we certainly want to
17 dispose of those issues that can be otherwise disposed of
18 by the parties. Would you be willing to enter into some
19 sort of an agreement with Idaho Power to negotiate with
20 the others who are similarly situated and if it doesn't
21 work out come back to the Commission on a single issue
22 case?
23 My feeling is, sir, and the feeling of ourA
24 company is that we are being constrained on a very
25 regular basis by changes that Idaho Power is making to
CSB REPORTING
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24 CAMPBELL (Com)Public
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1 their transmission and distribution facility charges to
2 our facility. We've tried this open discussion with them
3 over a two-year period and we are not having great
4 success with that and, therefore, that's why we're here
5 to show the support to the rest of the group today, and
6 we feel as though Idaho Power just doesn't have an open
7 ear and does not wish to listen to us, so we're always
8 open to any opportunity that's going to have some
9 fruitful end.
10 Just one question more. When aQ
11 transformer goes down, what's the time from the time that
12 you note that the transformer has gone down until the
13 time that Idaho Power is there to do the repair or
14 replacement work?
15 We haven't had a failure of a transformer.A
16 I couldn't tell you what that time is, sir.
17 COMMISSIONER REDFORD: Thank you very
18 much. I appreciate you taking all your time.
19 COMMISSIONER SMITH: We thank you for
20 appearing here and appreciate your help with the case.
21 THE WITNESS: Thank you very much.
22 COMMISSIONER SMITH: Thank you.
23 (The witness left the stand.)
24 COMMISSIONER SMITH: All right, we've done
25 the appearances. Ms. Kyler, are you admitted to practice
CSB REPORTING
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25 CAMPBELL (Com)
Public
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1 in the State of Idaho?
2 MS. KYLER: No. I have an order from the
3 Commission saying that I could practice pro hac vice.
4 COMMISSIONER SMITH: So you went to the
5 Bar and paid your union dues.
6 MS. KYLER: Yes.
7 COMMISSIONER SMITH: So the answer you
8 should have given was yes.
9 MS. KYLER: Oh, yes, for this case.
10 COMMISSIONER SMITH: Thank you.
11 Preliminary matters, in the last week we had filed a
12 motion by Mr. Howell. Actually, the first event was
13 surrebuttal by Mr. Purdy, a motion by Mr. Howell, a
14 response by Mr. Purdy. The Commission has reviewed the
15 motion and the response and has determined to allow the
16 surrebuttal testimony to be presented at the hearing, so
17 sorry if that cuts off your well-formed statements and
18 your persuasive comments, but we i re just moving right on,
19 so I assume -- are there other preliminary matters that
20 need to come up before the Commission? Ms. Nordstrom.
21 MS. NORDSTROM: Thank you. As you know, a
22 settlement stipulation has been filed that resolves most
23 of the issues presented by the Company's application;
24 however, to date, an Order has not been issued accepting
25 or rej ecting that stipulation. For purposes of the
CSB REPORTING
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26 COLLOQUY
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1 record in this proceeding, the Company would propose that
2 the Commission accept the direct testimony and exhibits
3 for filing as part of the record so that the parties and
4 the Commission can reference those testimonies and
5 exhibi ts during the course of the hearing today, and if
6 the settlement is not accepted by the Commission's Order,
7 Idaho Power would make available sponsoring witnesses at
8 a later date to be determined by the Commission.
9 COMMISSIONER SMITH: Any objection? Any
10 comment? My only comment is that the original filing of
11 the Company, the copies for the Commissioners are in
12 boxes, so if you intend to refer back to some of that,
13 other than, is it, Mr. Sparks, please give us advance
14 notice so we can open our boxes and drag it out. It
15 hasn't been put conveniently in a notebook for us, so
16 we'll have to go retrieve it.
17 MS. NORDSTROM: Okay. Idaho Power also
18 filed a letter dated November 28th, 2011, describing the
19 order of witnesses that it intends to call. Because of
20 the unusual nature of the, I guess the, state of the
21 record to this point, Idaho Power is proposing that we
22 submi t the direct and rebuttal testimonies simultaneously
23 and reserve the right to recall witnesses so that the
24 hearing can move forward in an orderly fashion.
25 COMMISSIONER SMITH: Any obj ection? Okay,
CSB REPORTING
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27 COLLOQUY
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1 that's perfectly acceptable.
2 MS. NORDSTROM: Those are all the
3 preliminary matters I have.
4 COMMISSIONER SMITH: Does anyone else have
5 anything preliminary to bring up before we start taking
6 testimony? Mr. Richardson.
7 MR. RICHARDSON: Madam Chair, we may have
8 a witness constraint, but we'll wait to see how things
9 progress. Mr. Butler won't be available tomorrow, but
10 I'm assuming we will get to him today, hopefully. If it
11 looks like we're not, then I may ask to call him out of
12 order.
13 COMMISSIONER SMITH: All right, are there
14 any other witnesses that have concerns regarding the
15 scheduling?
16 MS. KYLER: Yes, Kroger's witness would
17 prefer to testify today, if possible.
18 COMMISSIONER REDFORD: Who is that?
19 MS. KYLER: Kevin Higgins.
20 COMMISSIONER SMITH: All right.
21 MR. OTTO: Madam Chair?
22 COMMISSIONER SMITH: Mr. Otto.
23 MR. OTTO: Our witness, Nancy Hirsh,
24 Northwest Energy Coalition, is available both days, but
25 would prefer to get through today, if possible, seeing as
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28 COLLOQUY
.
.
.
1 she's here out of town from Seattle.
2 COMMISSIONER SMITH: All right. All
3 right, thank you for that. Ms. Nordstrom.
4 MS. NORDSTROM: Thank you. Idaho Power
5 calls Tim Tatum as its first witness.
6
7 TIMOTHY E. TATUM,
8 produced as a witness at the instance of the Idaho Power
9 Company, having been first duly sworn, was examined and
10 testified as follows:
11
12
13
14
15
16
17
DIRECT EXAMINATION
BY MS. NORDSTROM:
Q Good morning.
A Good morning.
Q Please state your name and spell your last
18 name for the record?
19
20
A Timothy E. Tatum, T-a-t-u-m.
Q By whom are you employed and in what
21 capacity?
22 A I'm employed by Idaho Power Company,
23 manager of cost of service, regulatory affairs
24 department.
25 Q Are you the same Timothy E. Tatum that
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29 TATUM (Di)
Idaho Power Company
.
.
.
1 filed testimony in support of the settlement stipulation
2 on September 23rd, 2011?
3 A Yes, I am.
4 Did you file exhibits?Q
5 No, I did not.A
6 Do you have any corrections or changes toQ
7 your testimony?
8 A No, I do not.
9 If I were to ask you the questions setQ
10 forth in your prefiled testimony, would your answers be
11 the same today?
12 Yes, they would.A
13 MS. NORDSTROM: I would move that the
14 prefiled direct testimony in support of the stipulation
15 of Timothy E. Tatum be spread upon the record as if read.
16 COMMISSIONER SMITH: If there is no
17 objection, it is so ordered.
18 (The following prefiled direct testimony
19 of Mr. Timothy Tatum is spread upon the record.)
20
21
22
23
24
25
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30 TATUM (Di)
Idaho Power Company
.
.
.
1 Q.Please state your name and business address.
2 A.My name is Timothy E. Tatum and my business
3 address is 1221 West Idaho Street, Boise, Idaho.
4 Q.By whom are you employed and in what capacity?
5 A.I am employed by Idaho Power Company (" Idaho
6 Power" or "Company") as the Senior Manager of Cost of
7 Service.
8 Q.Are you the same Timothy E. Tatum that
9 previously submitted testimony in this proceeding?
10 A.Yes. I submitted direct testimony on behalf of
11 Idaho Power describing the methodology used to develop
12 the 2011 test year revenue requirement.
13 Q.What is the purpose of your testimony?
14 My testimony describes the stipulationA.
15 ("Stipulation") that was signed by Idaho Power, the Idaho
16 Public Utilities Commission ("Commission") Staff, the
1 7 Idaho Irrigation Pumpers Association, Inc., the
18 Industrial Customers of Idaho Power, Micron Technology,
19 Inc., the U. S. Department of Energy, The Kroger Co., the
20 Idaho Conservation League, Snake River Alliance, the NW
21 Energy Coalition, and Hoku Materials, Inc. ("Hoku"), or
22 collectively referred to as the "Signing Parties," that
23 settles the maj ori ty of the issues arising in this case
24 ("Proposed Settlement"). Further, my testimony expresses
25 Idaho Power's support for the Stipulation and urges the
31 TATUM, STIP 1
Idaho Power Company
.
.
.
1 Commission to adopt the Proposed Settlement without
2 material change or condition.
3 Q.Do you believe that the Proposed Settlement is
4 in the public interest?
5 A.Yes. The Signing Parties have agreed to settle
6 the issues indentified in the Stipulation, thus
7 indicating their satisfaction with the outcome. From the
8 Company's perspective, the Proposed Settlement provides
9 the Company with the ability to update its rates to
10 better reflect current costs and the ability to
11 economically finance new investments in infrastructure
12 for its system. The Company also believes that the rates
13 that result from the Stipulation are just and reasonable
14 for its customers.
15 Q.How did the Signing Parties arrive at the
16 Stipulation?
17 A.On August 31, 2011, a settlement conference was
18 held at the Commission's offices. All parties to the
19 case were represented and discussed the issues presented
20 in the Company's case. The parties continued their
21 discussions on September 8, 2011, and ultimately those
22 discussions led to agreements which resulted in the
23 Stipulation.
24 Have all parties in this case joined in theQ.
25 Stipulation?
32 TATUM, STIP 2
Idaho Power Company
.
.
.
1 A.No . Community Action Partnership Association
2 of Idaho did not sign the Stipulation.
3 I. BACKGROUN
4 Q.Please describe Idaho Power's original revenue
5 requirement increase request.
6 A.On June 1, 2011, Idaho Power filed an
7 application in this case seeking authority to increase
8 the Company's base rates an average of 9.9 percent. If
9 approved, the Company's revenues would have increased
10 approximately $83 million annually. Idaho Power proposed
11 that the rate increase be spread in varying degrees among
12 all maj or customer classes and special contract
13 customers. Idaho Power based its filing on a 2011 Test
14 Year. The Company requested that new rates become
15 effective July 1, 2011, with the expectation that the
16 Commission would suspend implementation of the Company's
17 proposed rates for the statutory period set forth in
18 Idaho Code § 61-622. The Commission suspended the
19 effective date of the proposed rates for 30 days plus
20 five months from July 1, 2011, in Order No. 32272, which
21 also aligned with the terms of the stipulation approved
22 in Case No. IPC-E-09-30 requiring that any changes to the
23 Company's base rates would not become effective until
24 2012.
25 Q. Did Staff and other parties conduct a thorough
examination of the Company's filing?
33 TATUM, STIP 3
Idaho Power Company
.
.
.
1 Yes. The parties conducted extensive discoveryA.
2 on Idaho Power's filing. Over the course of this
3 proceeding, the Company provided responses to more than
4 450 data requests, the maj ori ty of which were from
5 Commission Staff. In addition, Commission Staff auditors
6 have made numerous visits to Idaho Power's corporate
7 headquarters to review the underlying accounting data
8 that was the basis for the Company's filed revenue
9 requirement.
10 II . REVENU REQUIRENT INCREASE
11 What is the revenue requirement increase toQ.
12 which the Signing Parties agree?
13 The Signing Parties agree to a base rateA.
14 revenue requirement increase of $34.0 million, which
15 represents a settlement of most issues in this case.
16 What is the overall average percentage increaseQ.
17 to rates resulting from the Stipulation?
18 The stipulated increase in test period revenueA.
19 requirement of $34.0 million is an approximate 4.07
20 percent average increase to Idaho base rates.
21 When will the rates to recover the stipulatedQ.
22 revenue requirement increase and new tariff schedules go
23 into effect?
24 The Signing Parties cannot say with certaintyA.
25 when the Commission will order the rates it adopts into
effect. However, the Signing Parties agree to support a
34 TATUM, STIP 4
Idaho Power Company
.
.
.
1 schedule that will allow rates to go into effect on
2 January 1, 2012.
3 Please describe the Stipulation's terms relatedQ.
4 to cost of capital.
5 The Signing Parties agree that the Company'sA.
6 overall rate of return should be set at 7.86 percent.
7 The specific rate of return components are not identified
8 as part of the Stipulation.
9 Please describe the Stipulation's terms relatedQ.
10 to revenue spread.
11 The Signing Parties agree to spread theA.
12 increase in the rates for each customer class and special
13 contracts customers by a uniform percentage amount of
14 approximately 4.19 percent. The resulting uniform
15 percentage increase amount of approximately 4.19 percent
16 is greater than the overall increase of 4.07 percent
17 because the overall increase does not apply to First
18 Block rates for special contract customer Hoku.
19 Please describe the Stipulation's termsQ.
20 related to rate design.
21 In determining the individual rates for eachA.
22 tariff schedule, the Signing Parties agree to use the
23 2011 Test Year customer billing determinants as proposed
24 by the Company in this case with the exception of the
25 agreed upon adj ustment in Schedule 1 residential energy
components.
35 TATUM, STIP 5
Idaho Power Company
.
.
.
1 The Signing Parties agree that the existing tariff rate
2 components for all schedules should be increased in a
3 manner that is consistent with the rate design originally
4 filed by the Company in this case, including increasing
5 the monthly Service Charge for residential Schedules 1,
6 4, and 5 from $4.00 to $5.00.
7 III. ACCEPTANCE OF THE PROPOSED ADJUSTMNTS
8 Q.Why was the Company willing to accept in
9 settlement a lower general rate increase than it
10 initially filed?
11 A.In his direct testimony, Mr. Darrel Anderson
12 explained that, in the preparation of its initial
13 request, the Company looked for areas where it could
14 forego requesting an increase at this time in recognition
15 of the prolonged economic downturn and concern for the
16 impact the rate increase would have on customers. Idaho
17 Power participated in the settlement negotiations with
18 those same concerns in mind and believes that the
19 Proposed Settlement strikes the right balance between the
20 Company's need for timely cost recovery and its
21 recogni tion of the state of the current economy. Idaho
22 Power believes that the Proposed Settlement will provide
23 the Company with an opportunity to recover the costs
24 associated with its investments and for operating its
25 electric system. Although the Proposed Settlement is areasonable resolution
36 TATUM, STIP 6
Idaho Power Company
.
.
.
1 of a broad range of contested rate issues, the agreement
2 will require the Company to be creative in maintaining
3 the same level of quality service, including continued
4 bel t tightening with regard to ongoing expenses and a
5 diligent approach to financial decisions.
6 Q.Were there other reasons why the Company was
7 willing to accept a lower revenue requirement?
8 A.Yes. In consideration of the Proposed
9 Settlement terms, the Company recognized that two major
10 adjustments to the test year were related to net power
11 supply expense ("NPSE") and to the overall rate of
12 return.
13 Q .Please state why the Company is willing to
14 accept the adjustment to its NPSE contained in the
15 Stipulation.
16 A.The adj ustment to the Company's filed NPSE is
17 related to power purchases under the Public Utility
18 Regulatory Policies Act of 1978 ("PURPA"). The agreed
19 upon NPSE removes approximately $23.9 million in
20 increased PURPA expense on a total system basis. The
21 Signing Parties agreed that the uncertainty related to
22 the Company's forecasted PURPA expenses justified this
23 adjustment. Further, because of this uncertainty, the
24 Signing Parties are willing to accept the continued use
25 of the Power Cost Adj ustment to recover these expenses,
should they materialize.
37 TATUM, STIP 7
Idaho Power Company
.
.
.
1 Q.Please explain the Company's acceptance of an
2 overall rate of return that was less than originally
3 requested.
4 For purposes of the Proposed Settlement, IdahoA.
5 Power is willing to accept an overall rate of return that
6 is lower than originally requested because Idaho Power
7 believes that it can economically finance its electric
8 utility operations at the agreed upon rate of return
9 until such time that either interest rates and/or risk
10 factors change.
11 Do you have any observations regarding theQ.
12 revenue spread provided for in the Stipulation?
13 Yes. Idaho Power believes that it is importantA.
14 to have rates that reflect the costs to serve its
15 individual classes of customers. With that said, the
16 Company also recognizes that there are many differing
17 views regarding class cost-of-service methodologies. In
18 order to facilitate settlement and avoid unnecessary
19 confrontational issues, the Company has agreed to a
20 uniform percent increase approach to rate spread to the
21 customer classes.
22 Please describe the issues that were notQ.
23 resolved as part of the Stipulation and that will be
24 resol ved in separate proceedings.
25
38 TATUM, STIP 8
Idaho Power Company
.
.
.
1 A.To facilitate further investigation and
2 participation, the Signing Parties agreed that Idaho
3 Power will initiate separate, subsequent proceedings
4 related to:
5 (1) Increasing overhead amounts paid by
6 persons or entities requesting services under the
7 Company's Rule H line extension tariff; and
8 (2) Whether the Fixed Cost Adj ustment (" FCA" )
9 pilot program should be made permanent. The Signing
10 Parties agree, however, that the FCA case should be
11 processed to allow a final order to be issued no later
12 than March 30, 2012. To allow for the timely processing
13 of the FCA case, the Signing Parties request that the
14 Commission decide at its earliest convenience (after a
15 14-day response period per RP 256) whether to process the
16 FCA case as a separate docket. The Signing Parties
17 further agree that if the Commission approves or extends
18 the FCA program beyond 2011, no Signing Party will object
19 to retroactively applying the subsequently determined
20 fixed costs per customer and fixed costs per energy
21 inputs to January 1, 2012.
22 Q.Please describe the issues not resolved by the
23 Stipulation that will be resolved as part of this ongoing
24 case.
25
39 TATUM, STIP 9
Idaho Power Company
.
.
.
1 The parties were not able to reach consensus onA.
2 the following issues, which will proceed to hearing under
3 the schedule established in Order No. 32316:
4 (1) The level of the Energy Efficiency Rider;
5 (2) Low-income Weatherization Assistance for
6 Qualified Customer program funding; and
7 (3) The facility charge rate determination
8 methodology used to develop facilities charges assessed
9 to Schedule 19 customers and issues relating to the
10 ownership of facilities subj ect to facilities charges.
11 However, the Signing Parties agree that any revenue
12 requirement impacts resulting from changes to the
13 facility charge methodology or changes in property
14 ownership shall be directly assigned to Schedule 19
15 customers in the form of a base rate increase or
16 reduction so that no other customer classes shall be
17 impacted by any resulting change.
18 Q.Do you have any concluding remarks regarding
19 the Proposed Settlement?
20 A.Yes. During this proceeding, the Company
21 experienced a willingness by the Commission Staff and the
22 other parties to address the issues in this case in a
23 straight-forward manner and to approach the possibility
24 of settlement in a productive way. The Company is very
25
40 TATUM, STIP 10
Idaho Power Company
.
.
.
1 appreciative of these efforts by the Commission Staff and
2 the other parties.
3 Q.Does this conclude your testimony?
4 A.Yes, it does.
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
41 TATUM, STIP 11
Idaho Power Company
.
.
.
1 (The following proceedings were had in
2 open hearing.)
3 MS. NORDSTROM: I will make this witness
4 available for cross-examination.
5 COMMISSIONER SMITH: Okay. Thank you.
6 Mr. Otto, do you have questions?
7 MR. OTTO: We do not have questions.
8 COMMISSIONER SMITH: Mr. Richardson.
9 MR. RICHARDSON: Thank you, Madam Chair.
10 I just have a couple of questions for Mr. Tatum.
11
12 CROSS-EXAMINATION
13
14 BY MR. RICHARDSON:
15 Q Mr. Tatum, on page 10 of your direct
16 testimony, your testimony in support of the settlement
17 stipulation, on page 10, beginning on line 11, you state
18 that the impacts resulting from changes to the facility
19 charge methodology or changes in property ownership shall
20 be directly assigned to Schedule 19 customers. Do you
21 see that?
22 A Yes, I do.
23 Q You would agree, wouldn't you, that
24 impacts from changes to the facility charge methodology
25 that are caused from changes in other classes other than
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42 TATUM (X)
Idaho Power Company
.
.
.
1 Schedule 19, for instance Schedule 9, would not be
2 assigned to Schedule 19?
3 No, I don't have that understanding. IA
4 was referring to the language in the settlement
5 stipulation that addresses that same issue.
6 Do you have that document in front ofQ
7 you?
8 Yes, if you can give me a moment to getA
9 there.
10 What's thatCOMMISSIONER REDFORD:
11 document, Pete?
12 MR. RICHARDSON: Mr. Commissioner, it's
13 the settlement stipulation.
14 COMMISSIONER SMITH: Exhibit 101.
15 Thank you.COMMISSIONER REDFORD:
16 THE WITNESS: I'm ready.
17 BY MR. RICHARDSON: If you would turn toQ
18 page 7, Exhibit 101, of the settlement stipulation --
19 Yes, I am there.A
20 -- and there's a section there entitledQ
21 "Unresolved Issues," do you see that?
22 A Yes, I do.
23 And under subparagraph (c), would you readQ
24 the first sentence?
25 "The facility charge rate determinationA
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43 TATUM (X)
Idaho Power Company
.
..
.
1 methodology used to develop facilities charges assessed
2 to Schedule 19 customers and issues relating to the
3 ownership of facilities subj ect to facilities charges."
4 So the only unresolved issue relating toQ
5 facili ties charges is specific to Schedule 19; correct?
6 It's related to facilities charges in theA
7 broader context of facilities charges.
8 I i m sorry, where do you see that in theQ
9 settlement, unresolved issues?
10 Well, I'm referring to the way that IA
11 understood the agreement.
12 I'm asking you what the agreement says.Q
13 I've read what the agreement says.A
14 It's restricted to Schedule 19; correct?Q
15 The subsection (c) refers to theA
16 methodology used to develop facilities charges assessed
17 to Schedule 19 customers, correct.
18 And to the extent and just putting onQ
19 your ratemaking, regulatory hat, to the extent that this
20 Commission finds that the imposition of a 20 percent
21 annual charge on property that is never depreciated is
22 nei ther reasonable nor prudent, would you still argue
23 that the Schedule 19 customers should be assessed those
24 charges?
25 I think that would be up to the CommissionA
.
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44 TATUM (X)
Idaho Power Company
.
.
.
10
1 to determine at that time.
2 I was asking what your position would beQ
3 on that.
4 Well, without describing the frameworkA
5 MS. NORDSTROM: I'm going to obj ect to
6 this line of questioning. The stipulation speaks for
7 itself and this is beyond the scope of his testimony and
8 there are other witnesses that can testify to facility
9 charge matters.
COMMISSIONER SMITH: Mr. Richardson.
11 MR. RICHARDSON: Thank you, Madam Chair.
12 This witness states on page 10, " impacts resulting from
13 changes to the facility charge methodology or changes in
14 property ownership shall be directly assigned to Schedule
15 19 customers...". I'm just asking this witness if you
16 the Commission finds that these charges are imprudent
17 whether he would still believe that they should be
18 assessed against Schedule 19 customers. It's directly
19 related to his direct testimony.
20
21
COMMISSIONER SMITH: Ms. Nordstrom.
MS. NORDSTROM: I fail to see the
22 relevance of Mr. Tatum's opinion as to the proper
23 assessment after the Commission makes its
24 determination.
25 COMMISSIONER SMITH: I kind of agree with
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45 TATUM (X)
Idaho Power Company
.
.
.
1 Ms. Nordstrom, Mr. Richardson.
2
3 That's all I have.
MR. RICHARDSON: Thank you, Madam Chair.
4
5 Nelson?
6
7
8
9
10
11
12
13
14
15
16
17
18 BY MR. HOWELL:
19 Q
COMMISSIONER SMITH: Thank you. Mr.
MR. NELSON: No questions. Thank you.
COMMISSIONER SMITH: Mr. Olsen.
MR. OLSEN: No questions.
COMMISSIONER SMITH: Mr. Purdy?
MR. PURDY: No questions.
MR. MILLER: No questions.
MS. KYLER: No questions.
COMMISSIONER SMITH: Mr. Howell.
MR. HOWELL: Thank you, Madam Chairman.
CROSS-EXAMINATION
Mr. Tatum, your testimony submitted in
20 support of the settlement stipulation was filed with the
21 settlement stipulation motion on September 23rd; is that
22 correct?
23
24
25
A
Q
That's correct.
So in other words, your testimony was
filed before the direct testimony of the CAPAI witness
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46 TATUM (X)
Idaho Power Company
.
.
.
18
1 opposing the settlement stipulation?
2 A Yes, that's correct.
3 Q Okay. Have you had an opportunity to
4 review her direct testimony opposing the stipulation?
5 A I have, yes.
6 Q And after your review, do you still
7 believe that the stipulation is reasonable and in the
8 public interest?
9 A Yes, I do.
10 Q And what are the reasons for that?
11 A Well, nothing has changed since the
12 parties, at least that I'm aware of since the parties,
13 agreed to the settlement stipulation and the parties
14 believe that the agreement that we reached in September
15 was reasonable at that time and I believe that -- and I
16 know Idaho Power and those parties still believe that
17 today.
Q So nothing in Ms. Ottens' testimony has
19 changed your opinion that the stipulation is reasonable
20 and in the public interest?
21
22
23
A No.
MR. HOWELL: No further questions.
COMMISSIONER SMITH: Any redirect? Oh,
24 sorry, Commissioners, any questions from the
25 Commissioners?
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47 TATUM (X)
Idaho Power Company
1 COMMISSIONER REDFORD: I have a.2 question.
3 COMMISSIONER SMITH: Commissioner Redford.
4
5 EXAMINATION
6
7 BY COMMISSIONER REDFORD:
8 Q What is it that you do with -- there was
9 originally a statement that stated Idaho Power doesn't
10 take those facility charges in as revenue and, therefore,
11 what happens to those revenues?
12 A Yes, Commissioner Redford, the way that we
13 determine our revenue requirement for base rates related.14 to facilities charges is to determine the overall revenue
15 requirement associated with all Company-owned facilities,
16 and then for the revenues that we receive from facilities
17 charges we credit back to the class that provides those
18 revenues prior to determining the level of revenue
19 recovery from base rates, so if you think of it in terms
20 of two separate revenue streams, we're coming up with a
21 full revenue requirement of all Company-owned facilities
22 and then crediting back to the individual customer
23 classes their contribution in terms of facilities charge
24 revenue..25 Q So let's just take the example of Simplot.
.
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48 TATUM (Com)
Idaho Power Company
.
.
.
1 At the end of the year, you've charged them X number of
2 dollars for facility charges. Assuming that there's been
3 outages or other costs by Idaho Power, you credit that
4 money back to Simplot or to the class?
5 It's credited back to the class throughA
6 the ratemaking process. It's not an annual crediting
7 back, but during the test year, the amount of revenue for
8 that test year associated with facilities charges would
9 be credited back before determining the amount of revenue
10 to recover from base rates.
11 Q And that's clearly delineated in your
12 accounting records, so if I looked at them, I would know
13 oops, there's the facilities charges, they didn't use
14 any, but they charged X number of dollars and it goes
15 back to the class of facilities charges on Schedule 19 or
16 special contracts?
17 It is demonstrated and clearly delineatedA
18 in our filed case and Mr. Larkins' exhibits can show
19 where the Company has credited back to each individual
20 customer class their contributions through facilities
21 charges that reduces the amount of recovery in base
22 rates.
23 Can I as a customer track that back toQ
24 find out how much I was refunded?
25 Through the publicly available materialsA
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49 TATUM (Com)
Idaho Power Company
.
.
.
1 that were filed in this case, yes, you could.
2 Q But there's never anything that goes back
3 to Simplot that says yahoo, you got X number of dollars
4 refunded through the class and so that in fact your
5 facility charges instead of X were Y?
6 A Not explicitly, other than what would be
7 filed in our cases; however, their base rates reflect
8 that treatment. They're lower than what they would be
9 otherwise.
10 Q And they're able to track that?
11 A Wi th the assistance of the Company they
12 could we could show that. We've also explained in
13 great detail how the process works through the discovery
14 process in this case.
15 Q So in fact in the long term, the express
16 charges for facility charges are less in a general sense
17 than they're invoiced for?
18 A I'm not sure I follow that. They're
19 invoiced the currently approved facilities charge rate.
20 Q Well, if they get X dollars that they're
21 charged for facilities charges during the year and there
22 is a reserve that is then credited back to that class of
23 Schedule 19 or special contracts , it would be lower, the
24 amount would be lower, and as a result, Simplot would
25 then receive in a roundabout way a credit back to the
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50 TATUM (Com)
Idaho Power Company
.
.
.
1 facili ties charge.
2 A The credit they receive is reflected in
3 base rates that are lower than they would otherwise be
4 wi thout a facilities charge.
5 Q You know, nowadays we find that we're in
6 situations it doesn't make any difference whether you buy
7 a computer or you buy a car, you get an extended
8 warranty, and isn't an extended warranty sort of like a
9 facilities charge?
10 A I think there are aspects of the
11 facilities charges that could be compared to a warranty,
12 sure. The customer is paying for a service related to
13 those facilities and Idaho Power is owning and
14 maintaining those facilities.
15 Q As is General Motors and so on, so what's
16 so different about your situation and the General Motors
17 situation? At the end of the contract or until the
18 tariff is changed, those are the charges. You either
19 gain the benefit from those charges or you don't.
20 A I would agree with that, yes.
21 COMMISSIONER REDFORD:I have no further
22 questions.
23 COMMISSIONER SMITH: Thank you. Any
24 redirect?
25 MR. WILLIAMS: Madam Chair, with the
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51 TATUM (Com)
Idaho Power Company
.
.
.
1 Chair's indulgence and the parties' counsel's indulgence,
2 Ms. Nordstrom and I have sorted divided up issues among
3 the case where I would address facilities charge-related
4 matters and she was going to address others and I know
5 she already tendered some questions for this witness, but
6 I would appreciate the opportunity to ask Mr. Tatum a
7 couple of brief questions on redirect.
8 COMMISSIONER SMITH: No problem.
9 MR. WILLIAMS: Thank you.
10
11 REDIRECT EXAINATION
12
13 BY MR. WILLIAMS:
14 Q Mr. Tatum, can you please go back to page
15 7 of the stipulation that Mr. Richardson directed you
16 to?
17 A Yes.
18 Q Now, he had you read the first line of
19 that subsection (c) there. Can you please read the
20 second line beginning with "However"?
21 COMMISSIONER SMITH: That would be the
22 second sentence.
23 Q BY MR. WILLIAMS: I'm sorry, that's
24 correct, the second full sentence of subparagraph 11 (c) .
25 A Yes, it begins with, "However, the signing
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TATUM (Di)
Idaho Power Company
52
.
.
.
1 parties agree that any revenue requirement impacts
2 resul ting from changes to the facility charge methodology
3 or changes in property ownership shall be directly
4 assigned to Schedule 19 customers in the form of a base
5 rate increase or reduction so that no other customer
6 classes shall be impacted by any resulting change."
7 So in your opinion, does that language sayQ
8 that changes to any facility charge methodology for any
9 class of customer would result in a direct assignment to
10 Schedule 19?
11 A I believe that's the intent of the
12 language, yes.
13 Q So for example, Simplot, Schedule 29,
14 which has facility charges, if that rate were reduced or
15 changed, the Company's revenue shortfall would be
16 assigned to Schedule 19; correct?
17 MR. RICHARDSON: Madam Chair, I would
18 obj ect to the question. The document that the Idaho
19 Power attorney is referring to doesn't refer to Schedule
20 24. It only refers to Schedule 19.
21 COMMI S S lONER REDFORD: You mean 29.
22 COMMISSIONER SMITH: Okay, Mr. Williams,
23 do you want to speak to Mr. Richardson's obj ection?
24 MR. WILLIAMS: Yeah, Mr. Richardson
25 actually specifically asked Mr. Tatum questions related
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53 TATUM (Di)
Idaho Power Company
1 to Schedule 9 and their impact on Schedule 19. I'm.2 simply asking Mr. Tatum the impacts of Schedule 29 on the
3 impact to Schedule 19 in the context of this
4 stipulation.
5 COMMISSIONER SMITH: Mr. Richardson, it
6 seems to me he is kind of repeating the same question you
7 asked.
8 MR. RICHARDSON: Madam Chair, the
9 stipulation only refers to Schedule 19 and it's my
10 understanding that the stipulation talks about allocating
11 costs that are increased costs to Schedule 19 from
12 Schedule 19 customers only, and Mr. Williams is referring
13 to other schedules that are outside of the stipulation..14 COMMISSIONER SMITH: Mr. Williams.
15 MR. WILLIAMS: Madam Chair, as Mr. Tatum
16 just read the language, it says revenue requirement
17 impacts resulting from changes to the facility charge
18 methodology or changes in property ownership, that does
19 not specifically limit it at all to Schedule 19.
20 COMMISSIONER SMITH: So here's what we're
21 going to do: This witness can give his opinion on what
22 that means and if the Commission has doubts later on, we
23 can have oral argument from the lawyers or we'll have
24 more witnesses, okay? Mr. Williams..25 Q BY MR. WILLIAMS: Mr. Tatum, do you need
CSB REPORTING
[phone]
54 TATUM (Di)
Idaho Power Company
.
.
.
1 me to repeat the question?
2 A Yes, if you would, please.
3 Under the terms of the stipulation, wouldQ
4 any change in facility charge revenue or ownership for
5 Schedule 29 that results in a revenue decrease for the
6 Company, would that revenue deficiency be required to be
7 directly assigned to Schedule 19?
8 Yes, that's what the stipulation says.A
9 The stipulation language that appears in the first
10 sentence is referring to facilities charges assessed to
11 Schedule 19 customers. It doesn't exclude facilities
12 charges assessed to other classes, and the intent of the
13 second portion of that paragraph is to make sure that the
14 stipulation is clear that any change in revenue
15 requirement associated with changes to facilities
16 charges, which Schedule 19 is one class that is assessed
1 7 facilities charges, would be assigned directly to
18 Schedule 19 customers.
19 MR. WILLIAMS: Thank you, Mr. Tatum.
20 Madam Chair, no more questions for this witness.
2l COMMISSIONER SMITH: Thank you, Mr.
22 Tatum.
23 I have one moreCOMMISSIONER REDFORD:
24 question.
25 COMMISSIONER SMITH: Commissioner Redford.
CSB REPORTING
[phone]
55 TATUM (Di)
Idaho Power Company
.
.
.
1 EXAMINATION
2
3 BY COMMISSIONER REDFORD:
4 Q Is there anywhere in Schedule 19 or in the
5 tariff that has that language specifically, however, the
6 signing parties agree that any... or in a similar way so
7 that Simplot knows what the net could be or there is
8 going to be a net return, do they know that? It doesn't
9 sound like in their testimony that they understood that.
lO A They've signed the stipulation that has
11 the language that --
12 Q No, I mean prior to the stipulation.
13 A Prior to the stipulation this agreement
14 and this arrangement didn't exist. This is specific to
15 the settlement stipulation.
16 COMMISSIONER REDFORD:Okay, thanks. No
17 further questions.
18 THE WITNESS: Thank you.
19 COMMISSIONER SMITH: All right, thank you,
20 Mr. Tatum.
21 (The witness left the stand.)
22 MS. NORDSTROM: Idaho Power calls Theresa
23 Drake as its next witness.
24
25
CSB REPORTING
[phone]
56 TATUM (Com)
Idaho Power Company
.
.
.
1 THERESA DRAKE,
2 produced as a witness at the instance of the Idaho Power
3 Company, having been first duly sworn, was examined and
4 testified as follows:
5
6 DIRECT EXAMINATION
7
8 BY MS. NORDSTROM:
9 Q Good morning.
10 A Good morning.
11 Q Please state your name and spell your last
12 name for the record.
13 A Theresa Drake, D-r-a-k-e.
14 Q By whom are you employed and in what
15 capacity?
16 A I'm employed by Idaho Power as the
17 customer relations and energy efficiency manager.
18 Q Are you the same Theresa Drake that filed
19 rebuttal testimony on November 16, 2011, and prepared
20 Exhibit Nos. 49 through 51?
21
22
A Yes, I am.
Q Do you have any corrections or changes to
23 your testimony or exhibits?
24
25
A I do. On my rebuttal testimony, page 21,
line 18, we have a typographical error. It's printed
CSB REPORTING
[phone]
57 DRAKE (Di)
Idaho Power Company
.
.
.
1 as--
2 MR. PURDY: Excuse me, Ms. Drake, I'm
3 sorry, but I didn't hear any of that. Would you please
4 repeat that?
5 THE WITNESS: Yes, I have a correction on
6 my rebuttal testimony, page 21, line 18, it's typed as
7 "3.48" and it should be "3.40."
8 Q BY MS. NORDSTROM: Do you have any other
9 changes or corrections?
10 A No, I don't.
11 Q If I were to ask you the same questions
12 set forth in your prefiled testimony, would your answers
13 be the same today?
14 A Yes, they would.
15 MS. NORDSTROM: I would move that the
16 prefiled rebuttal testimony of Theresa Drake be spread
17 upon the record as if read and Exhibits 49 through 51 be
18 marked for identification.
19 COMMISSIONER SMITH: If there's no
20 obj ection, we will spread the prefiled testimony of
21 Ms. Drake upon the record as if it had been read and mark
22 for identification Exhibits 49 through 51.
23 (The following prefiled rebuttal
24 testimony of Ms. Theresa Drake is spread upon the
25 record. )
CSB REPORTING
[phone]
58 DRAKE (Di)
Idaho Power Company
.
.
.
1 Please state your name and business address.Q.
2 My name is Theresa Drake. My business addressA.
3 is 1221 West Idaho Street, Boise, Idaho.
4 By whom are you employed and in what capacity?Q.
5 I am employed by Idaho Power Company (" IdahoA.
6 Power" or "Company") as Manager of Customer Relations and
7 Energy Efficiency.
8 Please describe your educational background.Q.
9 In May of 1990, I received a Bachelor ofA.
10 Science Degree in Marketing with emphasis in Finance from
11 Jacksonville State University in Jacksonville, Alabama.
12 I have attended numerous seminars and conferences on
13 pricing issues, regulatory issues, marketing research,
14 and energy efficiency.
15 Please describe your business experience withQ.
16 Idaho Power.
17 I joined Idaho Power in January 1997 as aA.
18 Pricing Analyst. In July 2001, my position evolved into
19 a Senior Pricing Analyst and included preparing
20 cost-of-service studies, development of the Company i s
21 tariffs, and performance of duties as a regulatory
22 liaison for customer-related issues. In February 2004, I
23 became Manager of Customer Relations and Research (now
24 referenced as Customer Relations and Energy Efficiency) .
25 In that capacity, I manage staff members and acti vi ties
associated with
59 DRAKE, REB 1
Idaho Power Company
.
.
.
1 customer satisfaction, process improvement, and energy
2 efficiency.
3 Q.What is the scope of your testimony in this
4 proceeding?
5 A.On September 23, 2011, Idaho Power filed a
6 settlement stipulation ("Stipulation") in this docket
7 that was signed by all parties but one. My testimony
8 will address two of the three unresolved issues
9 identified on page 7 of the Stipulation:
10 1.Low-income Weatherization Assistance for
11 Qualified Customers ("WAQC") program funding; and
12 2 .The funding level for the Energy
13 Efficiency Rider.
14 I. WAQC FUING
15 Q.Please describe the WAQC program.
16 A.The WAQC program provides financial assistance
17 to regional Community Action Partnership ("CAP") agencies
18 in the Idaho Power service area. This assistance helps
19 cover weatherization costs of electrically heated homes
20 occupied by qualified customers with limited income. In
21 an effort to simplify program management for CAP
22 weatherization managers, Idaho Power mirrors the U. S.
23 Department of Energy ("DOE") requirements, which can
24 change from year to year. In 2011, an applicant's income
25 to qualify for weatherization may be up to 200 percent of
60 DRAKE, REB 2
Idaho Power Company
.
.
.
1 the national poverty level guidelines. The WAQC program
2 also provides a limited pool of funds for weatherization
3 of buildings occupied by non-profit organizations serving
4 primarily special needs populations, regardless of
5 heating source, with priority given to buildings with
6 electric heat.
7 Q.Who administers the WAQC program?
8 A.The CAP agencies administer the day-to-day
9 operations of the WAQC program with funds collected in
10 electric base rates by Idaho Power.
11 Q.How would you summarize Idaho Power's
12 commi tment to the WAQC program?
13
14
A.Idaho Power has a long history helping to
provide low-income weatherization assistance. Beginning
15 in 1989, Idaho Power began funding what was called the
16 Low Income Weatherization Assistance ("LIWA") program.
17 Beginning in 2004, Idaho Power changed the name of the
18 program to Weatherization Assistance for Qualified
19 Customers after IPUC Order No. 29505 significantly
20 increased the level of funding provided by Idaho Power
21 customers. Idaho Power has dedicated staff to the
22 program that has in turn developed a good working
23 relationship with the CAP agency personnel. Through this
24 program, Idaho Power and its customers have helped to
25 weatherize over
61 DRAKE, REB 3
. Idaho Power Company
.
.
.
1 3,000 low-income residences in the last decade and
2 achieved cost-effective energy savings in so doing.
3 Q.What is the current funding level for WAQC?
4 A.Idaho Power customers currently fund the CAP
5 agencies at $1.2 million per year. To the extent there
6 are unspent funds at the end of the year, the balance is
7 carried forward and made available in the next year. In
8 addition, Idaho Power funds approximately $100,000 in
9 labor and overheads and some untracked labor funding from
10 other departments in the normal course of business (such
11 as the Information Technology Department, the Legal
12 Department, Human Resources Department, and Regulatory
13 Affairs Department).
14 Q.How does the Community Action Partnership
15 Association of Idaho ("CAPAI") propose to change WAQC' s
16 current funding level?
17 A.CAPAI is recommending that the Idaho Public
18 Utilities Commission ("Commission") increase customer
19 WAQC funding in base rates from $1.2 million per year to
20 $2. 7 million per year, a change of 125 percent.
21 Q.Does Idaho Power obj ect to increasing the
22 funding for WAQC?
23 A.No, provided there is the potential for more
24 cost-effective savings. The Company has little
25 administrative control over this program, which is
62 DRAKE, REB 4
Idaho Power Company
.1 operated on a day-to-day basis by local CAP agencies.
2 While Idaho Power can evaluate the cost-effectiveness of
3 the WAQC program after customer funds are spent by the
4 CAP agencies, the considerable concerns raised by other
5 utili ties and the Commission Staff regarding the
6 evaluation of WAQC programs ' cost-effectiveness and
7 related recovery of amounts spent cause Idaho Power
8 concern. If this is judged to be an appropriate time to
9 increase WAQC funds collected from Idaho Power customers
10 despite the lack of a uniform cost-effectiveness
11 evaluation protocol recommended in comments submitted in
12 Case No. PAC-E-11-13, Idaho Power believes that the
13 relative demand for WAQC services in Idaho Power's.14 service terri tory should be the focus of determining a
15 proper funding level. I believe it is prudent to
16 understand the needs of Idaho Power's customers based on
17 factual information and adjust accordingly. Suggesting
18 parity between utilities' funding levels to set such an
19 increase is not a good method for determining need, given
20 that demand for WAQC services may vary significantly
21 between utilities.
22 Q.On the issue of cost-effectiveness, does Idaho
23 Power believe the WAQC program at its current funding
24 level is cost-effective?.25 A. Idaho Power's Demand-Side Management 2010
Annual Report, Supplement 1: Cost-Effectiveness, filed in
63 DRAKE, REB 5
Idaho Power Company
.
.
.
1 Idaho Case No. IPC-E-11-05, shows that the WAQC program
2 is cost-effective under the utility cost test, total
3 resource cost test, participant cost test, and the
4 ratepayer impact measure test. As stated in Supplement
5 1, in calculating these tests, the Company relies on the
6 savings determination from the DOE-approved energy audit
7 programs (EA4 or EA5) used by the weatherization managers
8 in the CAP agencies.
9 Q.Does Idaho Power have plans to evaluate the
10 WAQC program in the near term?
11 A.Yes. Idaho Power is presently participating in
12 a national study of low-income weatherization programs
13 performed by Oakridge National Labs. Building on the
14 resul ts of that study, to be released in first quarter
15 2012, Idaho Power plans to do a third~party impact
16 evaluation on the WAQC program in 2012.
17 Q.Earlier you stated that increased funding for
18 WAQC should be based on need. What did you mean by that
19 statement?
20 A.Idaho Power believes that if there is a need
21 for increased WAQC funding it could be shown by the
22 wai ting list for WAQC. This could be determined by
23 taking the number of homes that actually qualify under
24 the federal income requirements, are electrically heated,
25 receive an
64 DRAKE, REB 6
Idaho Power Company
.
.
1 energy audit, and, subsequently, do not get weatherized
2 under the WAQC program for a specific time period.
3 Q.Do you know the magnitude of this waiting list?
4 A.No, Idaho Power does not have this data.
5 Q.Do you agree with CAPAI' s claim that there is a
6 20-year waiting list for homes to get weatherized under
7 the WAQC program?
8 A..No. The information referred to by CAPAI is
9 based on applicants who qualify for the Idaho State
10 Weatherization Assistance Program ("WAP"), not WAQC.
11 Idaho Power believes the waiting list for WAQC is a small
12 subset of applicants applying for energy assistance and
13 qualifying for WAP.
14 Q.There seems to be some confusion about waiting
15 lists and how applicants are screened and eventually
16 qualified for WAQC. Can you explain the process?
17 A.Although this is not Idaho Power's process, I
18 will describe it to the best of my knowledge. First, an
19 applicant for energy assistance (bill payment assistance)
20 is qualified for the Idaho State Energy Assistance
21 Program Low Income Home Energy Assistance Program
22 ("LIHEAP"). This includes all applicants regardless of
23 heating fuel source and includes customers of all major
24 utilities throughout the state as well as users of.25 propane, coal, wood, and oil
65 DRAKE, REB 7
Idaho Power Company
.
.
.
1 for heat. Second, all applicants who qualify for energy
2 assistance, regardless of heat source, are placed on the
3 WAP waiting List. Third, customers qualifying for Idaho
4 Power's WAQC program are determined by starting with the
5 WAP waiting list and removing non-electrically heated
6 homes and homes that are not in the Idaho Power service
7 area. These customers are then prioritized by the CAP
8 agencies for weatherization. Applicants from this list
9 then have an energy audit conducted by a CAP agency
10 auditor. Through the audit process, it is determined if
11 the home is actually electrically heated, what
12 weatherization measures are needed, and what percentage
13 of the weatherization project will be funded by Idaho
14 Power. At this point, only the electrically heated,
15 income-qualified customers wi thin Idaho Power's service
16 area would comprise a WAQC waiting list.
17 Q.What percent of the homes that get weatherized
18 are funded, or at least partially funded, by Idaho Power?
19 A. Idaho Power really does not know exactly.
20 However, according to the Agency Waiting List provided by
21 CAPAI through discovery and attached as Exhibit No. 49,
22 in 2008, 1,129 homes were weatherized through CAP
23 agencies in Idaho Power's service area. This is before
24 screening for heating source or electricity provider.
25
66 DRAKE, REB 8
Idaho Power Company
.
.
.
1 Q.Do you believe that Exhibit No. 49 demonstrates
2 that there is a significant waiting list for the WAQC
3 program?
4 A. No. To begin with, this exhibit contains a CAP
5 agency, "CAP" ( Community Action Partnership located in
6 Lewiston), in row one of the exhibit that does not
7 service homes in the Idaho Power service area. The
8 "Number on Waiting List" and the "Pre ARRA Annual
9 Production" provided in column one and three of Exhibit
10 No. 49 contain applicants that are not all Idaho Power
11 customers and may not have electric heat. Consequently,
12 the "Waiting List" in column four really has no relevance
13 to the WAQC program.
14 Q.Qualifying for WAP and other programs sounds
15 like a rather involved process. How does this all work
16 in the daily application of Idaho Power funds?
17 The CAP agencies determine the applicantA.
18 eligibili ty, prioritize the applicants, and oversee the
19 weatherization of homes. Idaho Power's WAQC program
20 specialist works with the CAP agency weatherization
21 managers to improve the design of the WAQC program,
22 conduct quality assurance, and administer and track
23 distribution of funds to the agencies. Through this
24 collaboration, Idaho Power and the CAP agencies have been
25 able to improve services to special needs customers in
67 DRAKE, REB 9
Idaho Power Company
1 Idaho. The Idaho Power and CAP agency partnership is a.2 product i ve and
3 /
4 /
5 /
6
7
8
9
10
11
12
13.14
15
16
17
18
19
20
21
22
23
24.25
68 DRAKE, REB 9a
Idaho Power Company
1 amiable relationship where program ideas are discussed.2 prior to implementation. For example, CAP agency
3 weatherization managers provide input to guidelines such
4 as determining annual average job costs, leveraging
5 funding opportunities, and proposing the inclusion of
6 additional measures into the program. Idaho Power also
7 works with CAP agency LIHEAP and energy assistance
8 personnel to improve communications and to facilitate
9 other important informational exchanges that improve
10 processes and benefit Idaho's special needs population.
11 Q.Has Idaho Power increased the level of funding
12 for WAQC or for other special needs customers since the
.13 Company's 2003 rate case?
14 A.Yes. In 2008, Idaho Power began a pilot
15 program call Weatherization Solutions for Eligible
16 Customers ("Solutions").
17 Q. How did this program design come about?
18 A. Idaho Power developed this program in 2008
19 based on conversations with local CAP agency
20 weatherization managers who voiced their concern that
21 often customers applying for WAP and WAQC assistance were
22 barely above the qualifying income level. From those
23 conversations, Idaho Power and CAP agency executive
24 directors and weatherization managers worked together to.25 develop a test pilot in one region. Currently, the
program has expanded to three Idaho
69 DRAKE, REB 10
Idaho Power Company
.
.
.
1 Power regions with plans to expand into a fourth region
2 in 2012. For the Solutions program, Idaho Power
3 contracts with limited liability corporations developed
4 at regional CAP agencies for those same weatherization
5 services provided by WAP and WAQC.
6 Could you describe this program?Q.
7 Solutions is an energy efficiency programA.
8 funded by the Rider, designed to serve Idaho Power's
9 residential customers who are slightly above poverty
10 level and, therefore, do not financially qualify for the
11 Company's legacy weatherization program, WAQC. The
12 program measures and implementation process mirror those
13 included in the WAQC program. Homes considered for this
14 program must be electrically heated and customers
15 eligible for this program have income just above the
16 federal poverty level, which is adjusted annually. The
17 customers typically do not have discretionary income to
18 participate in other residential energy efficiency
19 programs and live in similar housing as WAQC customers.
20 The qualifying guidelines target customers whose annual
21 income was between 175 percent and 250 percent of the
22 federal poverty level.
23 Was the Solutions pilot a success?Q.
24 Yes. In fact, the Solutions pilot evolved intoA.
25 a regular efficiency program in 2009. In, 2010, Idaho
Power expended a little over $220,000 for this program
70 DRAKE, REB 11
Idaho Power Company
.
.
.
1 weatherizing almost 50 homes. In 2011, the forecast
2 expendi tures for Solutions are nearly $ 7 00,000. The
3 Company has budgeted $1 million dollars for the program
4 in 2012, which will weatherize approximately 139 homes.
5 Q.Has the Company funded any other program to aid
6 special needs customers?
7 A.Yes. In 2009, Idaho Power committed to fund
8 the Easy Savings~ Program, which is an energy efficiency
9 education program for customers receiving energy
10 assistance but not prioritized for weatherization
11 services through the federal LIHEAP. In both 2009 and
12 2010, Idaho Power sent payments totaling $125,000 to
13 regional CAP agency executive directors. In 2009, 2,594
14 ki ts were distributed to Idaho Power customers approved
15 to receive energy assistance benefits. In 2010, 2,127
16 kits were ordered.
17 How would you summarize these additionalQ.
18 efforts?
19 In just looking at 2011, WAQC will contributeA.
20 $1.2 million, Solutions is forecast to invest $700,000,
21 and the Easy Savings~ Program will contribute $125,000.
22 The Company will directly utilize over $2 million on
23 special needs programs, excluding the labor marketing and
24 other base rate expenses incurred by these efforts.
25 Q. Do you agree with Ms. Ottens' statement on page
11 of her testimony that the WAQC program is currently
71 DRAKE, REB 12
Idaho Power Company
.
.
.
1 the only viable means for low-income customers to reduce
2 their electric bills?
3 A.No. I have just described two other programs
4 offered by the Company to help special needs customers
5 reduce their electricity usage. Additionally, Idaho
6 Power provides CAP agency weatherization and energy
7 assistance offices printed materials on saving energy for
8 special needs individuals. The Company also offers other
9 tools at no cost to all of its customers to help them
10 manage their electricity use. In addition, Idaho Power
11 offers all customers on-line hourly energy usage
12 information and access to powerful web-based Energy Tools
13 that offer individual savings recommendations using
14 customer input. Idaho Power's website contains many no-
15 and low-cost energy-saving tips as well as a robust
16 ENERGYsmart Library to address specific interests. Other
17 printed materials like Idaho Power's Energy Efficiency
18 Field Guide go out annually to thousands of customers
19 along with their newspapers (~162,500 in 2011) and
20 thousands of copies of Idaho Power's booklet "30 Simple
21 Things You can Do to Save Energy" (~37,000 to-date) have
22 been hand delivered by its employees via educational
23 presentations and at community events. Recently, Idaho
24 Power worked with the Idaho Commission for Libraries,
25 Avista Utili ties, and Rocky Mountain Power to make
kilowatt meters, which are easy-to-
72 DRAKE, REB 13
Idaho Power Company
.
.
.
1 use meters that allow customers to see how much
2 electricity individual appliances use, available for all
3 Idaho residents via their public libraries. Presently,
4 all libraries in Idaho Power's service terri tory have
5 energy efficiency kits for checkout. Idaho Power
6 continually looks for new ways to get educational energy
7 and money-saving information out to its customers.
8 Q.Are there additional means that Idaho Power
9 uses to assist special needs customers?
10 A.Yes, through Idaho Power Proj ect Share efforts.
11 Idaho Power started Proj ect Share in 1982. This is a
12 year-round energy assistance program administered by The
13 Salvation Army with funding provided mainly by Idaho
14 Power customers and shareholders. Proj ect Share
15 assistance is available to supplement energy needs and
16 can be applied to electric and natural gas, as well as
17 other heating commodities like wood, propane, oil, coal,
18 and furnace repairs.
19 In program year 2010-2011, Project Share provided
20 1,708 grants, benefiting 4,955 individuals with an
21 average of $164.51 energy assistance payment on those
22 energy bills.
23 Q.To your knowledge, has CAPAI requested the
24 Commission increase customer funding of WAQC since Order
25 No. 29505 was issued in 2003?
73 DRAKE, REB 14
Idaho Power Company
.
..
.
1 A.No. In fact, in 2007, Idaho Power and CAPAI
2 filed jointly to continue the funding level for WAQC as
3 set out in Order No. 29505. The j oint application in
4 Case No. IPC-E-07-09 stated, "CAPAI and Idaho Power
5 believe continuation of the increased funding for WAQC is
6 in the public interest and .will benefit all of
7 Idaho Power's customers. . ."
8 Q.In summary, does Idaho Power support increased
9 funding for WAQC?
10 A.Idaho Power is willing to collect customer
11 funds for WAQC to be administered by the CAP agencies at
12 the level the Commission deems appropriate and that
13 customers are willing to support. As I indicated
14 earlier, the Company desires confidence in an appropriate
15 method of demonstrating the actual need in concert with
16 cost-effectiveness and evaluation. If funding is
17 increased prior to those issues being resolved, Idaho
18 Power seeks assurances that it will not be held to a new
19 cost-effectiveness standard retroactively. Whatever
20 funding amount is ultimately set by the Commission, Idaho
21 Power believes it should be based on each utility's need
22 for cost-effective WAQC services rather than an unrelated
23 level of "parity" across the different regions of Idaho.
24
25
74 DRAKE, REB 15
Idaho Power Company
1 II. ENERGY EFFICIENCY RIDER FUING.2 Q.Please describe Idaho Power's Energy Efficiency
3 Rider ("Rider").
4 A.Currently, Idaho Power is authorized by the
5 Commission to collect 4. 75 percent of customers' base
6 rates and put it into a liability account. These funds
7 are intended to fund Idaho Power's energy efficiency
8 initiatives.
9 Q.What is the current balance of the Rider
10 account?
11 A.As of the end of October 2011, the balance of
12 this account was approximately a negative $6 million
13 dollars, indicating that the Company has spent more money.14 on energy efficiency initiatives than it has recovered
15 through the Rider funding.
16 Q.Is Idaho Power allowed to collect interest on
17 this account?
18 A.Yes, the Company has been directed to collect
19 or pay interest on these funds at the customer deposit
20 rate depending on whether the account balance is positive
21 or negative. The customer deposit rate determined by the
22 Commission for 2011 in Order No. 32109 is one percent.
23 Q.Has Idaho Power forecast the Rider balance in
24 future years?.25
75 DRAKE, REB 16
Idaho Power Company
.
.
.
1 A.Yes. Exhibit No. 50 shows Idaho Power's
2 forecast of the Rider balance through 2014 under two
3 levels of funding. The top half of Exhibit No. 50, lines
4 1 through 13, shows the results of a Rider funding level
5 of 4.75 percent, as is currently approved. Lines 14
6 through 26 show the same information under a 4 percent
7 funding level.
8 Q.Can you describe Exhibit No. 50 in more detail?
9 A.Line 10 and line 23 show the Rider balance
10 under the two funding scenarios. Under a 4. 75 percent
11 Rider, the balance is estimated to be over $5 million
12 dollars at the end of 2012 and grows to over $35 million
13 in 2014. Under a 4 percent Rider, the balance is a
14 negative $1 million at the end of 2012 and $15.8 million
15 at the end of 2014. Lines 13 and 26 show the total level
16 of funding of Idaho Power demand-side management
17 programs, including Rider funding and other funding
18 through the time period, which is the same under either
19 funding level.
20 Q.Does the level of the Rider funding determine
21 the Company's commitment to energy efficiency
22 initiatives?
23 A.No. Idaho Power is on the record in many
24 proceedings in front of this Commission and in other
25 public forums as being committed to pursuing all
76 DRAKE, REB 1 7
Idaho Power Company
1 cost-effecti ve energy efficiency.In the last nine years.2 since the Rider
3 /
4 /
5 /
6
7
8
9
10
11
12
13.14
15
16
17
18
19
20
21
22
23
24
25.
77 DRAKE,REB 17a
Idaho Power Company
.
.
.
1 began, the Company has made tremendous strides toward
2 achieving that goal. Idaho Power has a full portfolio of
3 energy efficiency programs offered to all customer
4 sectors. The Company has developed a large network of
5 trade allies and has developed excellent working
6 relationships with organizations that help the Company
7 promote its programs and ini tiati ves. One must remember
8 that energy efficiency, unlike supply-side resources, is
9 dependent on customer involvement and interaction. Based
10 on customer satisfaction surveys (included in Exhibit No.
11 51), customers that participate in Idaho Power's energy
12 programs are generally more satisfied than customers who
13 do not participate in the Company's programs. Idaho
14 Power believes customers use energy more wisely and have
15 reduced their energy consumption because of the Company's
16 programs.
17 Does Idaho Power plan to conduct anotherQ.
18 potential study soon?
19 Yes, in 2012, Idaho Power is planning onA.
20 contracting for a new potential study to be incorporated
21 into the 2013 Integrated Resource Plan.
22 Does the level of Rider funding determine howQ.
23 much program evaluation the Company conducts?
24 No. The level of Rider funding does not andA.
25 has not determined Idaho Power's level of spending and/or
evaluation of demand-side management efforts. Although
78 DRAKE, REB 18
Idaho Power Company
.
.
.
1 Idaho Power believes in timely recovery of energy
2 efficiency investment, the Company's historic level of
3 support for energy efficiency programs is evidenced by
4 the fact that, in the beginning of 2011, Idaho Power was
5 carrying an approximate $17 million deficit in the Rider
6 balance. The Company has been carrying a negative balance
7 in the Rider account since it went contra in April 2008.
8 Q.Does Idaho Power believe the percentage level
9 of funding for the Rider needs to be changed?
10 A.That would depend on the level of change.
11 Q.Can you explain?
12 A.Yes. Exhibit No. 50, as described earlier in my
13 testimony shows the forecast results of changing the
14 Rider funding. As you can see, a modest downward change
15 in the Rider funding level seems to decrease the Rider's
16 current negative balance, adequately fund the Company's
17 current programs and initiatives, and fund increased
18 marketing, expand residential programs, increase
19 evaluations, and research. In the past when Idaho Power
20 has filed for Rider increases, it based the changes on
21 similar analysis based on forecasted need. This is
22 consistent with past filings.
23 Q.What do you mean by "modest" Rider level
24 decrease?
25
79 DRAKE, REB 19
Idaho Power Company
.
.
.
1 As can be seen from Exhibit No. 50 and asA.
2 proposed by other parties in this case, decreasing the
3 Rider to 4 percent would provide adequate funding for
4 Idaho Power's current ini tiati ves and provide funds for
5 expanded efforts in the future.
6 Does this forecast include funding for theQ.
7 agreement with the Office of Energy Resources ("OER")
8 concerning the K-12 Energy Efficiency Project as pointed
9 out in Ms. Hirsh's direct testimony?
10 Yes, but there has been some confusion aboutA.
11 Idaho Power's level of funding for these projects. OER's
12 potential investment in these proj ects is $ 9.6 million
13 but Idaho Power' s incentives would be a small portion of
14 this amount. Although it is still an estimate, the
15 Company has included $3.5 million for incentives for the
16 OER projects in 2011 and 2012.
17 Why would a four percent Rider support existingQ.
18 and new energy efficiency services?
19 In Case No. IPC-E-10-27, Idaho Power filed aA.
20 comprehensive plan to fund energy efficiency. In Order
21 Nos. 32217 and 32245, the Commission authorized the
22 Company to account for the incentives from Custom
23 Efficiency by placing them in a regulatory asset account
24 and recover $10 million of the Rider balance through a
25 one-time adjustment to the 2011 power cost adjustment.
In this current rate
80 DRAKE, REB 20
Idaho Power Company
.
.
.
1 case, the Company filed to move the incentive payments
2 for the Company's demand response programs into net power
3 supply costs. These actions and favorable regulatory
4 treatment have allowed Idaho Power to decrease its
5 negative balance and remove approximately $16 million
6 fromi ts annual Rider expenses while maintaining its
7 obj ecti ves of pursing cost-effective energy efficiency.
8 Q.What if over time this level of funding does
9 not adequately support energy efficiency at Idaho Power?
10 A.Idaho Power, as it has done in the past, would
11 file with the Commission to increase the funding. Based
12 upon its past experience, Idaho Power believes that
13 customers prefer this approach rather than accumulating
14 large balances in anticipation of future energy
15 efficiency expenses.
16 Q.The Kroger Co. witness, Kevin Higgins,
17 recommended that the Commission reduce the Rider from
18 4. 75 to 3. 40 percent. Does Idaho Power support a
19 reduction of that size?
20 No. Mr. Higgins' calculations neglect to takeA.
21 into account the negative balance that currently exists
22 in the Rider. Mr. Higgins' proposed level of funding
23 would not provide adequate support for existing programs.
24 Q.Does this conclude your testimony?
25 A.Yes.
81 DRAKE, REB 21
Idaho Power Company
.1
2 open hearing.)
(The following proceedings were had in
MS. NORDSTROM: I make this witness
4 available for cross-examination.
10
3
5
6
7 questions.
8
9
11 BY MR. OTTO:
12
13.14
Q
A
Q
COMMISSIONER SMITH: Thank you. Mr. Otto?
MR. OTTO: Yes, I do have a few
CROSS-EXAMINATION
Good morning, Ms. Drake.
Good morning.
I'm going to ask you a few questions about
15 Exhibi t 50, so I' II give you and everyone else a few
16 minutes to pull that out, and I just want to walk through
17 this with you a little bit to make sure I understand
18 what's on this page.
20
19 A Okay.
So what we have in lines 1 through 9
21 appears to be -- I'm sorry, let's just look at lines 6
Q
22 through 9 and those appear to be the proj ections for
23 expenses in the next few years?
24.25
A
Q
That's correct.
And then I see in line 11 that it's custom
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82 DRAKE (X)
. Idaho Power Company
.
.
1 efficiency incentives, so the way I read this is that
2 line 9 is for efficiency and then also additional funding
3 would come from custom efficiency incentives in line
4 11?
5 A That's correct.
6 Q Okay, and then I also understand that
7 somewhere in here there's a back balance that's owed to
8 the Company and there's some debate about what that
9 number is, but it's in the $ 6-8 million range.
10 A Correct.
11 Q Is that paid down somehow? Could you show
12 me or track those numbers through in how that back
13 balance is then paid down? I can rephrase if that didn't
14 make sense.
15 A I believe what you're referring to is the
16 balance that's carried forward from year to year --
17 Q Okay.
18 A -- and you can see that in the line No.1,
19 which is the beginning balance. You can see from year to
20 year that's the anticipated carryover balance that has
21 yet to be refunded.
22 Q So the back balance is caught up in that
23 top line number?
24.25
A Correct, it's represented there.
Q Right, and so what see is under 4. 75
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83 DRAKE (X)
Idaho Power Company
.1 there's a back balance for two years and under the 4.0
2 rider there would be a back balance for three years?
3 Oh, for the duration of the time; is thatA
4 what you mean?
5 Q Yes.
6 A Not what's accumulated in the back
7 balance?
8 Q Yes.
9 Yes, it would take that period of time toA
10 eliminate the back balance.
.
.
11 Thanks, that is what I thought this allQ
12 said. I just wanted to make sure.
13 One clarification I would add to that isA
14 what's not represented on this chart is any type of base
15 rate change
16 Q Sure.
17 -- that the Company would anticipate outA
18 of this general rate case. It's not reflected in here in
19 these figures. We didn't put a figure in here to
20 anticipate what the Commission would rule on for a rate
21 change, so how that impacts this is line 3 where it shows
22 rider funding. Any change to base rates would be a
23 computed increase, if it would be, to what's contributed
24 towards increasing the rider funding availability
25 amount.
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84 DRAKE (X)
Idaho Power Company
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1 Q Sure, that makes sense, so, like, in 2013
2 if there was a rate case and the rates were higher, the
3 rider-generated funds would go up?
4 A Correct, and even this proceeding that we
5 have today going on.
6 Q Okay; so I want to ask you a couple of
7 questions about line well, line 9 and line 22 are the
8 same numbers and that's your forecast for expenses in the
9 next few years?
10 A Correct.
11 Q Okay, here's we'll just cut to the
12 chase. Those numbers in 2013, you see that's $25
13 million. 2014 it's $26 million. I gather your
14 assumption is that this is based on the 2011 IRP with
15 expanding programs?
16 A Correct.
17 Q Does it also -- and also some OER
18 incenti ves for the first two years? Does this also
19 include, like, the EM&V budget?
20 A Yes, it does.
21 Q Okay; so this would be kind of all in
22 expenses what you proj ect?
23 A Correct, for both energy efficiency and
24 demand response.
25 Q Okay. Now, the IRP shows, as I read it
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85 DRAKE (X)
Idaho Power Company
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1 shows, an increase of about 17 average megawatts a year
2 in new energy efficiency acquisitions.
3 A I don't have that number in front of me,
4 but that sounds about right.
5 Q Okay, I can --
6 COMMISSIONER SMITH: She accepted it.
7 MR. OTTO: Okay, great.
8 BY MR. OTTO: Thanks for working with usQ
9 on accepting that number. My concern is that -- so let's
10 take 2013 and 2014, there' s le~s than a million dollar
11 change in expenses, but the IRP presumes you're going to
12 do about 17 average megawatts of more energy efficiency
13 between these two years. Can you reconcile what is -- 17
14 average megawatts is about 146 gigawatt-hours of new
15 efficiency, how do you plan to acquire that for less than
16 a million dollars more in budget?
17 A Well, what I can address is that the
18 figures that you see here are purely a forecast of what
19 we're expecting and have put into the IRP planning
20 process. They are also what we anticipate from customer
21 response to our programs and what we anticipate paying
22 for all expenses for the future years here. We have also
23 included the figures for OER, as you have mentioned, for
24 the school efficiency program. Those figures weren't
25 included in the original IRP forecast, so as you can see,
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86 DRAKE (X)
Idaho Power Company
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.
.
18
1 there are a number of changes that can happen into the
2 future years, and what we propose is that we look at this
3 table as purely a forecast and we make modifications
4 along the way.
5 The 2013 IRP process will have additional
6 figures in there for energy efficiency and demand
7 response. After we get through with our potential study,
8 which will be concluded next year, we'll have a different
9 figure to look at that, so we look at this as a forecast
10 to give some guidance, but by no means is it set in stone
11 in terms of what changes might need to take place to
12 accommodate the acquisition of energy efficiency and
13 demand response.
14 Q That's fair enough, and you've done this
15 forecasting of what you think you'll get out of energy
16 efficiency for a few years now.
17 A Right.
Q Actual results, how have they compared to
19 the forecasts?
20 A Most of the time our results actually
21 surpass what is in the IRP that we are forecasting.
22 Q So you end up doing more than you would in
23 a forecast?
24 A Right, and actually in our 2000 -- the
25 last potential study that we had showed energy
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87 DRAKE (X)
Idaho Power Company
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1 efficiency, achievable energy efficiency, into the future
2 and presently at the 2010 annual report that we did for
3 DSM, we i re at what that potential study said we should be
4 for the year 2019, so we are expanding on what the
5 potential study had said previously. We i re anxious to
6 see what the next potential has for the future.
7 Q Now, the potential you refer to, is that
8 the economic potential or the achievable?
9 A It's the achievable.
10 Q Which is less than or more than the
11 economic potential?
12 A Uh-huh.
13 Q Well, it's less than.
14 A It's less than.
15 Q I apologize for snarky questions. Thank
16 you very much for that. I do want to ask you just a
17 couple of questions about another one of your exhibits,
.18 which is Exhibit 51, and that's the results of this
19 customer survey. I think you addressed this in your
20 testimony, but I'm going to tell you how I interpret this
21 and you can tell me if you agree or not, but how I
22 interpret this is that folks who participate in your
23 efficiency programs have a favorable view of the Company
24 compared to the folks that don't; is that fair?
25 A Yes, that's fair.
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88 DRAKE (X)
Idaho Power Company
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.
.
1 Q And then also in here you have in orange,
2 you have a percentage of folks segregated by who actually
3 participate as opposed to those who don't and about
4 one-third, 36 percent, of folks actually participate in
5 your programs?
6 A Right.
7 Q Okay; so there's -- okay, I'll just leave
8 it there. I have one last question. Well, so the 36
9 percent, and I think this also comes up, too, but do you
10 agree that that shows room for growth in program
11 participation?
12 A Yes, it does.
13 Q And a lot of that this has come up in
14 other circumstances before and this isn't necessarily in
15 your direct testimony, but if you'll indulge me just for
16 a moment, in other cases we've talked about how the
17 residential class -- a lot of the efficiency budget is
18 going towards the commercial and industrial class. You
19 have great gains there. The residential class there's
20 some room to improve if you look at kind of the balance
21 of where these expenditures are going. You deal with the
22 whole suite, both commercial and industrial and
23 residential, you oversee both of those; is that correct?
24 As part of your job, do you oversee both commercial,
25 industrial and residential programs?
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DRAKE (X)
Idaho Power Company
89
.
.
.
1 A Residential, commercial, industrial and
2 irrigation programs, yes.
3 Q Well, here's my actual question now, but
4 in comparing programs, do you think it's harder to get
5 residential savings as compared to commercial or
6 industrial savings? Does it take more effort, more
7 resources?
8 A I think that's a tough question to
9 quantify for an answer. Each of those four segments of
10 customers are different. Our approaches are different
11 for each of them, and they all come with their easiness
12 and their difficulties to attain attention as well as the
13 investment that needs to happen from the customer side
14 for energy efficiency. They're just different among the
15 four classes.
16 MR. OTTO: Okay, fair enough. That's all
17 the questions I have.
18 COMMISSIONER SMITH: Thank you. Mr.
19 Richardson?
20 MR. RICHARDSON: Madam Chair, I have no
21 questions for this witness.
22 COMMISSIONER SMITH: Mr. Nelson.
23 MR. NELSON: Thank you, no questions.
24 COMMISSIONER SMITH: Mr. Olsen.
25 MR. OLSEN: No questions.
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90 DRAKE (X)
Idaho Power Company
1 COMMISSIONER SMITH: Mr. Purdy..2 MR. PURDY: Yes, I do.
3
4 CROSS-EXAMINATION
5
6 BY MR. PURDY:
7 Q Good morning.
8 A Good morning.
9 Q Ms. Drake, in case you haven't figured
10 out, I know I'm a little hard of hearing and you're
11 somewhat soft-spoken, so I will try to listen hard and if
12 you would kindly speak directly into the mic, I would
13 appreciate it..14 A Sure.
15 Q Beginning on pages 2 and 3 of your
16 rebuttal testimony, you talk about the various low income
17 weatherization programs currently offered by the Company
18 and I want to ask you a few preparatory questions in that
19 regard. Are you familiar, generally familiar, with the
20 intake process whereby the CAP agencies receive and
21 process applications from customers for low income
22 assistance?
23 A I have a basic understanding, yes.
24 Q All right, and is it your understanding.25 that during that intake process, the CAP agencies are
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91 DRAKE (X)
Idaho Power Company
1 required to a certain degree to prioritize the needs of.2 the various applicants?
3 A Yes.
All right, what is your understanding as
5 to the nature of that prioritization?
4 Q
My understanding is that the agencies
7 prioritize based on their clients' claims from age,
6 A
8 number of children in the home, perhaps, income levels,
10
11
12
13.14
9 and so forth.
Q
A
Q
Income levels did you say?
Yes.
Okay, and are you familiar with what the
eligibility criteria for LIHEAP is?
A Not in detail.
15
16
17
18 is?
19
20
21
Q
A
Q
A
Q
A
Pardon?
Not in detail.
Do you know what the income criterion
It's -- just a moment, please.
Sure.
I believe in 2011 it was up to 200 percent
22 of the state low income levels.
.
23
24
25
Q
A
Q
Fifty-one percent?
Two hundred percent.
Of the state low income level?
92 DRAKE (X)
Idaho Power Company
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[phone]
.1 A The national poverty level guidelines.
So that would be federal poverty level; is
Right.
Okay; so it's not your position that
6 LIHEAP is based on 60 percent of the state median income
11
2 Q
I'm not familiar with that criterion.
All right, have you ever heard of that
I know there's a criterion, but I don't
12 have it in hand exactly what it is.
.
3 that right?
4 A
Do you know if there's a difference and
14 what the degree of difference is between 60 percent of
16 poverty level?
17 A
5 Q
15 state median income level and 200 percent of federal
7 level?
8 A
I don't have that. I don't know.
Do you know what the criterion or, I'm
19 sorry, the eligibility criteria are for the Company's
9 Q
Well, as I mentioned, I believe you're
22 asking about the 200 percent of the national poverty
.
10 criterion?
A
13 Q
So are applicants for WAQC eligible up to
25 the point or to the extent that their income falls below,
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93 DRAKE (X)
Idaho Power Company
18 Q
20 WAQC program?
21 A
23 level.
24 Q
.
.
.
1 equal to or below, 200 percent of the federal poverty
2 level?
3 A That's what I believe.
4 Q All right, and, again, you don't know if
5 the eligibility criterion for LIHEAP is different, do
6 you?
7 A No, I don't.
8 Q All right, and finally, you talk in your
9 testimony about the Company's Weatherization Solutions
10 program for eligible customers or something to that
11 effect called Solutions; is that right?
12 A It's called Weatherization Solutions,
13 yes.
14 Q Okay, and what is the criteria for
15 eligibility for Weatherization Solutions?
16 A For year 2011 it's 175 percent to 250
17 percent of the federal poverty guidelines.
18 Q As a practical matter, do- you know if
19 Solutions recipients are generally above 200 percent of
20 the federal poverty level?
21 A I don't know.
22 Q All right, subj ect to check, if you could
23 for the purpose of this question, assuming that the
24 LIHEAP eligibility criteria is stricter, shall we say, it
25 requires a lower income level to be eligible than WAQC,
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94 DRAKE (X)
Idaho Power Company
.
10
11
12
13.
1 might there be a gap between -- a gap for customers who
2 do qualify for WAQC, but make a little too much money to
3 qualify for LIHEAP?
4 A Now, I can't speak to that. To me, it's
5 my understanding that they are two different programs.
6 WAQC is weatherization assistance, LIHEAP also includes
7 financial assistance.
8 Q Did you say they are two different
9 programs
A Yes.
Q -- or you don't know?
A They are two different programs.
Q Yes. All right, are you familiar with the
14 criteria for receiving federal weatherization assistance
15 through what's called the WAP program, W-A-P?
16 A I have a basic understanding of it.
17 Q What is that?
18 A That after the clients come in for a
19 LIHEAP application, they're referred to the
20 weatherization assistance program regardless of their
.
21 heat source, what utility is providing their service and
22 so forth, and from that list of the WAP qualified
23 customers, they could be eligible for Idaho Power's WAQC
24 program.
25 Q Are all of the WAP customers necessarily
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95 DRAKE (X)
Idaho Power Company
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.
.
1 eligible for WAQC?
2 A No.
3 Q All right. Do you know if the Company's
4 WAQC funds have been, well, let's just say for the last
5 fi ve years, fully exhausted by the CAP agencies, spent
6 out, in other words?
7 A For what time period?
8 Q Let's say the last five years.
9 A They've been pretty close. Last year
10 there was a slight carryover balance of about $50,000.
11 Q Do you know what that's attributable to?
12 A It's attributed to funds that are
13 available for buildings, for nonprofit buildings, for
14 energy efficiency weatherization.
15 Q All right, but generally speaking, your
16 testimony is that WAQC funds are spend out every year, at
17 least for the last five?
18 A Yes.
19 Q All right, thank you. If you would turn
20 to page 4 of your rebuttal, please, beginning in response
21 to a question that begins on line 21, and starting on
22 line 23, you provide an answer to the Company's position
23 regarding an increase to WAQC funding. Do you see that
24 there?
25 A Yes.
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96 DRAKE (X)
Idaho Power Company
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.
.
1 Q And if I understand your answer there
2 correctly, the Company does not necessarily obj ect to
3 Communi ty Action's proposal made in this case to increase
4 Idaho Power's WAQC funding by $1.5 million, does it?
5 A The Company doesn't obj ect as long as
6 there's cost-effective savings and those dollars and
7 expenses are recoverable.
8 Q All right, understood. In fact, your
9 answer on line 23 at page 4 states, "provided there is
10 the potential for more cost-effective savings." What do
11 you mean by that?
12 A The WAQC fund pays to agencies based on
13 the weatherization of homes that meet certain criteria
14 for energy efficiency. That criteria needs to be energy
15 efficient. It needs to be able to have a savings
16 investment ratio of greater than one for those funds to
17 be passed through. Those particular projects come with
18 energy efficiency savings and that's what I'm referring
19 to.
20 Q All right, and then on -- if you want a
21 reference, it's page 5 of your rebuttal, beginning on
22 line 14, you state that I believe it is prudent to
23 understand the needs of Idaho Power's customers, and I
24 believe you're talking in reference to the establishment
25 of a WAQC funding level; is that right?
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97 DRAKE (X)
Idaho Power Company
.1 A Correct. I do think that it's important
2 for us to understand what those needs are in our service
9 A
3 terri tory.
4 Q And how long have you been employed by the
Almost 15 years.
Fifteen years. How long have you been
8 working on WAQC-related issues?
5 company?
6 A
Several years.
Several? Less than five?
Eight.
Eight, okay, quite a number. During those
.13 eight years, are you aware that there has ever been
14
7 Q
you alluded to one instance regarding nonprofit business
17 WAQC funding?
18 A
10 Q
15 buildings, but other than that, are you aware of any year
11 A
16 in which the CAP agencies did not fully spend out their
12 Q
Yes, I am. In years 2004, '5, '6 and '7
19 there were balances that were carried over each year.
20 Q Could you give me an idea of the magnitude
21 of those balances?
22 A In year 2004, the balance carryover was
23 300,000. In 2005, the balance carryover was 215,000. In
24 2006, the carryover was 83,000. In 2007, the carryover.25 was 96,000.
98 DRAKE (X)
Idaho Power Company
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.
.
.
20
1 Q Now, that carryover from year to year can
2 be the same dollars, can it not?
3 A I'm not sure I understand what you're
4 saying.
5 Q Are you saying that in every single one of
6 these years that the funding for that year was not
7 exhausted to this extent or that there are some
8 carryovers of these amounts from year to year?
9 A Any amount that's unspent from each year
10 is carried forward, made available for the following
11 year.
12 Q All right; so it becomes fully eligible
13 for WAQC expenditures in the following year?
14 A Correct.
15 Q All right. If in the past five years
16 we've seen a trend toward fully exhausting WAQC funds,
17 would in your mind that constitute a demonstration that
18 there is -- there's more than adequate need for
19 additional WAQC funding?
A It's my understanding that weatherization
21 assistance can come from a variety of resources, not just
22 Idaho Power funds. ARRA funding, as an example, if those
23 weatherization funds are made available can be used to
24 compliment Idaho Power's funds for WAQC, so I can't say
25 that it demonstrates a need.
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99 DRAKE (X)
Idaho Power Company
.
10
1 Well, hasn't ARRA expired?Q
2 A Yes.
3 And have you heard whether it i s possibleQ
4 that our Congress is considering lowering its low income
5 weatherization funding levels to less than pre-ARRA
6 levels, in fact considerably less?
7 I've understood that.A
8 And if that does occur, wouldn't thatQ
9 amplify the need for WAQC funds?
A I believe that's one factor of it. I also
11 looked on CAPAI' s website recently to see that the region
12 in eastern Idaho received a grant of $150,000 privately
.
.
13 per year for 20 years to help with this, so there's a lot
14 of factors that go into what's available for funding for
15 WAQC.
16 Was that 150,000 in Idaho Power's serviceQ
17 terri tory?
18 It was for the agency which covers a partA
19 of our territory.
20 All right. Is it possible that in certainQ
21 years if the CAP agencies believe that they have or are
22 going to fully exhaust their WAQC funds that there might
23 be -- that they might stop taking applications for that
24 particular program or stop proposing funding from that
25 program and consequently, there is an unknown number of
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100 DRAKE (X)
Idaho Power Company
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.
1 customers out there who are otherwise WAQC eligible, but
2 do not receive benefits because the funds are spent?
3 A I don't know.
4 Q Okay. Now, on page 5, if you'd look at
5 line 4 of your rebuttal, please, you are speaking there,
6 if I'm not mistaken, about the cost effectiveness of the
7 WAQC program, and on line 4, you state or mention
8 considerable concerns raised by other utilities in this
9 respect. What other utilities are you speaking of?
10 I'm aware that there's some activity withA
11 Rocky Mountain Power and Avista.
12 What is the nature of those activities?Q
13 All I'm aware of is that there'sA
14 discussion about the cost effectiveness of their
15 programs.
16 Discussion of whose programs by whom?Q
17 Rocky Mountain Power and their costA
18 effectiveness of their similar WAQC program.
19 What about Avista, what do you know aboutQ
20 their concerns, as you put it?
21 I'm aware that they had a recentA
22 evaluation of theirs and it didn't turn out that it was
23 cost effective.
24 Do you know this for a fact or is thisQ
25 based on secondhand information you're receiving?
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101 DRAKE (X)
Idaho Power Company
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.
.
1 A Part is secondhand and part is reading and
2 monitoring the documents that are published.
3 Q I'm sorry, I didn't hear the last part.
4 A Part is monitoring the documents that are
5 published.
6 Q What documents are published?
7 A In various filings. I don't recall
8 exactly what they are.
9 Q Okay. Has Idaho Power done any
10 independent basis -- I'm sorry, strike that. Has Idaho
11 Power conducted any independent evaluation of its own
12 WAQC program as to the cost effectiveness?
13 A We are presently involved in the Oakridge
14 National Lab national study on weatherization assistance
15 programs, and as we filed in our March 15th annual
16 report, we have a schedule for a formal third-party
17 evaluation in 2012.
18 Q Your participation in the Oakridge
19 National Lab study, what does that consist of exactly?
20 A It consists of a sample size of Idaho
21 Power customers that are participating in weatherization
22 as part of their national study.
23 Q So Oakridge has asked Idaho Power for a
24 sample or a sampling of its customers and data pertaining
25 thereto?
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102 DRAKE (X)
Idaho Power Company
1 A Correct..2 Q Has Oakridge asked for a sampling of this
3 kind of customer data from other utili ties as well?
4
5
A It's part of a national study.
Q All right; so do you characterize Idaho
6 Power as being a particularly big player in this study?
7 A No, I would characterize it as a
8 participant in a national study. What we're hoping to
9 gain out of it is insight that we can put into a study of
10 our own through a third party.
11 Q Okay, and if I understand your testimony
12 correctly that you state that the 2010 annual report
13 demonstrates that as far as the Company is concerned.14 right now, WAQC has satisfied cost-effectiveness tests
15 such as total resource costs?
16
17
A That's correct.
Q All right. You mentioned that the Company
18 intends to conduct a further evaluation of WAQC sometime
19 in 2012; is that right?
20
21
A That's right.
Q When do you -- when does the Company
22 intend to commence that evaluation?
23 A As we filed in our annual report, it is
24 scheduled for the latter half of 2012..25 Q When you say it's scheduled for the latter
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103 DRAKE (X)
Idaho Power Company
1 half of 2012, you mean that's the time at which Idaho.2 Power will commence the evaluation process?
3 A Correct.
4 Q Do you have any idea when Idaho Power
5 anticipates completing that process and reporting to the
6 Commission?
7 A We anticipate that taking a few months,
8 both from the launch to the completion and be able to
9 provide that in our following report the following year
10 in 2013.
11 Q Given the timeline you just outlined, is
12 it possible that any conclusion and ultimate report
13 provided to the Commission might not be forthcoming until.14 the year 2013, is that possible?
15 A We'll have the results at the end of 2012
16 is what we're anticipating. If there's a need for them
17 sooner than when we publish our DSM annual report or the
18 weatherization report, they can be provided.
19 Q You'll have the results at the end of
20 2012, what do you intend to do with those reports once
21 you have them?
22 A Learn from the results and if there's
23 program changes that are pointed out from that process be
24 able to work and incorporate those changes into our.25 program and then also report on that as part of our 2012
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104 DRAKE (X)
Idaho Power Company
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1 acti vi ties in our annual report.
2 And that annual report would be filedQ
3 when?
4 We have a DSM annual report that i s filedA
5 March 15th every year, and we also follow it with the
6 weatherization assistance report.
7 So those reports would be filed sometimeQ
8 in 2013, would they not?
9 A Yes.
10 Thank you. If you could look at -- well,Q
11 it begins on the bottom of page 6 and continues over on
12 to page 7, you question Ms. Ottens' calculations of the
13 current waiting list for WAQC eligible customers. Do you
14 see that?
15 A Yes.
16 And if I understood your testimonyQ
17 correctly, Idaho Power -- in fact, if you refer back now
18 to page 6, line 20, you state that Idaho Power believes
19 that if there is a need for increased WAQC funding, it
20 could only be shown by the waiting list for WAQC. Do you
21 see that?
22 That's not how I stated it. I said thatA
23 it could be calculated by a waiting list, not that it
24 should be.
25 I i m sorry, maybe I misspoke. It could beQ
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105 DRAKE (X)
Idaho Power Company
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1 shown or calculated?
2 A Yes.
3 Q Regardless of whether that waiting list is
4 ul timately shown to be 20 years or two years, is the
5 Company offering to essentially eliminate that list once
6 it's shown to its satisfaction what that -- how long that
7 list is?
8 A I don't believe that's for the Company to
9 decide.
10 Q Well, what would the Company's position be
11 in that case?
12 A Could you rephrase the question?
13 Q Sure. Regardless of whether it's
14 ul timately determined that the actual waiting list for
15 WAQC eligible customers is 20 years or two years or any
16 other time period, is it the Company's position that it
17 would then once that determination is made bring that
18 list up current so that there is no longer a waiting
19 list?
20 A The Company's position is purely on cost
21 effectiveness and recovery of expenses, so to the degree
22 that the program itself continues to be cost effective,
23 there i s energy efficiency opportunities that are out
24 there and the Company is allowed to recover those
25 expenses, that's what the Company's position is.
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Idaho Power Company
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1 Q I understand that. You said it's based
2 purely on cost effectiveness and recovery of those funds,
3 so it's not based on need?
4 A No.
5 Q All right; so you wouldn't include need in
6 that list?
7 A No, what I'm saying is that those are the
8 two primary characteristics that we're interested in in
9 this case. To be able to assess what that need is on
10 behalf of all the customers paying into these expenses is
11 important to us.
12 Q Okay. I think it's fair to say that in
13 your testimony you characterize as the Company's
14 characterize the Company's relationship with the CAP
15 agencies as being a generally posi ti ve one; is that
16 fair?
17
18
A Yes.
Q And you state that there is a
19 weatherization or WAQC specialist for the Company that
20 works with the CAP agencies; is that right?
21
22
23
24
25
A Yes.
Q Who is that person?
A The employee's name is Cheryl Powley.
Q Okay, and in that relationship and working
together closely, do you believe that Ms. Powley and
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Idaho Power Company
1 therefore Idaho Power becomes aware of the nature of the.2 current WAQC waiting list?
3 A That's a pretty broad question. We
4 understand that there's a waiting list. We don't know
5 what the waiting list is or how it's computed.
6 Q All right, then let me focus it down quite
7 a bit. I guess I'm -- challenge this if you wish, but my
8 characterization of your testimony is that you're
9 cri tiquing Ms. Ottens' calculation of the WAQC waiting
10 list, but you're not being very specific in how Idaho
11 Power plans to go about determining what the real waiting
12 list is; is that a fair characterization of your
13 testimony?.14 A Ms. Ottens' description of parity to come
15 up with what should satisfy a waiting list and the
16 document provided about what the computation is for a
17 wai ting list contain information that we don't agree
18 with, in particular, the Exhibit 49.
19 Q Excuse me, Madam Chair.
20 (Pause in proceedings.)
21 Q BY MR. PURDY: All right, I'd like to ask
22 you a few questions about the Company's Solutions
23 program, specifically I'm referring to page 10 of your
24 rebuttal. It states that in 2008, the Company.25 implemented this program and I believe elsewhere you
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108 DRAKE (X)
Idaho Power Company
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1 testify that the budgeted amount has grown and for 2012
2 you estimate it will be $1 million; is that right?
3 A That's right. In 2011, that program will
4 spend about 700,000 and in 2012 approximately a
5 million.
6 Q In fact, if you look at page 10, line 11,
7 there's a question to you, "Has Idaho Power increased the
8 level of funding for WAQC or for other special needs
9 customers since 2003?" And then your answer is yes, and
10 you talk about Solutions; is that right?
11 A Correct.
Q But Solutions isn't a change to WAQC at
all,is it?It's an entirely separate program.
A That's right.
Q All right,and the criteria are different
for the two,are they not?
12
13
14
15
16
17 A Yes.
18 Q And if we have -- if there is, as I
19 discussed with you earlier, some gap of customers whose
20 weatherization needs have not been met and those are low
21 income WAQC eligible customers, doesn't it make sense
22 from a policy standpoint for the Company to address the
23 needs of those poorer, relatively poorer, people first
.24 before moving up a notch in income?
25 A The Company doesn't make a criteria
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Idaho Power Company
1 decision on that..2 Q I'm sorry, I didn't understand that.
3 A The Company doesn't make a decision on
4 that. Actually, in response to a CAP agency request, it
5 described a situation where there was a customer in need,
6 a senior customer that was $30.00 over the poverty
7 guidelines, could we create a solution program that would
8 assist in those needs, and this program actually overlaps
9 the WAQC criteria, the weatherization criteria, and also
10 provides other opportunities for those that haven't been
11 prioritized, but have been waiting to receive assistance,
12 and in response to your question, on page 12 of my
13 testimony, starting on line 18, that's the full answer..14 We have contributed through WAQC funding or our customers
15 have contributed 1.2 million. Solutions is forecast to
16 be 700,000. Easy Savings program, which is the energy
17 efficiency education program for low income customers
18 that the agencies provide, $125,000, so those are the
19 collective efforts that have taken place to look at the
20 special needs customers of Idaho Power.
21 Q All right, and I'm not saying Solutions is
22 a bad program. My client is not saying that either. My
23 question was simply to the extent that there are
24 customers whose income is below that eligibility bottom.25 line for Solutions, wouldn' t it make sense to meet those
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110 DRAKE (X)
Idaho Power Company
..
1 customers' needs before increasing Solutions' funding?
2 MS. NORDSTROM: I believe this question
3 has been asked and answered.
4 COMMISSIONER SMITH: The witness may give
5 her opinion one more time.
6 THE WITNESS: The Company doesn't make a
7 decision criteria based on income. What we are making is
8 our programs available for income qualified as the
9 agencies see fit. We have a wide variety of offerings
10 for the special needs customers of Idaho Power.
11
.
.
Q BY MR. PURDY: So you don't base decisions
12 based on income; is that what you said?
13 A Yes.
14 The Company implemented the SolutionsQ
15 program of its own accord, did it not?
16 A Yes.
17 It didn't need Commission authority to doQ
18 that, did it?
19 After looking at the evaluation of theA
20 pilot and knowing that it met the cost-effectiveness
21 criteria, it was within our realms to offer that
22 program.
23 Similarly, the Company could increase WAQCQ
24 funding if it desired, could it not?
25 If the Commission and its customersA
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111 DRAKE (X)
Idaho Power Company
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1 support that, yes.
2 Q Did the Commission support the Solutions
3 program? Was there a formal proceeding obtaining
4 approval from the Commission for that program?
5 A As a rider-funded program, we didn't seek
6 the Commission's approval for it, but we did provide
7 evidence of its cost effectiveness in our annual report
8 which was determined prudent.
9 Q You referred on page 12 to the Easy
10 Savings Program, is that actually a low income program in
11 the sense that WAQC is, 200 percent of federal poverty
12 level or below?
13 A It's my understanding that those funds are
14 made available to the agencies to use for -- to assist
15 their low income clients.
16 Q Easy Savings funds are not available and
17 the program is not available to non-low income customers;
18 is that what you're saying?
19 A What I'm saying is those dollars were
20 directed for those agencies to be used for materials for
21 low income customers.
22 Q Does Easy Savings also serve non-low
23 income customers, if you know?
24
25
A They're meant to be served by the CAP
agencies. I don't know whether they're low income
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112 DRAKE (X)
Idaho Power Company
.1 qualified or not at that point.
2 On page 15 of your rebuttal, beginning onQ
3 line 1, in response to a question beginning on line -- on
4 page 14 you state that CAPAI has not requested the
5 Commission increase funding of WAQC since 2003; is that
6 right?
7 A Right.
8 Do you know every conversation orQ
9 communication that took place since 2003 between CAPAI
10 and Idaho Power's personnel, including senior management,
11 regarding CAPAI funding or, I'm sorry, WAQC funding?
12
.
.
A No, I don't know every conversation that
13 took place.
14 Is it possible that there were attemptsQ
15 made by CAPAI to obtain additional funding from the
16 Company since 2003?
17 A I don't know.
18 All right, and then back to page 15, lineQ
19 1, you state that in 2007, Idaho Power and CAPAI filed
20 jointly to continue the funding level for WAQC.
21 A Correct.
22 Do you have any idea -- I'm sorry, youQ
23 state that the case number is IPC-E-07-09. Have you
24 reviewed that case history at all?
25 A Not recently.
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.1 Q You cite Order No. 29505, have you
Not recently.
If I were to tell you that this joint
5 application was a result of the fact that the
2 reviewed that?
6 Commission's original 2003 case Order indicated that WAQC
3 A
7 would expire unless a j oint application or some
4 Q
8 application was made to continue it and this was simply a
9 filing done for that purpose, would that surprise you?
10
11
A
Q
12 Madam Chair.
That wouldn't surprise me.
All right, thank you. Excuse me
13 (Pause in proceedings.).
.
14
15 very much.
16
17
18 have questions?
19
20
21 .
22
23 BY MR. MILLER:
24 Q
MR. PURDY: That's all I have. Thank you
COMMISSIONER SMITH: Thank you.
COMMISSIONER SMITH: Mr. Miller, do you
MR. MILLER: Just a couple.
CROSS-EXAMINATION
Could I direct your attention to Exhibit
114 DRAKE (X)
Idaho Power Company
25 50?
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10
.
.
1 COMMISSIONER SMITH: Mr. Miller, you're
2 going to have to speak very loudly.
3 MR. MILLER: I'll do my best. Is that
4 good enough? No? We're pretty close to maximum volume.
5 I suppose if the Commission wanted to take a break, I
6 could rearrange myself during the break to be at a
7 microphone.
8 COMMISSIONER SMITH: Is this going to be
9 extensive? I said is it going to be extensive?
MR. MILLER: No. Well, I'll try.
11 BY MR. MILLER: With respect to ExhibitQ
12 50, as I understand it, the exhibit on lines 6, 7 and 8
13 shows forecasted expenses of the DSM program over a
14 number of years; is that correct?
15 A Yes.
16 In the course of your work before theQ
17 Commission and in regulation, have you become familiar
18 with the phrase known and measurable changes?
19 A Yes.
20 For the purpose of my question, would youQ
21 agree with me that known and measurable refers to an
22 allowance for future expenses above test year expenses if
23 the future expenses are certain to occur and are certain
24 in amount? I'm curious whether in your opinion the
25 expenses shown on lines 6, 7 and 8 over a period of years
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115 DRAKE (X)
Idaho Power Company
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1 are known and measurable using that definition?
2 A The expenses listed in the years in this
3 particular table are what we are aware of and what we are
4 planning for. It's purely a forecast.
5 Q But using the definition that I have given
6 you, you have not characterized them as certain to occur
7 and certain in amount?
8 A No.
9 MR. MILLER: That's all I have. Thank
10 you.
11 COMMISSIONER SMITH: Ms. Kyler.
12 MS. KYLER: Yes, I have a few. I'll try
13 to be loud as well.
14
15 CROSS-EXAMINATION
16
17 BY MS. KYLER:
18 Q I have a few questions related to your
19 Exhibit No. 50 as well. I'm looking at the forecast with
20 the funding rate of 4.0 percent, those numbers.
21 A Uh-huh.
22 Q Would you agree that 3.4 is 85 percent of
23 4.0?
24 A Yes.
25 It's a basic math question.Q
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116 DRAKE (X)
Idaho Power Company
.1
2
A
Q
Yes.
And Kroger's recommendation in this case
3 is a 3.4 percent funding level for the energy efficiency
4 rider?
5
6
A
Q
That's my understanding.
So there would be a 15 percent difference
7 between rider funding under Kroger's 3.4 percent funding
8 recommendation and Staff's 4.0 recommendation?
9
10
11
12
A
Q
A
Q
Okay.
Would you accept that?
Sure.
Okay, looking at your line 16 related to
13 rider funding, in 2012 with a funding rate of 4.0.14 percent, your numbers reflect that the rider funding
15 would be about $34 million; correct?
16
17
18 million?
19
20
21
22
A
Q
A
Q
A
Q
Yes.
And 15 percent of $34 million is about $5
Sure.
Would you accept that, subject to check?
That's fine.
Okay. For 2013, your numbers reflect that
23 with a 4.0 funding rate, the rider funding would be about
24 $34 million as well; correct?.25 A Yes.
117 DRAKE (X)
Idaho Power Company
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10
11
1 Q And 15 percent of that, subj ect to check,
2 is approximately $5 million?
3 A Yes.
4 Q Okay, and in 2014, your numbers reflect
5 wi th the 4.0 funding rate the rider funding would be
6 approximately $35 million?
7 Correct.A
8 And 15 percent of that, subject to check,Q
9 is about $5 million as well; correct?
A Correct.
Q So 5 million, plus 5 million, plus 5
12 million is about $15 million?
13.14
A Correct.
Q And so Kroger's proposal would reduce
15 these numbers in 2014 by about $15 million; correct?
.
16 A Correct.
17 Q And Staff's proposal would lead to a or
18 this proposal, these numbers would lead to a $15.8
19 million surplus for the rider in 2014? I guess that's
20 line 23.
21 Correct.A
22 Q So Kroger's 3. 4 percent funding proposal
23 would cover this $6 million rider deficit in the fund
24 balance here on line 23 reflected for 2011?
25 I'm sorry, I'm not tracking with you.A
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118 DRAKE (X)
Idaho Power Company
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10
11
.
.
1 I'll rephrase; so we've agreed thatQ
2 Kroger's proposal would reduce the rider funding by about
3 $15 million by 2014; is that correct?
4 A Correct.
5 And the fund balance reflected in theseQ
6 numbers for 2014 would be $15.8 million, approximately?
7 The way they're listed in this report,A
8 yes.
9 Yes, in this forecast.Q
A Yes.
Q So Kroger's $15 million difference
12 would -- I guess what I'm trying to get at, it would make
13 this fund balance, it would break it even in 2014; is
14 that correct?
15 Well, there's a lot of factors that goA
16 into this, as I've already described. This is purely a
17 forecast, and it covers a few years listed on here and
18 there's a number of factors that can change from year to
19 year.
20 Well, based on this forecast, wouldQ
21 Kroger's proposal break the numbers even by 2014, with
22 those factors in mind?
23 Subj ect to check all the calculations,A
24 yes.
25 MS. KYLER: Okay, no further questions.
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119 DRAKE (X)
Idaho Power Company
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10
1 COMMISSIONER SMITH: Thank you.
2 Mr. Howeii, do you have questions?
3 MR. HOWELL: Yes, ma' am, I do, but I was
4 wondering if we could take a break at this moment.
5 COMMISSIONER SMITH: That's certainly my
6 intention. Let's come back at 20 past.
7 (Recess. )
8 (Staff Exhibit No. 104 was marked for
9 identification. )
COMMISSIONER SMITH: We are at the point
11 of Mr. Howell having questions for Ms. Drake.
12
.
.
MR. HOWELL: Thank you, Madam Chairman.
13
14 CROSS-EXAMINATION
15
16 BY MR. HOWELL:
17 Q Ms. Drake, on page 8 of your testimony on
18 lines 22 and 23, you make a calculation regarding the
19 number of homes weatherized through CAP agencies in Idaho
20 Power's service area. Do you see that on lines 22 and
21 23?
22 Yes, I do.A
23 How did you make that calculation?Q
24 I'll refer to my Exhibit 49. ThatA
25 calculation is comprised of the weatherization agencies
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120 DRAKE (X)
Idaho Power Company
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1 listed there on the left and the row -- excuse me, the
2 column that's labeled "2008 Pre Arra Annual Production,"
3 it's the sum of those production minus the first agency
4 which is listed as CAP.
5 Q And the column on the left, does that in
6 fact list all the Community Action agencies in the
7 state?
8 A I believe so.
9 Q Okay, and so you merely totaled that
10 column under the pre ARRA annual production and then
11 subtracted the 308 projects for the CAP and why did you
12 subtract that?
13 The first agency listed, C-A- P, is not anA
14 agency that services Idaho Power's service terri tory.
15 Q Okay, and during the break, I passed out
16 what has been marked as Staff Exhibit 104. I put a copy
17 up there for you and a copy for the Commission and
18 distributed a copy to all the parties. I'm wondering if
19 you could look at page 1 of Staff Exhibit what's marked
20 104.
21 A Yes.
22 Q And in the bottom right-hand corner of the
23 state or the southeast, that CAP agency area is nominally
24 referred to in the box as the SouthEastern Community
25 Action Partnership; is that correct?
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121 DRAKE (X)
Idaho Power Company
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.
.
18
1 A Yes.
2 Q Then it lists in the box the counties
3 actually served by that community action agency; is that
4 correct?
5 A Yes. .
6 Q And does Idaho Power serve all electric
7 customers in those counties?
8 A No. We serve in all the counties except
9 for Bear Lake, Caribou and Franklin.
10 Q And those counties and other areas would
11 be served by other suppliers?
12 A Yes.
13 Q Such as PacifiCorp?
14 A Yes.
15 Q Such as electric co-ops or
16 municipalities?
17 A That's correct.
Q So then the number which occurs in the
19 column titled "2008 Pre ARRA Annual Production," 167,
20 that number, would it not be too large because it
21 includes weatherizations that may have occurred outside
22 of Idaho Power's service territory in those counties
23 served by that CAP?
24
25
A That's correct. It would also include a
number of production pieces that may not be only
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122 DRAKE (X)
Idaho Power Company
.
10
11
1 electrically heated.
2 Correct. Now, turning to page 2 of what'sQ
3 been marked as Staff Exhibit 104, that shows you the
4 Eastern Idaho Specialty Services Agency, another CAP
5 agency that serves northeastern Idaho in the counties
6 indicated in the box; is that correct?
7 A Yes.
8 And does Idaho Power serve all of thoseQ
9 counties in that CAP agency area?
A No, the only county we serve is Lemhi.
Q So then, again, referring to your Exhibit
12 49 under the column heading "EICAP" and then rolling
.
.
13 over, that number would be in the 2008 Pre ARRA Annual
14 Production column 247, would it not?
15 Right.A
16 And so in your opinion, does that numberQ
17 represent weatherizations in areas that would include
18 outside the Idaho Power service territory?
19 A Yes.
20 Now, at the top of your Exhibit 49, theQ
21 Company has characterized that this is Attachment A to
22 CAPAI' s response to an Idaho Power Company production
23 request; is that correct?
24 That's correct.A
25 And since the provision of this answer toQ
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123 DRAKE (X)
Idaho Power Company
.1 your production request, has the Company -- has CAPAI
2 supplemented the information contained in this chart?
3 A No.
4 Q So turning your attention again to the
5 2008 Pre ARRA Annual Production, would it be fair to say
6 that the data contained in that column is three years
7 old?
8 A I believe so.
9 Well, would that be your opinion given itsQ
10 marking as 2008?
11
12
A Right.
Q Okay. Now, again focusing on the third
13 column, it's headed "Pre ARRA Annual Production," what.
15
14 does A-R-R-A stand for?
A American Reinvestment Recovery
16 something.
17 COMMISSIONER KJELLANDER: Act.
18 THE WITNESS: Act, thank you.
19 Q BY MR. HOWELL: And do you or -- well, I
20 guess you're the Company witness. Do you know the amount
.
21 of American Recovery and Reinvestment Act funds that the
22 CAPs received for weatherization programs?
23 A I don't.
24 Q All right, if I could have you -- well,
25 one more question regarding Exhibit 49. If I were to
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124 DRAKE (X)
Idaho Power Company
.1 look at the El-Ada line dealing with the number on
2 wai ting lists, looking at this, do you know the current
3 amount on El-Ada' s waiting listing as of 2011 or any
4 month this year?
5 No, I don't.A
6 All right, if i could have you turn toQ
7 page 5 of your direct testimony, specifically if I were
8 to direct your attention to lines 14 through 20, is it
9 your opinion that solely funding low income
10 weatherization proj ects should be based on relative
.
.
11 parity between the three electrical utilities?
12 I'm sorry, I was reading while you wereA
13 asking the question. Would you repeat the question,
14 please?
15 Is it your testimony that it is reasonableQ
16 and appropriate to base the relative funding of Idaho
17 Power's weatherization program based upon the relative
18 pari ty between the three electric utili ties?
19 No, Idaho Power doesn't believe thatA
20 pari ty is a good measure to do that.
21 And don't you say on lines 18 through 20Q
22 that in fact, the demand for low income services may vary
23 significantly between utilities?
24 Yes.A
25 Q And in fact, on page 6 you indicated that
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125 DRAKE (X)
Idaho Power Company
.
10
1 in your opinion, or the Company's opinion, funding should
2 be based on a number of factors; is that correct?
3 A Yes.
4 And what are those factors?Q
5 COMMISSIONER SMITH: Is this
6 cross-examination, Mr. Howell?
7 MR. HOWELL: Yes.
8 COMMISSIONER SMITH: Are you sure?
9 MR. HOWELL: I'm positive.
MR. PURDY: Madam Chair, I do obj ect,
11 albeit rather late, on the basis that no, this is not
12 cross-examination. This seems to be a sympathetic
.
.
13 softball between two parties on the same side of an
14 issue. Furthermore, as stated in our response to Staff's
15 motion to strike, it is CAPAI' s position that, right or
16 wrong, we effectively carry the burden of proof in this
17 case, and while having Staff cross witnesses last might
18 normally make sense, in this case I respectfully suggest
19 that perhaps because we do carry the burden on WAQC
20 issues, low income issues, that we be allowed to cross
21 last, excuse me.
22 COMMISSIONER SMITH: Well, Mr. Purdy, I'm
23 somewhat sympathetic to what you're saying, but I think
24 we need to allow Mr. Howell to continue and certainly, if
25 questions come to you, we will come back to you for those
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126 DRAKE (X)
Idaho Power Company
.
.
.
14
15
16
1 if something comes up in the meantime.
2 MR. PURDY: Thank you.
3 COMMISSIONER SMITH: I would caution,
4 Mr. Howell, that the purpose of cross-examination is not
5 to bring out evidence that agrees with your position.
6 That's not right, but you know what I'm talking about.
7 MR. HOWELL: Well, we may have different
8 opinions, but I understand what you're talking about.
9 Q BY MR. HOWELL: Let me direct your
10 attention to the Company's Weatherization Solutions
11 program. Isn't it true that for 2012, the Company
12 intends to contribute $1 million to that program?
13 A We set aside a million dollars in our
budget for that, yes.
Q And how is Solutions funded?
A It's through the energy efficiency
17 rider.
18 Q Through the rider and not through base
19 rates?
20
21
A That's correct.
Q And has that amount contributed since its
22 inception or increased since in its inception in 2008?
23
24
25
A Yes, it has.
MR. HOWELL: Thank you, Madam Chairman. I
have no further questions.
CSB REPORTING
[phone]
127 DRAKE (X)
Idaho Power Company
.1 COMMISSIONER SMITH: Thank you,
2 Mr. Howell. Mr. Purdy.
3 MR. PURDY: If I may be allowed, just very
4 briefly.
5
6 RECROSS-EXAMINATION
7
8 BY MR. PURDY:
9 Ms. Drake, regarding Mr. Howell'sQ
10 cross-examination of you on Exhibit 49 and the list
11 there, he indicated that these, some of these, numbers
.
.
12 are three years old. In fact, at least for the purpose
13 of the pre ARRA numbers, isn't that necessary because
14 ARRA was initiated years ago?
15 You know, it's not my exhibit, so...A
16 Exhibi t 49 is not your exhibit?Q
17 What I mean is that the way it'sA
18 characterized with 2008 pre ARRA funds came prepared that
19 way.
20 Do you know whether Exhibit 49 representsQ
21 all low income customers who would otherwise be eligible
22 for WAQC or only a limited portion of those customers?
23 A I don't know.
24 Is it possible that the numbers containedQ
25 in Exhibit 49 are for LIHEAP applicants and as we
CSB REPORTING
[phone]
128 DRAKE (X)
Idaho Power Company
.1 discussed earlier, there might be a difference between
2 LIHEAP eligible and WAQC eligible customers?
3 I don't know.A
4 All right, and regarding the use of parityQ
5 versus demand for setting LIWA funding, did you not
6 previously testify that you don't actually know what the
7 current demand is?
8 A Correct.
9 Okay, and finally, Mr. Howell pointed outQ
10 that the Solutions program is funded through the DSM
11 tariff rider and not base rates; is that right?
12
13.
.
A Yes.
Q Do you know that Staff in its settlement
14 stipulation agreed to a reduction in the DSM tariff
15 rider?
16 A Yes.
17 And the Company agreed with that asQ
18 well?
19 A Yes.
20 MR. PURDY: All right. That's all I have.
21 Thank you.
22 COMMISSIONER SMITH: Do we have questions
23 from the Commissioners?
24 COMMISSIONER REDFORD:Yes.
25 COMMISSIONER SMITH: Commissioner Redford.
CSB REPORTING
[phone]
129 DRAKE (X)
Idaho Power Company
1 EXAMINATION.2
3 BY COMMISSIONER REDFORD:
4 Q Ms. Drake, I want to get back into the
5 numbers here, if I could, and if you're not the witness,
6 please tell me, but it appears in your Exhibit 50, your
7 Exhibit 50 identifies the expected fund balance and
8 tariff rider amounts at 4. 75 percent and 4 percent.
9 A Yes.
10 Q It's my understanding that at 4 percent,
11 this will nearly payoff the 2012 negative balance and
12 establish a forecast position balance for 2013.
13 A That's correct..14 Q Why isn't this why isn't 4 percent
15 sufficient as opposed to 4. 75 percent? Because it's my
16 understanding that would not the 3.4 percent as suggested
17 by Kroger and others be sufficient to payoff the
18 negati ve balance and so my question is why wouldn't a
19 rider of 3.4 percent to 4.0 amount be appropriate? Where
20 does the 75 percent come from or .75 percent come from?
21 A Well, Commissioner Redford, let me see if
22 I can explain. What we're looking at here is in terms of
23 a forecast and we also have, as I put in my testimony, a
24 plan for a potential study at the beginning of 2012 that.25 will incorporate any new identified energy efficiency
CSB REPORTING
[phone]
130 DRAKE (Com)
Idaho Power Company
.
.
.
1 savings into the future years into the next IRP process,
2 so with the expenses as they're outlined here in the near
3 future as well as incorporating any upcoming energy
4 efficiency opportunities, we prefer to keep it at 4
5 percent and not go below that.
6 And you want 4. 75?Q
7 4.75 is what it is today.A
8 Okay; so the difference is based uponQ
9 simply -- I shouldn't say simply, but a forecast?
10 That's correct.A
11 Why isn't it better to use previous yearsQ
12 to calculate what the tariff rider should be instead of
13 going ahead with 4 -- in the future years in your
14 forecast to 4 percent? I guess I'm challenging your
15 forecast. What's the difference?
16 A Commissioner Redford, could you reask the
17 question? I'm not sure that I'm following what your
18 question is.
19 Okay. You're saying your 4 percent isQ
20 based upon a forecast and that forecast is somewhere
21 between, the difference between, 3.4 and 4 percent. Do
22 you agree with that?
23 No. What I'm suggesting is that theA
24 difference between the 4 percent and 4. 75, which 4. 75 is
25 what we're operating under today, really looks at the
CSB REPORTING
[phone]
131 DRAKE (Com)
Idaho Power Company
1 balance and where it comes closer to zero in flipping.2 over out of a negative balance into a posi ti ve balance.
3 The amount of effort and activity and planned energy
4 efficiency savings and demand response stays constant
5 throughout the years.
6 Q But you're trying to be as accurate as
7 possible; is that correct?
8 A Well, we're trying to get as close to zero
9 as we can, but --
10 Q Okay, and Kroger's testimony and others
11 say that they think that 3.4 percent will put us down to
12 a zero percent negative balance. Where do you take
13 exception to that?.14 A It's really in the timing, Commissioner
15 Redford. We anticipate having -- coming out of the
16 balance with just a slight variation between 2012 and
17 2013.
18 Q If the Company's future DSM expenditure
19 levels were assumed to be at the level identified in your
20 Table 50 and you wanted to eliminate the negative account
21 balance by the end of 2014, at what percent would the
22 rider need to be set?
23 A I don't have that computation in front of
24 me..25 Q Is there anyone with the Company that has
CSB REPORTING
[phone]
132 DRAKE (Com)
Idaho Power Company
.
10
1 that computation?
2 A Yes.
3 Q Who?
4 A Mr. Pengilly has that. We don't have
5 information with us handy, but we can certainly provide
6 it.
7 Well, if you would, I'd sure appreciate itQ
8 and I don't believe Mr. Pengilly is a witness.
9 A Correct.
COMMISSIONER REDFORD:Okay, thank you.
11 I don't have any further questions.
.
.
12 COMMISSIONER SMITH: Do you have any
13 redirect?
14 MS. NORDSTROM: I do.
15
16 REDIRECT EXAINATION
17
18 BY MS. NORDSTROM:
19 Ms. Drake, could you tell me how the WAQCQ
20 program is funded in rates currently?
21 A It's part of our base rates.
22 So it is not funded with rider funds?Q
23 A That's correct.
24 When we have wanted to change the level ofQ
25 funding for the WAQC program in the past, has that been
CSB REPORTING
[phone]
133 DRAKE (Di)
Idaho Power Company
1 done by Commission order?.2 A Yes, it has.
3 Q And would that be the Company's
4 expectation going forward?
5 A Yes, it would.
6 Q There was some discussion in some of the
7 cross-examination about a potential study and the fact
8 that Idaho Power has exceeded proj ected cost savings in
9 the past. Do you anticipate that the Company will expand
10 its program offerings in future years?
11 A Yes, we do. We presently have an
12 expansion that's part of our 2011 IRP as described in
13 these figures, but we also are conducting a potential.14 study to help us identify the additional potential that's
15 out there yet to be claimed.
16 Q In your opinion, will reducing the energy
17 efficiency rider below 4 percent allow the Company to
18 adequately fund those expanded measures and anticipated
19 growth in energy efficiency programs?
20 A The Company has not been slowed down at
21 all in our efforts for achieving and pursuing all
22 cost-effective energy efficiency. What we hope to do is
23 try to hover around the zero mark on a balance
24 perspective going forward which we've articulated here,.25 but knowing what's on the horizon for the level of
CSB REPORTING
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134 DRAKE (Di)
Idaho Power Company
1 activities that we have yet to pursue, going below 4.2 percent is something that we don i t want to do.
3 Q Do these numbers that appear in your
4 Exhibi t 50, do they incorporate additional measures that
5 the Company anticipates will be implemented in future
6 years?
7 A No, it only includes up to the 2011 IRP,
8 so anything beyond that for future years hasn't been
10
9 identified yet.
11 you.
12
13.
MS. NORDSTROM: That's all I have. Thank
COMMISSIONER SMITH: Thank you and thank
you, Ms. Drake, for your help.
14
15
16
THE WITNESS: Thank you.
(The witness left the stand.)
MR. WILLIAMS: Madam Chair, at this time
17 we would like to call Mr. Warren Kline to the stand.
.
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135 DRAKE (Di)
Idaho Power Company
CSB REPORTING
[phone]
.
10
11
1 WARREN KLINE,
2 produced as a witness at the instance of the Idaho Power
3 Company, having been first duly sworn, was examined and
4 testified as follows:
5
6 DIRECT EXAINATION
7
8 BY MR. WILLIAMS:
9 Good morning, Mr. Kline.Q
A Good morning.
Q Could you please state your name and spell
12 your last for the record?
13.
.
A My name is Warren Kline, K-l-i-n-e.
14 By whom are you employed and in whatQ
15 capacity?
16 I'm employed by Idaho Power Company in theA
17 capacity of vice president of customer operations.
18 Are you the same Warren Kline that filedQ
19 rebuttal testimony on November 16, 2011?
20 A I am.
21 And if I were to ask you here today underQ
22 oath the same questions set forth in your prefiled
23 testimony, would your answers be the same?
24 Yes, they would.A
25 Q Do you have any corrections or
CSB REPORTING
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136 KLINE (Di)
Idaho Power Company
1 modifications to make to your testimony?.2 A No, I do not.
MR. WILLIAMS: Madam Chair, at this time I
4 move that the rebuttal testimony of Warren Kline be
3
5 spread upon the record as if read.
6 COMMISSIONER SMITH: If there is no
7 objection, it is so ordered.
8 (The following pre filed rebuttal testimony
9 of Mr. Warren Kline is spread upon the record.)
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CSB REPORTING
[phone]
137 KLINE (Di)
Idaho Power Company
.1 Q.Please state your name and business address.
2 A.My name is Warren Kline and my business address
3 is 1221 West Idaho Street, Boise, Idaho.
4 Q.Are you the same Warren Kline that submitted
5 direct testimony in this proceeding?
6 A.Yes, I am.
7 Q.What is the purpose of your rebuttal testimony?
8 A.I will describe Idaho Power Company's (" Idaho
9 Power" or "Company" ) facilities charge service option
10 from a customer service standpoint, particularly some of
11 the issues associated with mixed ownership of facilities
12 and with Company personnel maintaining customer-owned
.13 facili ties. I will also respond to the characterization
.
14 made by the Industrial Customers of Idaho Power (" ICIP")
15 that the Company's facilities charge option is an unfair
16 business practice.
17 What issues are you not discussing in yourQ.
18 rebuttal testimony?
19 I am not testifying about any tariff language,A.
20 the appropriate rate or methodology for the facilities
21 charge buyout, or any other regulatory or ratemaking
22 matters. Company witness Mr. Scott Sparks will testify
23 regarding the facilities charge rate methodology and
24 Company witness Mr. Michael Youngblood will testify
25
138 KLINE, REB 1
Idaho Power Company
.
.
.
1 regarding the facilities charge buyout option as well as
2 the regulatory and ratemaking issues associated with
3 facilities charges.
4 Q.Please describe at a very high level the
5 purpose of the facilities charge.
6 A.The facilities charge is a service that allows
7 primary and transmission service level customers the
8 option, when agreed to by the Company, of having the
9 electrical facilities necessary to supply service beyond
10 the Company's point of delivery owned, operated, and
11 maintained by Idaho Power in consideration of the
12 customer paying a monthly charge. It is very important
13 to note that Idaho Power provides this service at its
14 option to the approximately 240 Idaho jurisdictional
15 customers that have requested it.
16 Q.Please describe what you mean when you say
17 "beyond the Company's point of delivery."
18 A.The point of delivery is the point between the
19 facilities owned by the Company and the facilities owned
20 by the customer. For primary and transmission customers,
21 the point of delivery is most commonly the customer's
22 property line.
23 Q.Are all primary or transmission service level
24 customers obligated to pay a facilities charge?
25
139 KLINE, REB 2
Idaho Power Company
1 A.No. The general rule is that the Company.2 delivers energy to a point at the customer's location
3 and, if necessary, the transformation of power to the
4 vol tage at which it is to be used is the customer's
5 responsibility.Addi tionally, the service provisions
6 for facilities beyond the point of delivery detailed in
7 Idaho Power's Schedules 9 and 19 state:
8 At the option of the Company, transformers and
other facilities installed beyond the Point of
9 Delivery to provide Primary or Transmission
Service may be owned, operated, and maintained
10 by the Company in consideration of the Customer
paying a Facilities Charge to the Company.
11
12 Customers pay a facilities charge only if the
13 Company is providing the facilities charge service..14 Q. Please explain why Idaho Power provides a
15 facili ties charge service option.
16 A.Wi th regard to customers eligible for the
17 facilities charge service, the customer has an initial
18 choice to make. The general rule is that customers are
19 required to own, operate, and maintain their own
20 equipment beyond the Company's point of delivery. Both
21 historically and today, some Idaho Power customers do not
22 or cannot do this for themselves; thus, they ask the
23 Company for the facilities charge option to relieve them
24 from this requirement. Customers request this option.25 because sometimes they do not want to expend the capitalneeded to
140 KLINE, REB 3
Idaho Power Company
1 construct the facilities and/or they may not have the.2 expertise in their organization or the desire to operate
3 and maintain the facilities. In these instances, when
4 the Company agrees, Idaho Power will provide this
5 service.
6 Q.Are customers obligated to take the facilities
7 charge service from Idaho Power?
8 A.No. As I explained above, the Company only
9 provides this service upon the request of the customer
10 and if the Company agrees to provide the service. There
11 may be instances where the customer has both the capital
12 and trained personnel to fund, design, install, and
13 maintain its own facilities beyond the Company's point of.14 delivery but wants to take advantage of the other
15 benefits that the facilities charge option provides.
16 Q.What other benefits does the facilities charge
17 option provide?
18 A.If there is a problem with the equipment that
19 the customer is paying facilities charges on, Idaho Power
20 provides 24 hours a day, 7 days a week customer service
21 for that customer. Idaho Power has an inventory of
22 equipment across its service area that can be used if
23 needed along with a fleet of trucks and trained personnel
24 ready to respond to service trouble, including emergency.25 si tuations. Idaho Power also has the communications
141 KLINE, REB 4
Idaho Power Company
1 systems in place and the dispatchers needed to dispatch.2 the crews to
3 /
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142 KLINE, REB 4a
Idaho Power Company
.
.
.
1 respond. In short, Idaho Power has the necessary
2 business infrastructure and it stands ready to respond
3 when called upon. Many facilities charge customers place
4 a high value on this service.
5 Q.What leads you to believe that facilities
6 charge customers place a high value on this service?
7 A.other than the J. R. Simplot Company
8 '("Simplot"), none of the Company's other approximately
9 240 facilities charge customers in Idaho have formally
10 requested a buyout option in recent memory. I believe
11 this indicates that the vast majority of the Company's
12 other facilities charge customers have appreciated and
13 benefi ted from the Company operating and providing
14 maintenance on facilities that they would have had to pay
15 for and maintain themselves. Thus, I believe Simplot may
16 be unique, if not in a very small minority of customers,
17 who now desires to expend the financial capital and has
18 the expertise to operate and maintain its own electrical
19 facili ties. That is not to say that other customers were
20 in the same position when they first requested the
21 Company to provide facilities beyond the Company's point
22 of deli very. Many customers may not have been in a
23 position twenty or thirty years ago to construct, own,
24 operate, and maintain electrical facilities when they
25 were first starting out.
143 KLINE, REB 5
Idaho Power Company
1 Therefore, the Company agreed to take on that risk by.2 providing the facilities charge service.
3 Q.What is your response to ICIP' s
4 characterization that the Company's facilities charge is
5 an "unfair business practice"?
6 A.I strongly disagree with this characterization.
7 Both Mr. Sturtevant's and Mr. Butler's statements in
8 their direct testimony seem to be based on the idea that
9 if Idaho Power is not willing to hand over ownership of
10 all facilities to Simplot, this is somehow an unfair
11 business practice. I disagree and think it is
12 unreasonable for them to expect Idaho Power to give away
13 facili ties that have value..14 I think of the facilities charge as similar to
15 a rental arrangement. If I were to rent a house for 30
16 years, I would not reasonably expect the owner of the
17 house to hand it over to me at the end of the 30 years
l8 because I had "paid for it." If I was to ask the owner
19 to sell it to me and he/she were willing to do so, he/she
20 would require a fair price. Therefore, I do not agree
21 with the characterization of the Company's facilities
22 charge option as an unfair business practice. As
23 explained by Mr. Youngblood, facilities charge customers
24 pay to the Company an Idaho Public Utilities.25 Commission-approved rate for providing this service.
144 KLINE, REB 6
Idaho Power Company
1 Q.What are the operational and safety issues.2 associated with mixed ownership at locations where both
3 the Company and the customer own facilities beyond the
4 point of delivery?
5 A. Mixed ownership presents challenges for the
6 Company. If there is not an "end point" that makes it
7 very clear where Idaho Power's facilities end and a
8 customer' s facilities begin, it creates confusion during
9 an outage and in maintenance situations regarding who is
10 responsible for working on what pieces of equipment. It
11 also creates a safety issue for Company personnel who may
12 not know what a customer or a contractor for the customer
13 has been doing when working on the equipment. In.14 addi tion, there are differences between the National
15 Electric Safety Code that Idaho Power follows and the
16 National Electric Code that the customer is required to
17 follow. These differences can result in equipment that
18 is nonstandard for Idaho Power and its employees may not
19 be trained to safely operate or work on this equipment.
20 Q.Is it not true that the Company currently has
21 some mixed-ownership locations?
22 A.Yes.
23 Q.How is the Company proposing to handle these
24 existing mixed-ownership locations?.25
145 KLINE, REB 7
Idaho Power Company
1 A.In the early days of facilities charges, the.2 Company did provide its customers with a configuration
3 that sometimes allowed mixed-ownership facilities
4 installations. In the late 1980s, the Company made the
5 decision to no longer allow mixed ownership for new
6 facili ties charge installations. The Company is not
7 requiring existing customers with mixed-ownership
8 locations to make any changes at this time. However,
9 over time as opportunities arise, the Company will be
10 looking for ways to address this issue at those specific
11 locations where mixed ownership exists.
12 Q.Does the Company currently grant new customer
13 requests for mixed-ownership installations?.14 A. No.
15 Q.What are the operational and safety issues
16 associated with the Company doing maintenance on
17 facili ties owned by customers beyond the Company's point
18 of delivery?
19 A.Idaho Power personnel are trained on the types
20 of equipment that the Company deploys throughout its
21 system. Customers may elect to install different types
22 or brands of equipment that the Company's personnel have
23 never worked on or been trained to work on. The result
24 would be that Company personnel may not be properly.25 trained to maintain the customer's equipment. In
146 KLINE, REB 8
Idaho Power Company
.
1 addition,
2 customer
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the Company may be asked to maintain a piece of.
.
147 KLINE, REB 8a
Idaho Power Company
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1 equipment that has previously been maintained by a
2 third-party contractor. Failing to have the full
3 maintenance history on a piece of equipment can create
4 safety issues for Idaho Power's personnel. At times,
5 Idaho Power's crews are called to an outage in difficult
6 condi tions (e. g., middle of the night, severe weather,
7 etc. ). When the Company arrives on the scene of an
8 outage, its personnel are often under pressure to get the
9 service restored as soon as possible. Compound these
10 high stress external circumstances with the fact that the
11 Company personnel may not be properly trained or have the
12 maintenance history of a piece of customer-owned
13 equipment and the operational and safety concerns are
14 exacerbated.
15 Q.Can you provide some specific safety concerns
16 of Company personnel doing maintenance on customer-owned
17 equipment?
18 A.Yes. In addition to the training and
19 maintenance history information mentioned above,
20 customer-owned facilities many times involve underground
21 cabling that may not be properly mapped. Company
22 personnel may not be trained on the equipment and may not
23 know how the equipment was installed or maintained
24 because other people have been working on it. These
25 safety concerns are minimized when Idaho Power owns and
maintains the equipment.
148 KLINE, REB 9
Idaho Power Company
1 Q.Does the Company have any agreements where it.2 does maintenance only of customer-owned facilities?
3 A.Yes. Similar to the mixed use issue, there are
4 a handful of situations where, for historical and other
5 operational reasons, the Company has agreed to maintain
6 facilities owned by customers. This is not the line of
7 business the Company is in and it is migrating away from
8 this type of work. The Company is migrating away from
9 this line of work over time to give its customers the
10 opportunity to find qualified electrical contractors that
11 will be able to adequately perform the services for these
12 customers. However, on a going forward basis, the
13 Company is in the process of communicating to its.14 customers that it will not provide maintenance on
15 customer-owned facilities.
16 Q.During the course of this proceeding, has the
17 Company changed its position on the sale of facilities
18 subj ect to the facilities charge?
19 A.Yes. Simplot has expressed to Idaho Power its
20 strong desire to have an option whereby it can acquire
21 Company-owned facilities that are subj ect to the
22 facilities charge. The Company has listened to this
23 desire and is responding by providing Simplot the option
24 to purchase Company-owned facilities. Mr. Youngblood's.25 testimony describes this option in more detail.
149 KLINE, REB 10
Idaho Power Company
1 Q.Why is the Company changing its position with.2 regard to ownership of facilities subj ect to the
3 facili ties charge?
4 A.As the Vice President of Customer Operations,
5 one of my primary roles is to make sure Idaho Power is
6 providing exceptional customer service, to the best of
7 its ability, to its customers. Simplot has made it very
8 clear that it wants an option to own facilities currently
9 subject to the facilities charge. As a general rule,
10 Idaho Power is not in the business of selling Company
11 owned facilities. For example, Idaho Power would never
12 agree to sell a distribution line to a residential
13 customer, but facilities charges are different. As I.14 described earlier in my testimony , initially, facilities
15 charge customers have a choice-they can make the
16 investment and decision to install, operate, and maintain
17 facili ties or they can ask the Company to perform this
18 service. From a customer service standpoint, the Company
19 can understand Simplot' s position and it is now providing
20 Simplot with the option to buyout Company-owned
21 facilities.
22 Q.Does this conclude your testimony?
23 A.Yes.
24.25
150 KLINE, REB 11
Idaho Power Company
.1
2 open hearing.)
(The following proceedings were had in
MR. WILLIAMS: The witness is now
4 available for cross-examination.
3
5 COMMISSIONER SMITH: Thank you. Mr. Otto,
6 do you have questions?
.
7
8
9 have questions?
10
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15
16 questions?
17
18
MR. OTTO: I do not, Madam Chair.
COMMISSIONER SMITH: Mr. Purdy, do you
MR. PURDY: No, thank you.
COMMISSIONER SMITH: Mr. Olsen.
MR. OLSEN: No, Madam Chair.
COMMISSIONER SMITH: Mr. Howell.
MR. KLEIN: Mr. Klein and we don't.
COMMISSIONER SMITH: Would you have
MR. KLEIN: No.
COMMISSIONER SMITH: All right. Let's
19 see, I'm going to strike out soon. Mr. Miller?
20 MR. MILLER: Over at the silent table
21 we'll stay silent.
.
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COMMISSIONER SMITH: Okay.
MS. KYLER: No questions.
COMMISSIONER SMITH: No questions. Well,
25 we're back to you, Mr. Richardson.
151 KLINE
Idaho Power Company
CSB REPORTING
[phone]
.1 MR. RICHARDSON: Thank you, Madam Chair.
2 I do have a couple of questions.
3
4 CROSS-EXAMINATION
5
6 BY MR. RICHARDSON:
7 Good morning, Mr. Kline. I'm PeterQ
8 Richardson. I represent the Industrial Customers of
9 Idaho Power. What are your responsibilities as -- what's
10 your title again?
.
.
11 I'm vice president of customerA
12 operations.
13 Q And overall, what are your
14 responsibilities as vice president?
15 Yes, my primary responsibilities are IA
16 have the organization that directly provides service,
17 direct services to the customer, so from the time the
18 customer calls us through the call center to the time
19 that something needs to be physically done out in the
20 field, those folks out there, such as linemen and
21 troublemen and such, all of those people report within
22 the same organization, that's customer operations.
23 Do you believe that all of your facilitiesQ
24 charge customers fully understand the terms and
25 condi tions of the facilities charge service?
CSB REPORTING
[phone]
152 KLINE (X)
Idaho Power Company
1 A I would believe that they should.2 understand what those services are based on the fact that
3 it's described both in our rules that are approved by
4 this Commission and also within the tariffs that are
5 approved by the Commission.
6 Q Let me ask it in a little different way.
7 Do you believe that Idaho Power has done all that it
8 should do or could do to ensure that its facilities
9 charge customers fully understand the terms and
10 conditions of the facilities charge?
11 A I've been in this part of the business for
12 a long time and I do understand that there's always room
.13 for improvement in terms of communicating with our
14 customers and we can always look for other ways based on
15 the comments that we're getting back from our customers
16 that we can improve that, and I am aware certainly in the
17 testimony of the witness Mr. Youngblood, he has in his
18 testimony described some other kinds of things that we
19 can do in terms of communicating with our customers
20 regarding facilities charges.
21 Q On page 5 of your rebuttal testimony, you
22 state that, "Other than the J. R. Simplot Company, none
23 of the Company's other approximately 240 facilities
24 charge customers in Idaho have formally requested a.25 buyout option in recent memory." Do you see that?
CSB REPORTING
[phone]
153 KLINE (X)
Idaho Power Company
1 A Yes..2 Q Did you read Mr. Butler and Mr.
3 Sturtevant's testimony on behalf of the Industrial
4 Customers?
5 A I did.
6 Q And they're with the J. R. Simplot
7 Company; correct?
8 A Yes.
9 Q Isn't it true that they did not recommend
10 a buyout option, but rather stated that they have already
11 paid for their facilities, and in the case of Mr. Butler
12 at the Don plant in Pocatello paid for them over three
13 times over, and in the case of Mr. Sturtevant for Simplot.14 as a whole also paid for them over three times over; in
15 other words, they aren't asking for a buyout option
16 because they believe they have bought and paid for these
17 facili ties and Idaho Power ought to turn title over to
18 them; correct?
19 A What I i m aware of, I've read the
20 testimony, I'm also aware of at least conversations I did
21 not have, but conversations between the Company and the
22 J. R. Simplot Company and I was under the impression that
23 they had truly asked for an option to buy those
24 facilities..25 Q But isn't their -- I won't put their words
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1 in your mouth, so I'll move on to the next question..2 Still on page 5 at line 15, you observe that Simp10t may
3 be unique, if not in a very small minority of customers,
4 who now desires to extend the financial capital and has
5 the expertise to operate and maintain its own electrical
6 facili ties. Now, when you characterize Simp10t as being
7 in a small minority of customers, you don't mean to imply
8 that they're a small customer, do you?
9 A No. What I'm trying to say there is that
10 knowing the J. R. Simplot Company and i ts facilities and
11 the size of the facilities and the fact that they have
12 folks on site and also available to contract with that
13 they probably or could have people that are capable of.14 maintaining and operating those type of facilities.
15 There's a number of our customers that may not be able to
16 have the ability to take care of their facilities.
17 Q And Simplot is your second largest retail
18 customer, isn't it?
19 A I don't know if it's the second largest.
20 It's one of our larger customers.
21 Q And they're the single largest facilities
22 customer on your system, correct, facilities charge
23 customer; is that correct?
24 A I don't know that..25 Q And have other companies contacted Idaho
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.1 Power to, if you will, complain about the facilities
2 charge?
3 A I'm not aware of complaints regarding the
4 facili ties charge.
5 MR. RICHARDSON: Madam Chair, may I
6 approach the witness?
7 COMMISSIONER SMITH: You may.
8 (Mr. Richardson approached the witness.)
9 MR. RICHARDSON: Madam Chair, I'm handing
10 the witness a document that I would like marked as
11 Exhibit 308. This was filed --
12
.
.
COMMISSIONER SMITH: I believe we already
13 have a 308, Mr. Richardson. Maybe we should try 309.
14 MR. RICHARDSON: Exhibit 309.
15 (ICIP Exhibit No. 309 was marked for
16 identification. )
17 Q BY MR. RICHARDSON: This was filed with
18 the Commission on Friday by Boise State Uni versi ty. I
19 wonder if you would read for me --
20 MR. WILLIAMS: Madam Chair, can I just
21 interrupt?
22 COMMISSIONER SMITH: You may.
23 MR. WILLIAMS: I just want to be clear, is
24 Mr. Richardson suggesting that he's representing Boise
25 State Uni versi ty or that Boise State Uni versi ty is a
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.
.
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1 member of the ICIP?
2 COMMISSIONER SMITH: Mr. Richardson.
3 MR. RICHARDSON: I never said either,
4 Madam Chair.
5 COMMISSIONER SMITH: So your question to
6 Mr. Kline is do you know about this letter that we just
7 received?
8 MR. RICHARDSON: That's correct, Madam
9 Chair.
10 THE WITNESS: No.
11 MR. RICHARDSON: I'll represent that it
12 was filed with the Commission secretary on Friday.
13 MR. WILLIAMS: Madam Chair, if my witness
14 is going to be asked questions regarding this letter, I
15 ask that he have ample opportunity to review it. It's
16 two pages long and it looks like it's got some pretty
17 detailed information in it.
18 COMMISSIONER SMITH: Actually, I
19 apologize, Mr. Richardson, for having to interrupt your
20 cross-exam, but I have a noon conference call, so I think
21 we need to break for lunch right now and come back at
22 1: 15 which will allow the witness time to read the letter
23 and then we can resume with cross and I apologize.
24
25
MR. RICHARDSON: Thank you, Madam Chair.
COMMISSIONER SMITH: We're at recess until
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