20111219Volume VI Technical Hearing.pdf

~(Q~~.BEFORE THE IDAHO PUBLroE6J:frH.lfT~ÌES COMMISSION
?nii r¡t(' .19. ~~i+ii :47~.., Uk." H ¡
!Jr~!
IN THE MATTER OF THE APpi:fie~1~Ó~:
OF IDAHO POWER COMPANY FOR
AUTHORITY TO INCREASE ITS
RATES AND CHARGES FOR ELECTRIC
SERVICE IN IDAHO
) CASE NO. IPC~E-11-08
)
)
)
)
BEFORE
COMMISSIONER MARSHA H. SMITH (Presiding)
COMMISSIONER MACK A. REDFORD
COMMISSIONER PAUL KJELLANDER
.PLACE:Commission Hearing Room
472 West Washington
Boise, Idaho
DATE:December 6, 2011
VOLUME VI - Pages 622 - 873
.f.. .::,\
CSB REPORTING
Constance S. Bucy, CSR No. 187
23876 Applewood Way * Wilder, Idaho83676
[phone] * [phone]
Email csb~heritagewifi.com
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APPEARANCES
For the Staff:
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5
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
7
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
[phone]
APPEARANCES
1. 2
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12
13.14
15
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20
21
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24.25
A P PEA RAN C E S (Continued)
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
-and-
FISHER PUSCH & ALDERMAN LLPby John R. Hamond, Jr., Esq.
Post Office Box 1308
Boise, Idaho 83701
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5
6 For The Kroger Company:
(Of Record)
7
8
9
CSB REPORTING
[phone]
APPEARANCES
1 I N D E X.2
3 WITNESS EXAMINATION BY PAGE
4 Stacey Donohue Mr.Howell (Direct)626(Staff)Pre filed Rebuttal Testimony 6285Mr.Purdy (Cross)646
Mr.Howell (Redirect)6946
Randy Lobb Mr.Howell (Direct)6957(Staff)Prefiled Direct Testimony 697Mr.Otto (Cross)7278Mr.Richardson (Cross)734Mr.Purdy (Cross)7369Commissioner Smith 741
Mr.Williams (Cross)74310
Teri Ottens Mr.Purdy (Direct)74511(CAPAI)Prefiled Direct Testimony 751
Prefiled Surrebuttal Test.80012Ms.Nordstrom (Cross)833
Mr.Otto (Cross)84913Mr.Howell (Cross)851.Commissioner Redford 85814Commissioner Smith 864Mr.Purdy (Redirect)86615
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25.
CSB REPORTING INDEX(208 )890-5198
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EXHIBITS
3 NUMBER DESCRIPTION PAGE
4 FOR I DAHO POWER COMPANY:
5 49. - 52.Admitted 871
6
7 FOR THE STAFF:
8 101.Stipulation Premarked
Admitted 871
9
102.Monthly Billing Comparison Premarked
Admitted 871
103. - 104.Admitted 871
13 FOR THE INDUSTRIAL CUSTOMERS OF IDAHO POWER:
14 301. - 309.Admitted 871
15
16 FOR THE KROGER COMPANY:
17
18
501.Admitted 871
19 FOR THE COMMUNITY ACTION PARTNERSHIP ASSOCIATION:
20
21
22
601.IPCO's Response to CAPAI' S
Production Request Nos. 1-3,
5,7,8-14 & 16
Premarked
Admitted 871
23 FOR THE CONSERVATION COMPANIES:
24
25
801. - 803.Admitted 871
CSB REPORTING
[phone]
EXHIBITS
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1 BOISE, IDAHO, TUESDAY, DECEMBER, 6, 2011, 9:30
2
3
4 COMMISSIONER SMITH:Good morning, ladies
5 and gentlemen. Good to see you all here this morning.
6 Before we go to Mr. Howell and his witnesses, is there
7 anything preliminary that needs to come before the
8 Commission?
9 MR. WILLIAMS: Yes, Madam Chairman. Jason
10 Williams on behalf of Idaho Power. Yesterday
11 Commissioner Redford had requested some information from
12 the Company related to facilities charges. I just wanted
13 to advise the Commission that Idaho Power will be able to
14 provide a summary of the investment report for each
15 indi vidual facilities charge customer, and in addition to
16 that, we will be able to provide a sample of the
17 underlying data that makes up that summary information
18 and that sample would be the actual log information. It
19 would include the date the plant went into service, the
20 original investment amount, the depreciated amount, et
21 cetera.
22 In addition to that, we will be able for
23 each category of assets subj ect to the facilities charge
24 be able to provide a 20-year average of the -- or going
25 back 20 years, rather, an average of the O&M expenses for
CSB REPORTING
[phone]
622 COLLOQUY
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20
1 each type of equipment that we use. We don i t have it
2 tracked by individual piece of equipment, but we do have
3 averages that provide what the O&M expense is for the
4 types of equipment that are subj ect to facilities
5 charges, and we will be able to provide that information
6 by next Tuesday, which I understand will be prior to the
7 record closing in this docket, so I'm hopeful that that i s
8 responsive to your request, Commissioner.
9 COMMISSIONER REDFORD:Thank you very
10 much.
11 COMMISSIONER SMITH: I'm confused why you
12 think the record doesn i t close until next Tuesday.
13 MR. WILLIAMS: I i m sorry, maybe I
14 misunderstood. Can I ask when the Commission anticipates
15 the record closing in this matter?
16 COMMISSIONER SMITH: I thought it would
17 close today, but if I i m mistaken, please help me out.
18 MR. RICHARDSON: Madam Chair?
19 COMMISSIONER SMITH: Mr. Richardson.
MR. RICHARDSON: Normally the record would
21 close at the conclusion of the hearing, but if you choose
22 to keep it open to take additional evidence, I think that
23 that additional evidence should be provided to all the
24 parties and we should have an opportunity to respond to
25 it.
CSB REPORTING
[phone]
623 COLLOQUY
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1 COMMISSIONER SMITH: That i s what Ilm
2 afraid of. The Commissioners will -- I think we'd like
3 the information. Whether it will relate to our decision
4 making process in this case is a different question and
5 probably it won It.
6 MR. WILLIAMS: Fair enough, thank you. No
7 further preliminary matters for Idaho Power.
8 COMMISSIONER SMITH: Thank you.
9 Mr. Howell.
10 MR. HAMMOND: Commissioner Smith?
11 COMMISSIONER SMITH: Yes.
12 MR. HAMMOND: I apologize, Mr. Howell.
13 COMMISSIONER SMITH: Would you please
14 identify yourself for the court reporter?
15 MR. HAMOND: Yes, Ilm John Hammond. Ilm
16 appearing this morning for Kroger. Jody Kyler was here
17 yesterday. They presented finishing their witnesses and
18 their case. They have nothing further to present. They
19 waive closing to the extent there i s any closing argument.
20 I don i t think they have anything further. Jody could not
21 make this morning. She tried to change her flight. It
22 was a 9: 20 flight and therefore __
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24
COMMISSIONER SMITH: She i s gone.
25 here, and Ilm trying to set a record for the shortest
MR. HAMMOND: She apologizes for not being
CSB REPORTING
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624 COLLOQUY
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1 time at a technical hearing by an attorney.
2 COMMISSIONER SMITH: I donlt think you
3 made it.
4 MR. HAMMOND: I i d ask that I could be
5 excused.
6 COMMISSIONER SMITH: You are excused, Mr.
7 Hammond, but I i m sorry, I don i t think you did have the
8 shortest time.
9 All right, Mr. Howell.
10 MR. HOWELL: Thank you, Madam Chairman.
11 The Staff would call its next witness Stacey Donohue.
12 COMMISSIONER SMITH: To all the witnesses,
13 you and I both know that the hardest questions come from
14 your own lawyer who apparently sometimes doesn i t even
15 know how to say your name.
16
CSB REPORTING
[phone]
625 COLLOQUY
.1
2
STACEY DONOHUE,
produced as a witness at the instance of the Staff,
3 having been first duly sworn, was examined and testified
13
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4 as follows:
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6
7
8 BY MR. HOWELL:
9 Q
state your
please?
A
Q
capacity?
A
DIRECT EXAMINATION
Good morning, Ms. Donohue. Could you
full name and spell your last for the record,
Stacey Donohue, D-o-n-o-h-u-e.
And whom are you employed by and in what
16 Commission as a utilities analyst.
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17 Q And are you the same Stacy Donohue that
18 prepared testimony on November 16th in this case?
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A
Q
I am.
And do you have any corrections or
21 additions to your testimony as filed?
22 A I do. I have three small corrections. On
23 page 3, line 9 and line 25, the figure "$3.21" should be
24 changed to "$3.06.".25 COMMISSIONER SMITH: That was line 9 and
CSB REPORTING
[phone]
626 DONOHUE (Di)
Staff
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1 line--
2 THE WITNESS: -- 25.
3 COMMISSIONER KJELLANDER: What page again?
4 THE WITNESS: Page 3.
5 COMMISSIONER KJELLANDER: Thank you.
6 COMMISSIONER REDFORD: $3.00 and what?
7 THE WITNESS: The" $ 3 . 2 1" figure should be
8 changed to "$3.06.
9 COMMISSIONER REDFORD:Thank you.
10 THE WITNESS: And there i s one more change
11 on page 6, line 8. After the comma it should read "but
12 it is clear" rather than "is it clear."
13 Q BY MR. HOWELL: Any other changes?
14 A No.
15 Q Wi th those changes, if I were to ask you
16 the questions laid out in your pre filed testimony, would
17 your answers be the same today?
18
19
A Yes.
MR. HOWELL: And with that,
20 Madam Chairman, I would move that we spread Ms. Donohue IS
21 testimony on the record as if read and she is available
22 for cross.
23
24 it is so ordered.
COMMISSIONER SMITH: Seeing no obj ection,
25 (The following prefiled rebuttal testimony
of Ms. Stacey Donohue is spread upon the record.)
CSB REPORTING
[phone]
627 DONOHUE (Di)
Staff
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1 Q.Please state your name and business address for
2 the record.
3 A.My name is Stacey Donohue. My business address
4 is 472 West Washington Street, Boise, Idaho.
5 Q.By whom are you employed and in what capacity?
6 A.I am employed by the Idaho Public Utili ties
7 Commission as a Utilities Analyst in the Utilities
8 Division, focusing on demand-side management (DSM) issues
9 and cases.
10 Q.What is your education, experience and
11 background?
12 A.I received a B.A. in History from James Madison
13 Uni versi ty in 1999 and a Master i s of Public
14 Administration (M.P.A.) from Boise State University in
15 2010. Prior to joining the Commission Staff in 2010, I
16 was employed as an Energy Specialist at the Idaho Office
17 of Energy Resources where my main responsibility was
18 managing the administration of stimulus-funded grant
19 proj ects. While completing my MPA, I was hired by the
20 Boise State University Department of Public Policy and
21 Administration to conduct survey research and author a
22 report on customer service and state-wide interagency
23 relationships for the Idaho Transportation Department,
24 which was presented to the ITD Board. I have attended
25 the New Mexico State Uni versi ty Center for Public
CASE NO. IPC-E-11-08
11-16-11 628 DONOHUE, S. (Reb) 1
STAFF
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1 Utili ties i course in Practical Regulatory Training, the
2 National Regulatory Research Institute i s course on
3 "Electricity i s Current Challenges Ii, the International
4 Energy
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CASE NO. IPC-E-11-08
11-16-11 629 DONOHUE, S. (Reb) 1a
STAFF
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1 Program Evaluation Conference, as well as multiple web
2 trainings related to DSM issues. I serve on Idaho
3 Power i s Energy Efficiency Advisory Group (EEAG), Avista i s
4 Energy Efficiency Advisory and Technical Committees, and
5 the Regional Technical Forum i s Policy Advisory Committee.
6 In addition, I have filed written comments representing
7 Staff iS position in DSM related cases for all three Idaho
8 investor-owned utili ties.
9 Q.What is the purpose of your testimony?
10 A.My testimony rebuts CAPAI witness Teri Ottens i
11 opinion that the Commission should increase Idaho Power iS
12 Weatherization Assistance for Qualified Customers (WAQC)
13 program funding. I maintain that Ms. Ottens i definition
14 of low income funding level "parity" among Idaho electric
15 utilities does not justify the $1.5 million (125%)
16 funding increase she recommends for Idaho Power. I
17 further believe that uncertainty regarding both program
18 cost effectiveness and overall need makes significant low
19 income weatherization funding increases premature in this
20 case. I recommend that interested parties immediately
21 convene workshops to develop consistent cost
22 effectiveness criteria, identify appropriate methods for
23 measuring need, and establish proportional funding
24 levels.
25 Q. On pages 15 through 17 of her testimony, Ms.
Ottens defines Idaho electric utility "parityll as a
CASE NO. IPC-E-11-08
11-16-11 630 DONOHUE, S. (Reb) 2
STAFF
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1 relatively equal low income weatherization funding level
2 based on a dollar per residential customer amount. Using
'3 this definition, do you agree with Ms. Ottens i conclusion
4 that Idaho Power i s funding level should increase by 125%
5 (from $ 1.2 million to $2. 7 million annually) to achieve
6 "parity" with Avista i s current funding level?
7 A.No. Although I agree with Ms. Ottens that
8 Rocky Mountain Power and Idaho Power are funding their
9 low income programs at approximately $5. 32/customer and
10 $3.06/ customer respectively, I disagree with her
11 conclusion that Avista' s per-customer funding level is at
12 $6. 69/customer. Ms. Ottens i testimony ignores that when
13 the Commission ordered Avista to spend $700,000 annually
14 on low income weatherization in Idaho, that amount was
15 for both its gas and electric low income weatherization
16 programs. The funding levels for Idaho Power and Rocky
17 Mountain Power, on the other hand, are only for those
18 utili ties i electric low income weatherization programs.
19 Ms. Ottens is, therefore, over-stating Avista i s per
20 customer funding level.
21 If Avista continues to spend 60% of its low
22 income program budget on electric measures, then (using
23 Ms. Ottens i methodology) the $ 420, 000 budget divided by
24 Avista iS 105,286 electric residential customers (FERC
25 form No.1, 2010, pg. 304) equates to a $3.98/customer
CASE NO. IPC-E-11-08
11-16-11 631 DONOHUE, S. (Reb) 3
STAFF
1 expendi t ure .Accordingly,Idaho Power i slow income.2 investment of $3.06/customer is
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CASE NO.IPC-E-11-08 632 DONOHUE,S.(Reb)3a11-16-11 STAFF
1 similar to Avista i s and achieves relative "parity", even.2 as defined by Ms. Ottens.
3 Q.Do you agree that the Commission should seek to
4 attain parity among utilities as defined by Ms. Ottens?
5 A.No. It makes more sense to provide similar
6 funding based on need, not on the basis of total
7 residential utility customers as proposed by Ms. Ottens.
8 Requiring each utility to fund low income programs based
9 on the total number of residential utility customers is
10 arbitrary and does not account for differing levels of
11 need for low income weatherization in each utility i s
12 service territory.
13 Q.Can you suggest a better method of comparing.14 funding levels among Idaho electric utili ties?
15 A.Yes. It would be better to compare
16 proportional funding levels among the utilities based on
17 factors measuring relative need for low income
18 weatherization within each utility i s service territory.
19 Possible methods could include the number of low income
20 customers, number of homes needing weatherization, and
21 poverty rates. Although these suggestions are a
22 reasonable starting place for discussions, determining
23 equitable funding levels is complicated issue that would
24 be best resolved through the previously mentioned
25 workshops..
CASE NO. IPC-E-11-08
11-16-11 633 DONOHUE, S. (Reb) 4
STAFF
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1 Q.Did Ms. Ottens accurately characterize Staff IS
2 low income cost effectiveness concerns on pages 21 and 22
3 of her
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CASE NO. IPC-E-11-08
11-16-11 634 DONOHUE, S. (Reb) 4a
STAFF
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1 testimony?
2 A.In broad terms, yes. Ms. Ottens says she
3 perceives that Staff seeks "a sort of parity or
4 uniformi ty in the cost effectiveness evaluation
5 methodologies used for the three utilities i programs".
6 She states that Staff "wishes to know whether, in fact
7 the programs are cost effective". Finally, Ms. Ottens
8 states that Staff is looking for "guidance from the
9 Commission" regarding the incorporation of non-energy
10 benefi ts in low income costs effectiveness analysis.
11 While Ms. Ottens i statements on this subject
12 are generally accurate, Staff believes that cost
13 effectiveness methodologies, including the treatment of
14 non-energy benefits, should be reasonably similar between
15 utilities rather than necessarily "uniform". This is the
16 standard for other DSM program cost effectiveness
17 calculations and Staff sees no reason to modify that
18 approach for low income programs.
19 In a slight departure from Ms. Ottens i
20 perception, Staff believes that stakeholder workshops are
21 the most effective venue for establishing the treatment
22 of non-energy benefits and cost effectiveness
23 methodology. Staff believes these issues should be
24 resol ved before existing low income funding levels are
25 significantly increased.
CASE NO. IPC-E-11-08
11-16-11 635 DONOHUE, S. (Reb) 5
STAFF
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1 Idaho low income weatherization programs?
2 A.Staff has identified problematic
3 inconsistencies among Idaho i s utility-funded low income
4 programs. A recent evaluation of Rocky Mountain Power IS
5 low income program by an independent evaluator revealed
6 problems with program deli very, oversight, and possibly
7 cost effectiveness. Idaho Power has yet to complete a
8 post implementation evaluation of its low income
9 weatherization program, but it is clear that all three
10 utilities have very different standards for measuring
11 energy savings, recording measure level data, providing
12 oversight of Community Action Partnership ("CAP")
13 agencies, and calculating cost effectiveness.
14 For example, all low income programs should
15 capture and analyze measure level data from the CAP
16 agencies so that the list of measures eligible for
1 7 utility reimbursement can be effectively analyzed for
18 cost effectiveness, and if necessary, modified.
19 Currently, utili ties capture wide-ranging amounts and
20 types of data from the CAP agencies, which negatively
21 impacts program implementation decisions. This and other
22 discrepancies should be resolved so that Staff, CAPAI,
23 and the utilities have a clear understanding of
24 expectations surrounding program management and
25 cost-effectiveness calculations before more funds areinvested.
CASE NO. IPC-E-11-08
11~16-11 637 DONOHUE, S. (Reb) 6
STAFF
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1 Q.What are Staff i s concerns regarding
2 cost-effectiveness calculations?
3 A.Staff is concerned that the three companies
4 calculate the cost effectiveness of their low income
5 programs very differently. While there should be some
6 flexibility within the methodological details to account
7 for different circumstances, there should also be common,
8 general parameters for cost effectiveness calculations
9 between such similar programs.
10 In particular, all three utilities measure
11 energy savings differently. Rocky Mountain Power uses a
12 billing analysis, Avista uses deemed savings per measure,
13 and Idaho Power uses an energy audit analysis to measure
14 energy savings. None of these methods are necessarily
15 wrong. However, they all have substantial shortcomings,
16 which can include significant over or under-estimation of
17 savings. It is impossible to accurately assess a
18 program i s cost effectiveness, and how to improve it if
19 necessary, until the disparate views on how to measure
20 energy savings are resolved.
21 In addition, there is wide discrepancy on
22 whether and to what extent non-energy benefits should be
23 included in the cost effectiveness analysis. Idaho Power
24 does not include any, but Avista and Rocky Mountain
25 include some limited and quantifiable non-energy
benefits. Avista and
CASE NO. IPC-E-11-08
11-16-11 638 DONOHUE, S. (Reb) 7
STAFF
1 Rocky Mountain also include a 10% conservation preference.2 adder to their low income programs, which Idaho Power
3 does not include. Disparate methodologies make it
4 difficult, if not impossible, to draw conclusions about
5 cost effectiveness among similar programs when the
6 benefi ts of each are quantified so differently.
7 Q.Are the three utilities i low income
8 weatherization programs similar enough that a negative
9 evaluation of one program calls into question the other
10 programs i cost effectiveness?
11 A.It certainly could. Idaho Power is not, of
12 course, responsible for the shortcomings of Rocky
13 Mountain i s program. Nevertheless, according to Ms..14 Ottens, the CAP agencies implement the three
15 utili ty-funded low income programs in Idaho using
16 "identical implementation standards dictated by the U. S.
17 Department of Energy" (Direct Testimony of Teri Ottens,
18 IPC-E-11-08, pg. 22). Therefore, a significant problem
19 with program oversight or discrepancies in cost
20 effectiveness calculations is likely to affect all three
21 programs.
22 Q.Ms. Ottens justifies increasing Idaho Power IS
23 low income funding by $1.5 million per year citing
24 statistics in her testimony including rising poverty
.25 rates, the termination of American Recovery and
CASE NO. IPC-E-11-08
11-16-11 639 DONOHUE, S. (Reb) 8
STAFF
1 Reinvestment Act (ARRA)funding,and the backlog of WAQC.2 eligible customers in Ada
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CASE NO.IPC-E-11-08 640 DONOHUE,S.(Reb)8a11-16-11 STAFF
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1 County. Do you disagree that the economy has impacted
2 the number of low income customers and their ability to
3 pay electric bills?
4 A.No. Staff disagrees that this information
5 alone can identify program need or proper funding levels.
6 Wi thout proper program implementation and evaluation to
7 determine cost effectiveness, it is impossible to
8 determine if the existing program is a reasonable
9 expenditure of rate payer funds.
10 Q.On page 21 of her testimony, Ms. Ottens
11 indicates that Staff i s concern about increasing Idaho
12 Power WAQC funding is due to a Rocky Mountain Power Case
13 No.
14 PAC-E-11-13 in which Rocky Mountain Power asked to
15 discontinue evaluation of its low income program because
16 of cost effectiveness. Is she correct?
17 A.Yes, in part. In that case, Staff had serious
18 concerns about the implementation and evaluation of the
19 Company i s low income program, including program cost
20 effectiveness. In addressing these issues, Staff had the
21 following comments:
Staff further believes there needs to be a common
understanding and approach with respect to how
utilities implement, evaluate, measure and verify
programs targeted to low income customers. The
Commission Staff , utilities, stakeholders, and
other interested parties would greatly benefit
from such an understanding. Similarly, interested
parties could come to agreement with respect to
CASE NO. IPC-E-11-08
11-16-11 641 DONOHUE, S. (Reb) 9
STAFF
1 how utili ties should manage programs and what degree.of oversight is necessary.
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CASE NO.IPC-E-11-08 642 DONOHUE,S.(Reb)9a11-16-11 STAFF
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In pursuit of this, Staff recommends that the
Commission host an informal workshop as soon as
possible so that all interested parties can par-
ticipate in a collaborative discussion about the
issues surrounding low income weatherization
programs. Workshop objectives include developing a
deeper understanding of the issues, explore ways to
resolve those issues, and finally, developing an
action plan that creates greater certainty regarding
the implementation and evaluation of low income
weatherization programs. This workshop will allow
Rocky Mountain and the other utili ties to consider
ways to enhance the cost-effectiveness of existing
low income programs and/or create new programs that
target low income customers. At the conclusion of
the workshop, Staff will provide the Commission with
a report which will, at a minimum, identify the
agreements reached and recommendations for future
Commission action.
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12 Additionally, in Case No. AVU-E/G-11-01, Staff
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13 supported a Stipulation and Settlement that called for
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the following:
The Company and interested parties will meet and
confer prior to the Company i s next general rate
filing in order to assess the Low Income weather-
ization and Low Income Weatherization Education
Programs and discuss appropriate levels of low-
income weatherization funding in the future.
19 In testimony supporting the stipulation in that
20 case, Staff witness Lobb stated:
21 Staff believes it is time to discuss all issues
associated with the Company i s low income weather-22 ization program to assure the program is cost
effective, that it remains cost effective and that23 sufficient funds based on need are made available.
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25
Q.What is you recommendation in this case?
A.I recommend that the Commission not increase
CASE NO. IPC-E-11-08
11-16-11 643 DONOHUE, S. (Reb) 10
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1 by CAPAI. Rather, I recommend that the Commission
2 consolidate the low income workshops approved in Avista
3 Case No. AVU-E/G-11-01 and proposed in Rocky Mountain
4 Power Case No. PAC-E-11-13 to resolve issues relating to
5 utili ty low income programs and include Idaho Power in
6 these discussions. These issues include consistent
7 implementation methodology and cost effectiveness
8 evaluation, identification of non-energy benefits, proper
9 determination of need, and appropriate levels of annual
10 low income funding. CAPAI i S request for a funding
11 increase for Idaho Power i s WAQC program should be
12 considered after the consolidated workshop has resolved
13 administration and cost effectiveness issues.
14 Q.Does this conclude your testimony in this
15 proceeding?
16 A.Yes, it does.
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CASE NO. IPC-E-11-08
11-16-11 645 DONOHUE, S. (Reb) 11
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2 open hearing.)
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4 questions?
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12 Madam Chair.
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22 BY MR. PURDY:
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(The following proceedings were had in
COMMISSIONER SMITH: Mr. Otto, do you have
MR. OTTO: No, Madam Chair.
COMMISSIONER SMITH: Mr. Olsen.
MR. OLSEN: No questions.
COMMISSIONER SMITH: Mr. Nelson.
MR. NELSON: Thank you, no questions.
COMMISSIONER SMITH: Mr. Richardson.
MR. RICHARDSON: No questions,
COMMISSIONER SMITH: Mr. Miller.
MR. MILLER: No, thank you.
COMMISSIONER SMITH: Any from the Company?
MS. NORDSTROM: None.
COMMISSIONER SMITH: Mr. Purdy.
MR. PURDY: I do.
CROSS-EXAMINATION
Good morning, Ms. Donohue.
Thank you.
It i S not Donohoe, is it?
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1 A No.
2 Q First of all, thank you for clearing up
3 the $3.06 housekeeping matter. I was going to ask you
4 about that, so while I understand that you disagree with
5 Ms. Ottens i per capita parity comparison in principle, if
6 the Commission were to rely at all on a per capita parity
7 analysis or comparison, to be clear, Idaho Power IS
8 funding should be calculated at $3.06; is that right?
9 A Yes.
10 Q All right. The other two calculations as
11 you perceive them don i t change, do they, I i m sorry, for
12 Rocky Mountain and Avista?
13 A Well, Rocky Mountain is at $5.32 per
14 customer and I think we disagree on the calculation for
15 Avista.
16 Q Right, I thought I said that, but okay,
17 thank you. On page 3 at line 22, in your disagreement
18 with Ms. Ottens i calculation of Avista i s relative parity
19 or per capita contribution to LIWA, you state that
20 instead of basing it on the entire $700,000 that Avista
21 has been authorized to invest, it should only be $420,000
22 to account for non-electric heaters; is that a fair
23 characterization?
24 A No, not exactly, although I think you Ire
25 close. What I did was take away the money that Avista
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1 spent on non-electric measures, so it i S a little
2 different than non-electric heaters, but I think you Ire
3 getting to about the same point. If you take -- have I
4 been clear?
5 Q Well, as far as youlve gone. I'm not
6 qui te clear what you mean by the difference.
7 A Avista spent -- Avista was ordered to
8 spend $700,000 on low income weatherization. They spent
9 about 60 percent of that on electric measures, which is
10 $420,000, so I recommend if you want to determine parity
11 on a per capita basis to only use the $420,000, because
12 you i re taking away the expenditures on gas measures.
13 Q Right, and how did you obtain that
14 $420,000 figure?
15 A I looked at Avista IS DSM report for 2010
16 and 2009, if I recall correctly, and they have for the
17 past two years spent about 60 percent of their total low
18 income DSM budget on electric measures.
19 Q Given the reports were filed in 2009 and
20 i 10, would those be for program years 2008 and i 9?
21 A No, one year forward. It was filed the
22 2010 report was filed in March of 2011, so it i S for
23 program year 2010 and program year 2009.
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Q Okay, excuse me.
(Pause in proceedings.)
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1 Q BY MR. PURDY: And is it a fair statement
2 that all or nearly all of Avista i s gas customers are also
3 Avista electric customers?
4 A I don i t know.
5 Q Isnlt it somewhat intuitive? I mean, it
6 does take electricity to run a gas furnace, does it
7 not?
8 A It does.
9 Q It takes electricity to do most anything,
10 including speak into this microphone and turn on lights
11 in this room; is that right?
12 A It does.
13 Q All right; so when you subtract out from
14 the 700,000 weatherization measures that you attribute to
15 gas heaters, are you considering that some of those
16 measures, some of the electric weatherization dollars
17 might also go to gas customers and there might be some
18 cross-effect of the two because a customer iS -- Ilm
19 sorry, their gas customers are also electric customers?
20 A Can you be more specific about kind of a
21 particular cross-over effect?
22 Q Actually, Ilm going to move on, thank you.
23 Regarding the $700,000 authorized for Avista i s low income
24 weatherization program, you referred to a Commission
25 Order and I think your belief is that Ms. Ottens has
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1 ignored that Order in her testimony. My question to you
2 is did the Commission in its 2010 Order in which it
3 approved the $700,000 state one way or another that low
4 income weatherization funding should be allocated to gas
5 versus electric heaters?
6 A No. My understanding is the Commission
7 did not make a distinction.
8 Q All right, and are you aware whether the
9 contracts between Avista and the CAP agency that
10 administers low income weatherization does not require
11 any specific allocation or contain any designation of
12 funding?
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A Ilm not aware.
Q All right. Is it your belief, though,
15 that the Commission was well aware that Avista when it
16 issued the Order in the 2010 case approving the $700,000
17 that Avista used that on both its gas and electric
18 heating customers?
19 A I can see where that is a reasonable
20 assumption, but I don i t know that.
21 Q Okay, and as far as subtracting dollars
22 out of Avista i s funding for comparison purposes, I
23 started to get into this earlier, let me throw an example
24 at you. Ilm an Idaho Power customer, electric customer,
25 but I have gas heat, so isnlt it true that when I pay my
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1 monthly Idaho Power bill that I am paying for that.2 Company iS WAQC program for electric heaters?
3 A Yes.
4 Q And aren i t all Idaho Power gas heaters
5 paying for WAQC?
6 A If they i re an Idaho Power customer, yes.
7 Q Okay. Should I feel deprived or should I
8 feel that I 1m receiving some benefit by partly funding
9 WAQC?
10 A I don i t have any idea how you feel about
11 that.
12 Q All right. I was trying to be more
13 personal about it, but letls be more detached. Shouldnlt.14 a customer expect something for their investment dollar
15 in WAQC even if they don i t receive directly the benefits
16 of that program?
17 A Yes.
18 Q And to what extent should they believe
19 theyl re getting something for their money?
20 A They should be paying for a cost-effective
21 program.
22 Q Ilm sorry, would you repeat that?
23 A They should be paying for a cost-effective
24 program.
25 Q They should be, okay; so you i re saying.
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1 that any cost-effective DSM program benefits a customer
2 of Idaho Power?
3 A Yes.
4 Q All right, and isnlt it true that low
5 income programs have an added benefit that might not
6 appear in other DSM programs and that is in the form of
7 helping reduce arrearages, bad debt write-offs,
8 uncollectible accounts, things of that nature?
9 A That could be the case to the extent it i s
10 quantified, but those numbers are not included in Idaho
11 Power i s cost-effectiveness analysis.
12 Q Okay; so I guess wrapping up the Avista
13 comparison issue, is it fair to say that there i s really
14 no way to perfectly make an apples-to-apples comparison
15 between all three of the utilities?
16 A Well, nothing is perfect, but I think we
17 could come pretty close, something that i s reasonable to
18 compare the three electric low income DSM programs if you
19 wanted to calculate it on a per capita basis.
20 Q All right. Now, on page 4 of your
21 rebuttal, you seem to absolutely reject the notion that
22 pari ty of funding as we i ve just discussed should be any
23 form of guiding principle for the Commission; is that
24 true?
25 A That i S approximately true.
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1 Q Well, if Ilm not right on the money true,
2 please clarify.
3 A Okay, I i II say that i s correct.
4 Q All right.
5 A I don i t think a per capita methodology for
6 funding allocation is particularly useful.
7 Q Thank you. Have you completely considered
8 the ramifications of discarding parity as a guiding
9 principle? And in that regard I i II offer you a
10 possibili ty. Couldn i tit be determined if we base it on
11 something other than parity, strictly on demand or need,
12 whatever word you prefer, that it might be discovered
13 that certain utilities, and I i II throw out Rocky Mountain
14 Power as an example, have a much higher relative poverty
15 level in their service territory and if we discard parity
16 as we now calculate it or at least CAPAI calculates it
17 and we go strictly to need, we could end up potentially
18 wi th a LIWA funding level for Rocky Mountain Power that
19 is tremendously greater than its current level. Have you
20 considered that possibility?
21 A I think I need a further explanation on
22 how, you know, Rocky Mountain Power i s low income funding
23 weatherization would go through the roof if we discarded
24 parity.
25 Q Well, and we i II get into it later, but my
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1 understanding of your testimony in general is that you
2 believe LIWA funding levels should be determined based on
3 the relative demand wi thin a given utility's service
4 territory and in that regard, you refer to respective
5 poverty levels, do you not?
6 A I do refer to respective poverty levels.
7 I think maybe the slight disagreement between, the slight
8 miscommunication here is that Staff is advocating basing
9 funding levels based on relative need and I think CAPAI
10 was inferring that means satisfying the need for low
11 income weatherization in the utilityl s service territory
12 and that i s not what Staff is advocating.
13 Q Well, but my question doesn i t really
14 require that we determine whether need is completely or
15 only partly satisfied. My question is simply have you
16 considered the possibility if you discard parity as the
17 guiding principle and you use instead relative need and
18 rely on poverty levels that we could see a substantial
19 increase for one utilityl s LIWAfunding level and a
20 substantial decrease for another IS?
21 A Well, I disagree with that conclusion.
22 The 2009 poverty rate in Rocky Mountain Power i s service
23 territory is 14.9 percent. In Idaho Power itls 14.7
24 percent, and in Avista it was 16.1 percent, so those are
25 different, but relatively close, and it doesn i t seem like
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.i we would have drastic changes based on the poverty rates.
2 Now, these are 2009 numbers and I don i t doubt that
3 poverty levels have gone up since then, but they still
4 seem to be similar to each other.
5 Q But I thought I heard you state poverty
6 levels had varied by as much as two percent; isn i t that
7 true?
8 A No, 14. 7 and 16. 1 .
9 Q All right, if you would direct your
10 attention to page 4 of your rebuttal, line 12, where you
11 state that it would be better to compare proportional
12 funding levels among the utilities based on factors
13 measuring relative need for low income weatherization.14 wi thin each utility i s service terri tory. Do you see
15 that?
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A Yes.
Q And then you further on go on to identify
18 possible methods, including the number of low income
19 customers, number of homes needing weatherization and
20 poverty rates.
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A Yes.
Q All right. My question is simply, I
23 realize that you haven i t been with the Commission as many
24 years as CAPAI has been testifying in these cases, but
.25 aren i t those three factors that you identify in your
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1 testimony the same factors or types of factors that CAPAI
2 through Ms. Ottens i testimony over the years has focused
3 in on and suggested reliance upon?
4 A The distinction here is that CAPAI uses
5 those numbers as evidence of need, but not a metric to
6 determine funding levels, which is what Staff is
7 proposing.
8 Q The last part of that was not a metric
9 what?
10 A Not a metric to determine funding levels,
11 which is what Staff is proposing.
12 Q So in a lay person i s lexicon, does that
13 simply mean that you i re proposing a greater specificity
14 or more precise calculation, but you i re still relying on
15 the same general factors?
16 A No. CAPAI, the factor that CAPAI relies
17. on to determine its funding levels are the number of
18 residential customers in a service terri tory and the
19 dollar amount of the funding award. What Staff proposes
20 doing is to tie the funding award to the relative need
21 for low income weatherization in a utilityl s service
22 territory, which could be measured in a multitude of
23 ways; possibly the number of homes needing
24 weatherization, the poverty rates, the unemployment
25.rates, something that determines how useful that funding
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1 is going to be in that service terri tory, how much it i s
2 needed.
3 Q Do you know whether Ms. Ottens in the
4 past -- in past cases involving LIWA has in fact focused
5 on the concept of need?
6 A She certainly has focused on the concept
7 of need, but she uses it as evidence to justify an
8 increase in the per capita funding. She doesn i t use it
9 to calculate the funding level.
10 Q All right, she doesn i t do a metric?
11 A Correct.
12 Q And isnlt it true that Ms. Ottens has
13 often referred to the waiting list or what we call
14 backlog of LIWA eligible customers?
15 A She has.
Q And that i s one of your factors as well, is
17 it not?
18 A Can you point to the place in my rebuttal
19 where I say that?
20 Q Yes, absolutely. Lines 18 and 19 of page
21 4 where you state, and I quote -- well, I i m sorry,
22 starting on line 17, "Possible methods could include the
23 number of low income customers, number of homes needing
24 weatherization, and poverty rates." Aren i t you implying
25 that these homes that need weatherization are going to be
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1 LIWA eligible customers?
2 A I specifically didn i t use the term waiting
3 list because I think that the LIWA waiting list is not an
4 accurate count of the number of homes that could qualify
5 for weatherization in Idaho Power i s service terri tory.
6 Q Well, I don i t think you i II get any
7 disagreement from anyone that it is a very difficult
8 thing to accurately count, but are you discarding it as
9 an important factor nonetheless?
10 A If it can be measured more accurately, I
11 would certainly be interested in that information. In
12 its current form, itls not very useful I donlt think.
13 Q Do you think and have you actually done
14 this in your testimony, it i s possible to more accurately
15 determine the backlog?
A It may be possible to more accurately
17 determine the backlog and I would be delighted to explore
18 that possibility to see if we could come up with a more
19 accurate number, because I certainly don i t dispute that
20 the need has increased.
21 Q And in fact, isn i t it true that past
22 Commission orders have specifically referred to
23 backlogs?
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A I don i t know.
Q Okay. On page 5 of your rebuttal, lines
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1 14 through 15, you make a distinction in stating that Ms.
2 Ottens i characterization of Staff i s position is close,
3 but not perfect, and you say that cost-effectiveness
4 methodologies between the three LIWA programs of Idaho
5 Power, Avista and Rocky Mountain don i t need to be
6 uniform, but they should be reasonably similar. My
7 question simply is what i s the difference in your mind?
8 A There should be some flexibility for the
9 three companies in how they determine cost effectiveness
10 and how their cost-effectiveness calculations are
11 determined. That i s the standard for the rest of their
12 demand side management programs and it seems reasonable
13 to treat the low income weatherization programs
14 similarly.
Q Why should there be flexibility?
A There should be flexibility because the
17 companies have to defend their cost-effectiveness
18 calculations and they should be making those decisions
19 and should include and exclude what they feel they can
20 reasonably defend and that i s not -- and then the
21 Commission can make a ruling on whether or not they feel
22 that those inclusions or exclusions are appropriate.
23 Q All right, regardless of what the utility
24 needs to be able to reasonably defend, isn i tit true that.25 there needs to be flexibility, because as you note in
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1 numerous places in your testimony that there are distinct
2 differences between the three utili ties and their LIWA
3 programs?
4 A Yes.
5 Q Differences in the way those programs are
6 administered, evaluated, monitored, audited, savings
7 estimates measured, all those things?
8 A Yes.
9 Q All right, and to a certain extent it is
10 not possible to eliminate for metric calculation purposes
11 these kinds of innate differences between utilities and
12 their programs, is it?
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A Yes.
Q It is possible to completely eliminate
15 these differences?
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A Pardon me, I agree with your statement.
Q Thank you. I always like to hear that.
18 If you would turn to page 6 of your rebuttal, please, and
19 just Ilm going to start off with a more general question,
20 and please correct me if you think I i ve misstated
21 anything here in paraphrasing you, but it seems that
22 beginning on page 6 and continuing through page 8, you
23 begin a fairly detailed discussion of differences between
24 the three utilities i LIWA programs and concerns that you
25 have about those differences, and in fact, on line 2 of
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1 page 6, you refer to these as problematic
2 inconsistencies; is that right?
3 A Yes.
4 Q Okay. Prior to this year i s slew of cases,
5 including the Avista 2011 rate case, the Idaho Power case
6 we i re here now to discuss, the Rocky Mountain rate case,
7 and the Rocky Mountain Power LIWA evaluation case, that i s
S the 11-13 case, have you served as an expert analyst or
9 testified as a witness on behalf of Staff regarding LIWA
10 prior to these cases this year?
11 A No.
12 Q Okay, how long have you been providing the
13 services that you do to the Commission Staff?
A About a year.
Q About a year, okay. Were you involved as
16 far as LIWA is concerned in the 2010 Rocky Mountain Power
17 case?
18 A Are you referring to the 2010 Rocky
19 Mountain Power general rate case?
20 Q Yes. I i m not sure what I said, but yes,
21 that i s what I meant.
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A No, I was not involved.
Q And in that case, the Commission Staff
24 recommended an increase to Rocky Mountain iS LIWA funding
.25 of $300,000, did it not?
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1 A It did.
2 Q Okay, and that was approved this year?
3 A Yes.
4 Q But you were not involved in that case?
5 A No.
6 Q All right; so that really leads to my
7 question. Are these many concerns and problematic
S inconsistencies that you discuss throughout your
9 testimony concerns or considerations that the Commission
10 Staff, to your knowledge, has ever embraced or engaged in
11 in prior LIWA cases?
12 A Can you repeat that question, please?
13 Q Sure. Is it your opinion that the
14 concerns, the issues, the problematic inconsistencies
15 that are mentioned throughout your testimony have not
16 been adopted or embraced or advanced by the Commission
17 Staff in LIWA cases prior to this year? Is this new
18 stuff?
19 A I don i t believe there IS anything in the
20 written record to reflect the problematic inconsistencies
21 that I i ve identified; however, in last year i s Rocky
22 Mountain Power rate case, Staff did dispute the notion of
23 awarding fund levels based on per capita parity.
24 Q All right. Well, so I i m trying to avoid
25 cliches and inappropriate terminology, but isn It it fair
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1 to characterize your testimony in this case, it i S a
2 hyperbole, but it i S somewhat revolutionary for Staff?
3 It i S certainly new, isn i tit?
4 A I think the hew thing that happened this
5 year is that we got an evaluation from a low income
6 program that demonstrated it was not cost effective
7 unless non-energy benefits were considered, and that
8 prompted Staff to take a closer look at all
9 utili ty-funded low income weatherization programs in the
10 state and that i s when we discovered some serious
11 concerns.
12 Q Serious concerns?
13 A Yes.
14 Q And that program evaluation you refer to,
15 is that the subject matter of Case PAC-E-11-13 involving
16 Rocky Mountain?
17 A Yes.
18 Q All right, and that i s the case that caused
19 you to have serious concerns?
20 A Let me be clear. I am not holding Idaho
21 Power i s low income weatherization program responsible for
22 an evaluation, for any evaluation results of Rocky
23 Mountain Power i s low income weatherization program;
24 however, the Rocky Mountain evaluation did cause Staff to
25 take a closer look at the Avista low income
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1 weatherization program and the Idaho Power low income
2 weatherization program and that i s when we identified
3 serious concerns.
4 Q Well, whether you i re holding it against
5 Idaho Power or not, it has affected your position in this
6 case, hasnlt it?
7 A Yes.
8 Q Are you suggesting to the Commissioners
9 that their prior decisions on LIWA funding have been
10 based on inaccurate or misleading or incomplete data?
11 A No. I think that our understanding of
12 that data might not have been as thorough then as it is
13 now, but I donlt know.
14 Q You don i t know what?
15 A I don i t know what the understanding of the
16 data was in previous years and orders because, as you
17 pointed out, I wasn i t working here at that point.
Q Yes, thank you, and to the extent that the
19 Commission has ever relied upon parity before, are you
20 now testifying that that was somehow a mistake, whether
21 intentional or unintentional?
22 A I don i t think that I need to give an
23 opinion on the Commission i s past orders. The Commission
24 is entitled to their own opinion.
25.Q Of course they are, we all know that. My
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1 question is testifying as you are today that you have
2 serious concerns about the manner in which these programs
3 have historically been evaluated, implemented and LIWA
4 funding decisions made, my question is simply isn i tit
5 possible that under your hypothesis that the Commission IS
6 prior LIWA orders have been based on bad information?
7 A Ilm not going to take a position on the
8 Commission i s prior orders. I i m talking about this
9 case.
10 Q All right, fair enough, and you talked a
11 minute ago about not holding the Rocky Mountain Power
12 evaluation against Idaho Power, but that it does affect
13 your testimony in this case, have you conducted a
14 thorough evaluation of your own of Idaho Power IS WAQC
15 program?
16 A No.
17 Q Okay, and is it your understanding based
18 on Ms. Drake i s testimony both in rebuttal and through
19 cross-examination that Idaho Power believes that its WAQC
20 program satisfies the standard cost-effectiveness
21 evaluation such as uniform -- well, UCT and TRC, total
22 resource cost, and the RIM test?
23 A I understand that Idaho Power believes
24 their program to be cost effective, certainly, for the
25 total resource cost and the utility cost test. I don i t
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1 know about the ratepayer impact measure.
2 Q Okay. Are you challenging that assertion
3 by Idaho Power in this case?
4 A As I said before, I have serious concerns
5 about the cost effectiveness of their program, not
6 because Idaho Power has managed it poorly or is in any
7 way using inaccurate information, but because -- well,
8 for example, for the 2010 year, the utility cost test
9 ratio for Idaho Power i s program was 3.27, so it i S for
10 every dollar they invested, Idaho Power estimates theyl re
11 getting $3.27 in savings, and for the same program year
12 for Avista, their utility cost test ratio was .66. For
13 the same program year for Rocky Mountain Power, the
14 benefit-cost ratio for the UCT was also .66, so for
15 programs that in Ms. Ottens i words are implemented
16 according to identical Department of Energy standards, to
17 have one program that is extremely cost effective while
lS the other two are nowhere near cost effective is a
19 serious concern to Staff. It seems that there is
20 something going on with the cost-effectiveness
21 calculation that needs to be resolved.
22 Q All right, and I i II ask you about your
23 characterization of Ms. Ottens i testimony and whether
24 that i s been fully stated or characterized later, but so
25 that Ilm sure that I feel I understand your answer, it
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1 seems to me you i re saying that on the one hand, you just
2 said that you don i t believe that Idaho Power i s assessment
3 of the cost effectiveness of its WAQC program is based on
4 erroneous information, but --
5 A I didn i t say that.
6 Q -- but elsewhere in your testimony you
7 state that Idaho Power, Rocky Mountain and Avista use
8 widely disparate types of information and consequently,
9 there should be some uniformity or reasonable similarity
10 to change that?
11 A First of all, I did not say that Idaho
12 Power is using erroneous information in their
13 cost-effecti veness calculation. I said I have concerns
14 about it and I would like those concerns to be
15 resolved.
16 Q I i m sorry, I thought I said that you
17 didn i t say, you did not say, that Idaho Power was using
18 erroneous data.
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A Okay, we agree on that point.
Q Good, thank you. Sorry if I misstated
21 your testimony. Okay, beginning on 6 -- Ilm sorry, page
22 6 and continuing through page S, I 1m just going to take
23 about three or four quotes from you and Ilm going to ask
24 some questions about those. On page 6, lines 17 through
25 20, you state that currently, utili ties capture
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1 wide-ranging amounts and types of data from the CAP
2 agencies, which negatively impacts program implementation
3 decisions. Do you agree that that is found in your
4 testimony?
5 A Yes.
6 Q And on page 7, lines 15 through 20, you
7 state that the manner in which the three utili ties
8 measure energy benefits should be included in the
9 cost-effecti veness analysis. I i m sorry, I have the wrong
10 quote, I back up. On page 7, lines 15 through 20, you
11 state that the manner in which the three utilities
12 measure energy savings all have substantial shortcomings.
13 You further state that it is impossible to accurately
14 assess a program i s cost effectiveness and how to improve
15 it, if necessary, until the disparate views on how to
16 measure energy savings are resolved.
17 A Yes, that i s in my testimony.
18 Q That i S your testimony. You further state
19 on page 7, lines 21 through 23, that there is a wide
20 discrepancy on whether and to what extent non-energy
.
21 benefits should be included in the cost-effective
22 analysis; is that right?
23 A Yes.
24 Q And then finally, IIll wrap up, page 8,
25 lines 3 through 6, you testify that disparate
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.1 methodologies make it difficult, if not impossible, to
2 draw conclusions about cost effectiveness among similar
3 programs when the benefits of each are quantified so
4 differently.
5 A Yes.
6 Q All right, given those snippets of your
7 testimony, I understand they were taken out of context to
8 some extent, but given that you have characterized your
9 testimony as having very serious concerns about these
10 differences between utility programs, how could Staff
11 have possibly evaluated the LIWA programs properly prior
12 to this new regime of ideologies and theories and
13 techniques that you propose in this case?.14 A You i re asking me about what Staff did on
15 cases that I didnlt work on?
16 Q Ilm asking if this is so important and
17 causes you such serious concerns, how is it that Staff
18 has made recommendations regarding LIWA funding in the
19 past and the Commission has acted in part on those
20 recommendations and other parties as well?
21 A I can i t comment on cases that occurred
22 before I worked here that I didn i t work on.
23 Q Okay. All right, as I promised, you
24 quoted Ms. Ottens as testifying that the three utili ties
25.for their LIWA programs use identical Department of
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669 DONOHUE (X)Staff
.1 Energy standards. If I would -- do you have Ms. Ottens i
2 testimony in front of you?
3 A I do. Give me just a minute.
4 Q Okay, sure.
5 A Okay.
6 Q It seems that you have left off a
7 substantial part of Ms. Ottens i actual sentence in her
8 testimony. Would you mind reading the entirety of her
9 answer beginning on page 22, line 17 through the period
10 on line 20 after the word "evaluated"?
11 Q Page 22, line 17 through where?
12 Q Through line 20, ending with the word
13 "evaluated.".14 A Okay. "First, though all three LIWA
15 programs share common objectives and must adhere to
16 identical implementation standards dictated by the U. s.
17 Department of Energy, a cost-effectiveness evaluation by
18 one utility of one program should not be deemed to have
19 any bearing on what results would occur if the other
20 programs were similarly evaluated."
21 Q All right; so she i s not stating that the
22 programs are in fact identical simply because they all
23 adhere to the Department of Energy criteria for
24 weatherization measures, is she?
25.A No.
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15
16
1 Q In fact, doesnlt she go on to cite what
2 she calls the human element that could factor in to the
3 evaluation of any LIWA program that might make one
4 program less cost effective or more than another?
5 A She does, but that does not explain why
6 Rocky Mountain and Avista came up with exactly the same
7 utili ty cost test results and Idaho Power i s was extremely
8 different.
9 Q All right, but human element, that i s a
10 valid thing to take into consideration, is it not, when
11 comparing utility program results?
12 A I don i t think it i S valid.
13 Q Well, valid as a possible explanation why
14 those results might differ?
A No.
Q You think it i S makes no difference at
17 all?
18 A I havenlt seen any evidence that it
19 produces a measurable difference.
20 Q Okay. Now, on page 8, line 11, you
21 contend that a negative evaluation of one LIWA program in
22 fact does call into question the other programs i cost
23 effectiveness, and if you need a reference, actually page
24 8, beginning on line 7, you have your question followed
.25 by your answer on line 11. Aren i t you in fact stating
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1 there that it is the Rocky Mountain Power 11-13 filing
2 and the evaluation of that Company i sLIWA program that
3 has called into question Idaho Power's program in this
4 case?
5 A Let me get back to a point you made in
6 your introduction there. I didn i t say that one company IS
7 evaluation does impact the others. I said, "It certainly
8 could," and I think that that i s an important
9 distinction.
10 Q All right. Okay, I accept that, so maybe
11 it does, maybe it doesnlt, but it could?
12 A Yes.
13 Q Now, the Commission -- well, strike that
14 What is the procedural status of the 11-13 proceeding, do
15 you know?
16 A If memory serves, I believe it i S a fully
17 submi tted matter on a decision memo for today.
18
19
20
Q For today?
A I think so.
Q I did not know that, thank you, and Staff
21 filed comments in that case, did it not?
22
23
A Yes.
Q Did you participate in preparing those
24 comments?
25.A Yes, I did.
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1
2
Q Are you the only Staff member who
participated in preparing those comments?
3
4
5 lead?
6
A
Q
A
No, Ilm not.
Would you characterize yourself as the
No, I would say I shared equal
7 responsibili ties with the other person who helped write
8 the comments.
9
10
11
Q
A
Q
Who else participated in those comments?
As an author, Beverly Barker.
Okay, and in that proceeding, I seem to
12 recall a number of us being on the telephone while we
13 went through something called a webinar. Do you recall
14
15
16
that?
17 webinar is?
18
19 that.
20
21
A
Q
I do.
Would you explain to the Commission what a
COMMISSIONER SMITH: There i s no need for
MR. PURDY: Therels no need for that?
COMMISSIONER SMITH: The Commissioners are
22 familiar with webinars.
23 MR. PURDY: Thank you, Commissioner. Then
24 strike that question.
25 Q BY MR. PURDY: My question is, you know, I
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.1 can obviously have my own impressions of your reaction to
2 that webinar, but, of course, we i re only interested in
3 yours. Did that webinar give you much confidence in the
4 resul ts of Rocky Mountain i s cost-effectiveness
5 evaluation?
6 A That webinar did not, that single review
7 did not, but that did not -- our review of the Rocky
8 Mountain evaluation comprised of much more than that
9 single webinar.
10 Q Understood, and your analysis would be
11 reflected, however, in the comments you filed in that
12 case; is that right?
13.14
A Yes.
Q Okay, and, Ms. Donohue, do you have those
15 comments in front of you?
16
17
18
A I think so.
Q All right.
A Let me find them. Yes.
19 MR. PURDY: Madam Chair, I donlt know how
20 far this will go. I don't have copies, so I i II ask the
21 witness to quote from certain parts of this and ask that
22 the Commission take official notice of a document
23 currently on file before it in an open case.
24.25
Q BY MR. PURDY: Would you turn your
attention
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1 MR. HOWELL: Madam Chair, Ilm going to
2 obj ect to taking official notice of Staff comments. I
3 don i t have the comments sitting here in front of me, nor
4 do the other parties, nor does the Commission. There
5 could be adj udicatory facts wi thin those comments that
6 the Commission hasn i t ruled on, so Ilm not sure that
7 official notice is allowed of adjudicatory facts and
8 without knowing exactly what comments are in that, Ilm
9 hesi tant not to obj ect. In addition, we are moving
10 pretty far afield regarding a cross-examination of
11 comments in another case in this case and I think the two
12 are, of course, separate and distinct.
13 COMMISSIONER SMITH: Mr. Purdy.
14 MR. PURDY: Madam Chair, first, in
15 response to Mr. Howell i s first point, I i m not asking that
16 the Commission deem Staff i s comments in any sense
17 adj udicatory, simply that they represent Staff IS position
18 taken in that case. The Commission can under its rules
19 take official notice of things, such as comments or
20 pleadings filed.
21 COMMISSIONER SMITH: I believe that i s not
22 correct, Mr. Purdy.
23
24
MR. PURDY: Well, okay.
COMMISSIONER SMITH: Our rule on official
25 notice allows us to take notice of our own orders,
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19
20
21
22
23
1 notices, rules, certificates and permits and those of any
2 other regulatory agency, state or federal, matters of
3 common knowledge, technical, financial or scientific
4 facts and matters judicially noticeable and the data and
5 periodic reports of regulated utili ties filed with the
6 Commission or federal agencies, so I don i t think comments
7 filed by any party in a case before the Commission which
8 case has not been decided and an order has not been
9 issued is available for official notice.
10 Now, if you were seeking to use Ms.
11 Donohue i s previous work as a means of impeaching her
12 position or testimony in this case, that i s allowed.
13 MR. PURDY: I am doing that very thing and
14 Ilm sorry if I mischaracterized the rule and
15 misunderstood the rule.
16 COMMISSIONER SMITH: So let i s take a
1 7 five-minute break so we all can go get our copy of the
18 comments.
MR. PURDY: Thank you.
(Recess. )
COMMISSIONER SMITH: Mr. Purdy.
MR. PURDY: Am I to understand --
COMMISSIONER SMITH: I i m sorry, I guess
24 you didn i t hear me, I said Mr. Purdy.
25 MR. PURDY: Thank you.
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1 Q BY MR. PURDY: Do you have Staff i s
2 comments in the Rocky Mountain Power 11-13 case in front
3 of you, Ms. Donohue?
4 A Yes.
5 Q Would you please turn to page 5 of those
6 comments and specifically, I refer you to the second full
7 paragraph appearing on that page dealing with the words
8 "Staff is unwilling."
9 A Yes, I see that.
10 Q Would you go ahead and read the first two
11 sentences?
12 A "Staff is unwilling to use the results of
13 the Cadmus study to approve Rocky Mountain's request to
14 find its current low income program as an acceptable part
15 of its portfolio. While the Cadmus evaluation was
16 generally in line with industry standards for low income
17 evaluations, its analysis was inconclusive in several
lS areas, primarily because Rocky Mountain failed to collect
19 detailed data from the CAPs which could inform
20 measure-level implementation decisions."
21 Q Thank you. Now, I heard you say that in
22 quoting the first line, you stated Staff is unwilling to
23 use the results of the Cadmus study. That word is
24 actually evaluation, isnlt it?
25.A It is. Thank you for the correction.
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1 Q Thank you; so doesn i t this somewhat
2 contradict testimony you i ve previously given that you are
3 not really holding the Rocky Mountain evaluation against
4 Idaho Power, yet that evaluation which you yourself call
5 into question here in these comments or someone on behalf
6 of the Staff calls into question in these comments are in
7 fact using that as a reason to have serious concerns in
8 this case about increasing WAQC funding and, therefore,
9 cause Staff to oppose increasing WAQC funding?
10 A No.
11 Q You don i t see the --
12 A I don i t see that at all. Nowhere in these
13 comments have I referred to Idaho Power or, pardon me,
14 not in those two sentences I just read, so I don i t
15 understand how you're getting from this quote to WAQC
16 funding.
17 Q Let me back up, Ilm sorry; so this quote
18 on page 5 of the Staff's comments in the Rocky Mountain
19 case, is it fair to characterize those as being fairly
20 critical of Rocky Mountain i s evaluation as to the cost
21 effectiveness of its LIWA program?
22 A I don i t think that i s entirely a fair
23 characterization. It is somewhat critical and then it
24 goes on to say it was generally in line with industry
25 standards for low income evaluations.
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1 Q And then it goes on to say after that that
2 it was inconclusive in several areas, does it not?
3 A It does.
4 Q All right. Well, the comments speak for
5 themsel ves, so my question is you have identified this
6 Rocky Mountain proceeding as being a cause of concern for
7 you in this case regarding WAQC funding, haven i t you?
8 A Can you point to the place in my rebuttal
9 where I say that?
10 Q Sure. I would point you to page 9, line
11 16, and actually, it begins on line 10 with the question
12 to you and that question, I i II paraphrase, indicates that
13 Ms. Ottens believes that Staff i s concern about increasing
14 WAQC is due to a Rocky Mountain case, the 11-13 case, and
15 you then were asked is she correct, and you say "Yes, in
16 part."
1 7 A Yes, that i s what I said.
18 Q All right; so in fact this Rocky Mountain
19 11-13 case is causing you some concern, some trouble in
20 terms of increasing WAQC funding?
21 A As I explained earlier, when we got the
22 evaluation of the Rocky Mountain Power low income
23 weatherization program showing that it was not cost
24 effective unless non-energy benefits were included, that.25 prompted Staff to take a closer look at Idaho Power i sand
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1 Avista i s low income weatherization programs, but it is
2 not holding Idaho Power i s program responsible for results
3 from the evaluation of Rocky Mountain i s low income
4 weatherization program.
5 Q Well, maybe it i S a matter of semantics,
6 but to say you i re not holding Idaho Power responsible, it
7 has nonetheless caused you concerns and caused you to
8 oppose WAQC funding in this case, has it not?
9 A It has not. On its own, the Rocky
10 Mountain Power evaluation has nothing to do with Idaho
11 Power iS WAQC program. When we took a closer look at
12 Idaho Power i s program on its own, we discovered
13 problems.
14 Q But you testified earlier that you have
15 not yet evaluated Idaho Power i s program.
16 A I i m not an evaluator. I i m a regulator. I
17 don i t evaluate programs.
18 Q So you just testified, though, a second
19 ago that you have concerns about Idaho Power iS WAQC
20 program based on what?
21 A As I said before, based on the results
22 published in Idaho Power i s 2010 DSM report where the
23 utili ty cost test is 3.27 for a program that is run
24 extremely similar to Avista and Rocky Mountain i s and they
25 get a utility cost test result of .66, which is not at
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.1 all cost effective ~ That discrepancy is the concern that
2 Staff has about Idaho Power i s program.
3 Q But Idaho Power i s evaluation shows that it
4 is doing relatively well in terms of cost effectiveness.
5 You i re concerned about how that can be so much greater
6 than Rocky Mountain i s evaluation results; is that
7 right?
S A No. Idaho Power has not conducted a
9 third-party evaluation of their program and they won It
10 until 2012.
.
.
11 Q Right, but --
12 A So we i re looking at their own
13 cost-effectiveness analysis which is different than a
14 third-party evaluation.
15 All right. Finally, referring back toQ
16 your comments, if you i d look at page 8 --
17 A Are we looking at my comments or my
18 rebuttal testimony now?
19 Q I i m sorry, I was about to correct that.
20 If you would look at Staff i s comments in the Rocky
21 Mountain Power case on page 8 of those comments, and Ilm
22 asking you about the last full paragraph prior to Staff
23 recommendations, is it fair to state that that paragraph,
24 starting with the words "for a variety reasons,"
25 generally supports a need for low income
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681 DONOHUE (X)Staff
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10
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1 weatherization?
2 COMMISSIONER SMITH: Mr. Purdy, are you
3 cross-examining now on another case iS position as opposed
4 to trying to impeach her testimony in this case?
5 MR. PURDY: I i m actually still trying to
6 impeach on the basis that Ms. Donohue has testified that
7 Idaho Power iS WAQC funding should not be increased in
S this case, that sufficient need has not been
9 demonstrated.
COMMISSIONER SMITH: And that is in her
11 testimony; correct?
12 MR. PURDY: Yes, that is in her testimony
13 and these comments talk about the need for low income
14 weatherization programs in general and they seem to
15 suggest there is a need.
16 Q BY MR. PURDY: Okay, do you need me to
17 repeat the question?
lS A Yes, please.
19 Q Okay. Why don i t you go ahead, if you
20 would, please, just for clarity and read the first three
.
21 sentences of that paragraph I referred you to.
22 A Beginning with "for a variety of reasons Ii?
23 Q Yes.
24 A "For a variety of reasons, low income
25 customers are less likely to participate in energy
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682 DONOHUE (X)Staff
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1 efficiency programs targeted to residential customers in
2 general . Incentives cannot overcome the lack of
3 available funds to invest in energy-savings measures or
4 purchase more efficient appliances. Low income housing
5 tends to be less energy efficient and more likely to need
6 repairs or additional work before weatherization measures
7 can be installed, such as repairing a roof before
8 installing ceiling insulation . Additional steps may need
9 to be taken to improve the health and safety of
10 occupants, such as installing adequate ventilation."
11 A That goes as far as I asked for.
12 A Oh, I apologize.
13 Q That i S all right, thank you for your
14 enthusiasm. The point of my question is simply based on
15 what you i ve just read, is this a fairly encouraging
16 statement of the need for low income weatherization and
17 the difficulty of low income customers to afford
18 weatherization without assistance?
19 MR. HOWELL: Madam Chairman, I'm going to
20 object to the nature of the question. I don i t think this
2 1 witness has said there isn i t a need for low income
22 funding, and now what we i re doing is we i re reading into
23 the record comments in another case and then
24 cross-examining. I think we i ve moved far beyond
25 impeachment.
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1 COMMISSIONER SMITH: Mr. Purdy.
2 MR. PURDY: Ms. Donohue refers to this
3 case, this Rocky Mountain Power case, no less than four
4 separate times in her testimony. She has indicated quite
5 clearly from my way of thinking that this case, Rocky
6 Mountain, has had a significant impact on Staff IS
7 position.
8 COMMISSIONER SMITH: And she i s explained
9 that several times.
10 MR. PURDY: All right.
11 COMMISSIONER SMITH: So has she in her
12 testimony said there i s no need for which you i re trying to
13 impeach by her other comments in another case?
14 MR. PURDY: My position is that in her
15 testimony, she insists that need is the critical
16 determiner or criterion for establishing WAQC funding and
17 for some reason we haven i t demonstrated that
18 sufficiently; otherwise, Staff would be proposing a WAQC
19 funding increase.
20 MR. HOWELL: Madam Chairman, this witness
21 isn i t objecting to WAQC funding. She i s objecting to an
22 increase in that funding and there i s been no indication
23 that she opposes the continuation of the current $1.2
24 million in WAQC funding.
25 MR. PURDY: But a WAQC funding increase is
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11
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20
22
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1 the whole point of my client i s involvement in this case.
2 It i s the primary point.
3 COMMISSIONER SMITH: Mr. Purdy, I just
4 don i t think that you i re on impeachment now.
5 MR. PURDY: All right, Madam Chair, I i II
6 stop there. Thank you.
7 Q BY Mr. PURDY: Finally, just a couple of
8 wrap-up questions on the Rocky Mountain Power case. Do
9 you know when the Commission will issue a final ruling in
10 that proceeding?
A No.
12 Q All right. Is there any chance that the
13 Commission i s ruling could potentially render some of the
14 concerns you i ve stated in your testimony moot?
15 A Ilm not going to speculate on a Commission
16 ruling.
17 Q All right, are some of the same issues
18 that you i re presenting in this case also involved in the
19 Rocky Mountain case?
A Are you talking about the Rocky Mountain
21 Power general rate case or the
Q No, the LIWA evaluation, the 11-13 case.
23 A There are some similar concerns.
24 Q Okay, thanks. Now, you are the only Staff
25 wi tness to specifically address the details of WAQC in
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1 this case, are you not?
2
3
A Yes, I am.
Q By default, are you the policy witness for
4 Staff on WAQC or would that be somebody else?
5
6
7
8
A That would be somebody else.
Q And who would that be?
A Randy Lobb.
Q Okay, IIll pick on Mr. Lobb. Ilm sure
9 he i s shaking in his boots as we speak. Did you hear
10 Ms. Drake testify for Idaho Power yesterday?
11 A Yes, I did.
13 that it is the Company i s position that it will not
All right, and do you recall her testimony12Q
14 increase WAQC funding without a Commission order to do
19 recall?
15 so?
16 A
17 Q
That was my understanding.
All right, and Ms. Ottens has also stated
18 this or noted this in her testimony, did she not, if you
20
21
A
Q
That i S my understanding.
All right, and did you also hear Ms. Drake
22 testify that Idaho Power did not intend to complete its
23 WAQC evaluation until the end of 2012 and a report
24 wouldn i t likely be forthcoming until the year 2013?
25 A That i S correct.
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21
1 Q All right, and now I want to ask you, and
2 this will be the beginning of the end of cross, I want to
3 ask you some questions, Ms. Donohue, about your
4 procedural recommendation to the Commission, how should
5 we deal with these concerns you have identified on a
6 going-forward basis, what i s the answer now; so with that
7 in mind, isn It it true that in your rebuttal testimony,
8 you indicate that in the Avista case there is a
9 settlement stipulation requiring workshops to discuss
10 LIWA funding prior to the next rate case?
11 A There is. Could you refer me to the exact
12 page?
13 Q Well, I might not be able to, but I know
14 you said that. Do you recall generally referring to the
15 Avista stipulation to that effect?
16 A Yes.
17 Q Okay, fair enough. Do you know whether
18 that Avista settlement stipulation also contains a
19 stay-out provision for Avista?
A I do not know.
Q Would it surprise you to know that Avista
22 cannot increase its rates unless April of 2013?
23
24
25.
A No, it wouldnlt surprise me.
Q Okay, and that settlement has been
approved by this Commission, has it not?
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1 A I don't know.
2 Q Okay. Regarding the Rocky Mountain Power
3 proposed settlement to be heard before this Commission
4 soon, does that settlement stipulation also contain a
5 stay-out, not allowing Rocky Mountain Power to file a
6 general rate case until May of 2013?
7 A I don i t know.
8 Q All right, my point Ilm driving at is if
9 we have these -- if you i re keying off settlement
10 stipulations that provide for workshops and you Ire
11 proposing that we defer a WAQC funding increase decision
12 off on to workshops that will be conducted in the future
13 and, in part, you i re relying on settlement stipulations
14 for utilities that have stay-out provisions, doesn i t that
15 create some uncertainty as to when these workshops will
16 actually be conducted?
17 A No. Staff recommends conducting the
18 workshops immediately because we do understand that there
19 is a need for low income weatherization.
Q Okay. You recommended that in your Staff
21 comments in the Rocky Mountain Power 11-13 case, right,
22 back in October?
23
24.25
A Recommended workshops?
Q Immediately, yes.
A I don i t recall the exact language, but I
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1 believe we were trying to convey some urgency..2 Q What do you mean by immediately? Do you
As soon as we get the Commission orders in
5 these several cases, it seems to me we could set up
3 have an idea?
4 A
6 workshops for January.
7 Q I i m sorry, I didn i t hear the first part of
8 that. As soon as you gèt Commission orders
9 A When we get Commission orders in this
10 handful of cases ordering us to conduct workshops, I
11 would like to start them in January.
12 Q The handful of cases being this case, the
13 Rocky Mountain case --.14 A And the other Rocky Mountain case.
-- and the other Rocky Mountain case?
And the Avista case, I guess.
I think we have a final ruling in that,
18 but maybe Ilm wrong.
20
15 Q
Okay.
Okay; so you i re hopeful that we can get
21 rulings that will allow you to have workshops in
16 A
17 Q
19 A
Q
22 January?
23
24.25
A
Q
Yes.
All right, and in light of the fact that
Idaho Power has clearly stated that it does not intend to
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1 increase WAQC funding absent a Commission order,
2 realistically, when do you think that anything
3 substantive will come out of those workshops as far as
4 WAQC funding is concerned?
5 A I think we could get something substantive
6 in probably two or three months, and then CAPAI could
7 file a case asking Idaho Power to raise WAQC funding at
8 that point.
9 Q Ilm not asking you to speculate what Idaho
10 Power would do, but it i s obvious that they would not be
11 anywhere near done with their own WAQC third-party
12 evaluation, would they?
13 A Did Staff recommend waiting until the WAQC
14 evaluation results were in in order to get an increase in
15 WAQC funding? I don i t recall saying that or writing that
16 at any point.
17 Q That i s what I i m asking you now, to outline
18 your vision for the future.
19
20
A What i s the question?
Q The question was simply would Idaho Power
21 maybe have a problem settling or agreeing to a WAQC
22 funding increase and a Commission order to that effect
23 when it hasn i t even finished its third-party evaluation
24 of WAQC?
25.MS. NORDSTROM: I obj ect to this line of
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1 questioning and speculating about what Idaho Power would
2 or would not do in a certain set of circumstances from
3 this witness.
4 COMMISSIONER SMITH: Thank you,
5 Ms. Nordstrom, and I think, Mr. Purdy, she i s correct.
6 MR. PURDY: Thank you.
7 Q BY MR. PURDY: Did you take into
8 consideration in proposing deferring a WAQC funding
9 decision the fact .that ARRA has expired?
10 A Yes.
11 Q And do you have any information, Ms.
12 Donohue, as to what Congress might do in terms of federal
13 low income weatherization funding?
14 MR. HOWELL: I i m going to obj ect to the
15 question. It requires speculation on the part of the
16 witness.
18 Ms. Drake and she had information. If she doesnlt have
MR. PURDY: This was asked and answered by
19 it, she doesnlt have it.
20 COMMISSIONER SMITH: You know, I think if
21 Ms. Donohue knew what Congress was going to do she would
22 be somewhere besides our Hearing Room.
23 Q BY MR. PURDY: I i II restate. Is there any
24 guarantee that Congress will necessarily reinstitute the
25 pre-ARRA funding levels for low income weatherization or
CSB REPORTING
[phone]
691 DONOHUE (X)
Staff
.
.
1 could they be less potentially?
2 A There is no guarantee.
3 Q Thank you, and you i ve testified, I
4 believe, that the current state of the economy is not
5 insignificant in this case?
6 A That i S true.
7 Q Excuse me. One more question. Did you --
8 do you understand that Idaho Power. perceives its current
9 WAQC funding to total or constitute one-third of one
10 percent of total residential revenues?
11 A I donlt know that.
Q Do you know?
A No.
Q All right;so I guess in this question
it IS pretty evident where my client is coming from,given
that we are clearly in very,very troubling economic
12
13
14
15
16
17 times, given that we have lost ARRA funding, given the
lS uncertainty of future federal LIWA funding, given the
19 fact that Idaho Power has not increased WAQC funding
20 since the 2003 rate case, given the fact that we have
21 many variables regarding the outcomes of evaluations and
22 Commission Orders, given what Ms. Ottens has testified to
23 as far as a backlog for Idaho Power, given the fact that
24 the other utilities have had funding increases, several.25 funding increases, since 2003 --
CSB REPORTING
(20S) 890-5198
692 DONOHUE (X)Staff
.
.
1 MR. HOWELL: Madam Chairman?
2 MR. PURDY: -- is it really fair
3 COMMISSIONER SMITH: Mr. Howell.
4 MR. HOWELL: I i m going to obj ect to the
5 form of the question. It assumes facts not in evidence.
6 It introduces irrelevant evidence. It i S predicated on
7 facts that are not facts and I think -- and it i S a
8 compound question and Ilm not sure how the witness can
9 speculate on the proper answer.
10 COMMISSIONER SMITH: Mr. Purdy.
11 MR. PURDY: It i S compound. I was trying
12 to expedite things.
13 COMMISSIONER SMITH: Well, I think you Ire
14 characterizing a whole number of things that people may
15 disagree on the characterization of.
16 MR. PURDY: Okay, I will restate.
17 Q BY MR. PURDY: In light of all
18 circumstances, Ms. Donohue, is it really fair to Idaho
19 Power i s low income customers to defer into the uncertain,
20 indefinite future the WAQC funding decision to
21 workshops?
22 A I i m not disputing the need for low income
23 weatherization funding. As I have explained several
24 times, we have serious concerns about the cost.25 effectiveness of Idaho Power i s low income weatherization
CSB REPORTING
[phone]
693 DONOHUE (X)
Staff
.
.
20
21
1 program and we cannot support an increase of 125 percent
2 wi th those very substantial concerns. Those concerns
3 need to be resolved and I think that workshops are the
4 best place to make sure that CAPAI i S concerns, Staff IS
5 concerns and Idaho Power i s concerns are met and resolved
6 to the satisfaction of all parties.
7 MR. PURDY: That is all that I have for
8 Ms. Donohue. Thank you very much.
9 COMMISSIONER SMITH: Thank you, Mr. Purdy.
10 No questions from the Commissioners.
11 Redirect, Mr. Howell?
12 MR. HOWELL: Just two questions.
13
14 REDIRECT EXAMINATION
15
16 BY MR. HOWELL:
17 Q Isn i t it true that Avista provides only
18 gas service in some communities within its service
19 territory?
A I believe that to be the case.
Q And are you -- you i re not advocating, are
22 you, discarding parity as a guideline or one of the
23 metrics, are you?
24 A As one of the metrics, it seems.25 reasonable.
CSB REPORTING
[phone]
694 DONOHUE (Di)
Staff
.
.
.
1
2
MR. HOWELL: All right, thank you. No
further questions.
3 COMMISSIONER SMITH: Thank you,
4 Mr. Howell, and, Ms. Donohue, we appreciate your help.
5 (The witness left the stand.)
6
7 Mr. Howell.
8
9 the stand.
10
COMMISSIONER SMITH: Your next witness,
MR. HOWELL: Staff would call Mr. Lobb to
11 RANDY LOBB,
12 produced as a witness at the instance of the Staff,
13 having been first duly sworn, was examined and testified
16
17
14 as follows:
15
18 BY MR. HOWELL:
19 Q
DIRECT EXAMINATION
Could you please state your name and spell
20 your last for the record, please?
21
22
A
Q
My name is Randy Lobb, L-o-b-b.
23 in what capacity?
And Mr. Lobb, who are you employed by and
24 A I i m employed by the Idaho Public Utili ties
25 Commission as the utilities division administrator.
CSB REPORTING
[phone]
695 LOBB (Di)
Staff
.
13
. 14
16
17
18
1 Q And would it be fair to characterize you
2 as the Commission Staff i s policy witness in this case?
3 A Yes.
4 Q And do you have any corrections to either
5 your prefiled direct testimony or your two exhibits?
6 A I have one correction on page 17, Line 21.
7 Line 21 starts off with "per month." "Per month" should
8 be removed, so the full sentence would read, "A small
9 commercial customer using 1,000 kilowatt-hours per month
10 will see an average monthly increase of 3.01% from $92.33
11 to $95.11."
12 Q Any other corrections?
A No,that completes them.
Q With that correction,if I were to ask you
the questions set out in your prefiled testimony,would
your answers be the same today?
15
A Yes, they would.
19 Mr. Lobb is available for cross.
MR. HOWELL: With that, Madam Chairman,
20
21 Mr. HowelL.
COMMISSIONER SMITH: Thank you,
22 (The following prefiled direct testimony
23 of Mr. Randy Lobb is spread upon the record.)
24
25.
CSB REPORTING
[phone]
696 LOBB (Di)Staff
.
.
.
10
1 Q.Please state your name and business address for
2 the record.
3 A.My name is Randy Lobb and my business address
4 is 472 West Washington Street, Boise, Idaho.
5 Q.By whom are you employed?
6 A.I am employed by the Idaho Public Utili ties
7 Commission as Utilities Division Administrator.
8 Q.What is your educational and professional
9 background?
A.I received a Bachelor of Science Degree in
11 Agricultural Engineering from the University of Idaho in
12 1980. I then worked for the Idaho Department of Water
13 Resources from June of 1980 to November of 1987. I
14 recei ved my Idaho license" as a registered professional
15 Civil Engineer in 1985 and began work at the Idaho Public
16 Utilities Commission in December of 1987. My duties at
17 the Commission currently include case management and
18 oversight of all technical Staff assigned to Commission
19 filings. I have conducted analysis of utility rate
20 applications, rate design, proposed tariffs and customer
21 peti tions. I have testified in numerous proceedings
22 before the Commission including cases dealing with rate
23 structure, Cost of Service, power supply, line
24 extensions, regulatory policy and facility acquisitions.
25 Q.What is the purpose of your testimony in this
CASE NO. IPC-E-11-08
10/07/11 697 LOBB, R. (Di) 1
STAFF
.
.
.
1 case?
2 A.The purpose of my testimony is to describe the
3 Stipulation (the Proposed Partial Settlement) filed in
4 this case and to explain the rationale for Staff IS
5 support. I w~ll also present Staff i s proposed reduction
6 in the Energy Efficiency Tariff Rider.
7 Q.Please summarize your testimony.
8 A.The Stipulation resolves most of the issues in
9 the general rate case and is agreed to by all parties but
10 one. Based on Staff iS audit of Idaho Power Company IS
11 results of operations, evaluation of proposed proforma
12 adjustments and consideration of all issues associated
13 with Cost of Service, rate design and customer impact,
14 Staff supports the Proposed Partial Settlement resulting
15 in an increase in base rates of 4.19%. Staff further
16 proposes reducing the Energy Efficiency Tariff Rider
17 (Schedule 91) by O. 75%, thereby reducing the overall net
18 increase to 3.44%. Finally, based on its review of the
19 Company i s filing and in consideration of issues and
20 concerns expressed by other parties to the case in
21 settlement negotiations, Staff believes the broad
22 Proposed Partial Settlement is in the public interest, is
23 just and reasonable and should be approved by the
24 Commission.
25 Q.
A.
How is your testimony organized?
My testimony is subdivided under the following
CASE NO. IPC-E-11-08
10/07/11 698 LOBB, R. (Di) 2
STAFF
.
.
.
1 headings:
2 Stipulation Overview Page 3
Page 5
Page 8
Page 11
Page 14
Page 18
Page 19
3 The Settlement Process
4 Revenue Adj ustments
5 Cost of Service
6 Rate Design
7 Separate Dockets
8 The Energy Efficiency Rider
9
10 Stipulation Overview
11 Q.Please provide an overview of the Stipulation
12 and Proposed Partial Settlement.
13 A.The Stipulation provides for an annual overall
14 increase in electric base revenue of $34 million or
15 4.07%. The increase, spread uniformly to all customer
16 classes, is actually 4.19% because the overall increase
17 does not apply to Hoku Material i s first block energy.
18 The Stipulation encourages the Commission to make the new
19 rates effective on January 1, 2012.
20 The Stipulation specifies annual power supply
21 cost levels for the Power Cost Adjustment (PCA)
22 mechanism, the amortization schedule for Bennett Mountain
23 combustor inspection costs, and the amortization schedule
24 for the Light Detection and Radar Survey (LIDAR) costs.
25 It also specifies a 7.86% overall rate of return (ROR)
CASE NO. IPC-E-11-08
10/07/11 699 LOBB, R. (Di) 3
STAFF
.
.
.
1 all revenue requirement issues in the case, it does not
2 specify revenue adj ustments to the Company i s case or an
3 authorized ROE. While the Stipulation uses the Company i s
4 Class Cost of Service Study (COS): 1) to establish fixed
5 costs for the Fixed Cost Adj ustment mechanism (FCA); 2) to
6 reset the Load Change Adjustment Rate (LCAR) for the PCA;
7 and 3) to modify rate components within individual
8 customer classes, the COS has not been used to spread the
9 revenue increase among customer classes. Rather, the
10 Stipulation uniformly spreads revenue among the classes.
11 The Stipulation is attached as Staff Exhibit No. 101.
12 Q.Does the Stipulation resolve all issues
13 presented by the Company in its original filing?
14 A.No. Several issues remain. Two issues will be
15 addressed in separate dockets: 1) Whether the FCA pilot
16 should be made permanent; and 2) Overhead amounts
17 associated with line extensions under Rule H. Three
18 other issues are not resolved and will be addressed at
19 hearing. These three unresolved issues are: 1) the level
20 of funding for Low Income Weatherization Assistance; 2)
21 the calculation of facility charges associated with
22 industrial Schedules 9 and 19 customers; and 3) the
23 appropriate level of the Energy Efficiency Rider.
24 Q.How does the annual base revenue requirement
25 increase proposed in the Stipulation compare to the
increase
CASE NO. IPC-E-11-0S
10/07/11 701 LOBB, R. ( Di) 4
STAFF
.
.
.
1 originally proposed by Idaho Power?
2 A.The Company originally proposed increasing
3 annual base electric revenue by $83 million or 9.9%. The
4 Stipulation would increase annual base electric revenue
5 by $34 million or approximately 41% of the original
6 request.
7 The Settlement Process
S Q.Would you please describe the process leading
9 to the Stipulation?
10 A.Yes. The Company filed its rate application
11 with the Commission on June 1, 2011 and Staff immediately
12 began its review. The Commission set a July 1, 2011
13 intervention deadline. Parties ultimately approved for
14 intervention included: The Community Action Partnership
15 Association of Idaho (CAPAI), the U. S. Department of
16 Energy (DOE), the Industrial Customers of Idaho Power
17 (ICIP), the Idaho Irrigation Pumpers Association (IIPA),
18 Kroger Company, Micron, the Northwest Energy Coalition
19 (NWEC), the Idaho Conservation League (ICL), the Snake
20 River Alliance (SRA) and Hoku Materials.
21 Once parties to the case were determined, they
22 met to establish a procedural schedule that included
23 production request deadlines, direct and rebuttal
24 testimony prefile dates, hearing dates and two dates for
25 settlement negotiations. The settlement conferences were
CASE NO. IPC-E-I1-0S
10/07/11 702 LOBB, R. (Di) 5
STAFF
, ~ "":, ~~-1 hèlcLon, August 31ànd September 8,201'1 "flt the
.'. . .~" ,- ,...
., '. ." "
2 Commission hearing
3 /
4 /
5 /
6
7
8
9
10
11
12
13
. 14
15
16
1 7
18
19
20
21
22
23
24
25.
CASE NO. IPC-E-11-08
10/07/11 703 LOBB, R. (Di) Sa
STAFF
.1 room. All parties participated in both conferences.
2 Settlement discussions focused primarily on
3 revenue requirement with specific discussion regarding
4 ROE, Company salaries, Power Supply Costs and
5 amortization of a variety of test year expenses. Other
6 topics discussed included the FCA pilot program, Cost of
7 Service, low income weatherization, facilities charges,
8 line extension overheads, rate design and the appropriate
9 level of the Energy Efficiency Rider.
10 The parties stated their positions on the
11 various revenue requirement issues and presented
12 proposals on all of the other topics. There was frank
13 and thorough discussion of all issues. Tentative.14 agreement was reached by the end of the conference on the
15 8th by all parties except CAPAI.
16 Q.Were there further efforts and discussions
17 about issues after September 8th?
18 A.Yes, the Energy Efficiency Rider level issue
19 was still in dispute after the September 8th conference.
20 After further discussions, the parties agreed to
21 designate the DSM Rider issue as unresolved and address
22 it at the December technical hearing. After several
23 rounds of review, all parties except CAPAI signed the
24 Stipulation and it was submitted to the Commission for
.25 approval on September 23, 2011.
Q. How did Commission Staff evaluate the Proposed
CASE NO. IPC-E-11-08
10/07/11 704 LOBB, R. (Di) 6
STAFF
.
.
.
1 Partial Settlement to determine that it was reasonable?
2 A.As in prior cases, Staff evaluated whether a
3 settlement would result in a better outcome for customers
4 than could reasonably be anticipated through litigation.
5 In this case, Cost of Service and revenue spread to the
6 various customer classes, in addition to the overall
7 revenue requirement increase, were of primary concern.
8 Staff evaluated the Stipulation i s merits by comparing it
9 to what might be expected if all of the parties filed
10 testimony and the case proceeded to hearing. Staff
11 believes the Stipulation, arrived at through give and
12 take of all the parties, results in both a reasonable
13 overall base rate increase and equitable treatment of all
14 customer classes.
15 Q.Doesn i t the Commission decide what the revenue
16 requirement increase should be and how the increase
17 should be allocated to each customer class?
18 A.Yes. The Commission makes the final decision but
19 its decision must be based on the record presented
20 through testimony and other evidence. The parties to the
21 case make revenue requirement adjustment recommendations
22 on the record for the Commission to consider. The
23 parties also make recommendations regarding Cost of
24 Service and how the increase should be allocated to the
25 various customer classes. The potential outcome at
CASE NO. IPC-E-I1-08
10/07/11 705 LOBB, R. (Di) 7
STAFF
.
.
.
1 party recommendations presented and on what
2 recommendations the Commission might ultimately accept.
3 Revenue Adj ustments
4 Q.What type of adjustments to the Company i s
5 proposed revenue requirement had Staff identified and
6 what was the dollar value of those adjustments?
7 A.Staff aggressively evaluated the Company's
8 proposed revenue requirement increase and proposed a
9 variety of adjustments at the settlement conferences.
10 Two of the largest adjustments identified by Staff were
11 ROE and salaries. Staff maintained that the Company i s
12 proposed ROE of 10.5% was excessive and unjustified under
13 current economic conditions. Similarly, Staff maintained
14 that salary increases awarded to employees in 2011 and
15 2012 were excessive and should not be allowed for cost
16 recovery. The Staff positions of lowering the ROE to a
17 more reasonable level in combination with lower employee
18 salaries would, in our judgment, reduce the Company i s
19 revenue requirement request by more than $16 million.
20 Staff also proposed various other adjustments
21 including amortization of test year expenses incurred for
22 the Bennett Mountain combustor inspection and the LIDAR
23 Survey costs; removal of Fish and Game and civic
24 organization expenses; adjustments for FERC allocated
25 costs, smart grid investments, board of directors i
compensation,
CASE NO. IPC-E-11-08
10/07/11 707 LOBB, R. (Di) 8
STAFF
.
.
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1 P-Card expenses and revenue normalization. The combined
2 effect of other Staff-proposed adj ustments may have
3 reduced revenue requirement by an additional $7.8
4 million.
5 Q.Did Staff take a position on any other revenue
6 requirement issues?
7 A.Yes. The single largest adjustment proposed by
8 Staff was removing $23.9 million in Cogeneration and
9 Small Power Production (CSPP) costs from base rate
10 recovery. The identified CSPP costs were associated with
11 contracted wind projects anticipated to come on line in
. 12 2011 or 2012.
13 The Company had included this level of CSPP
14 costs to offset $23.9 million in first block revenue
15 currently generated from the Hoku service contract. Both
16 revenue from the contract and the CSPP costs are captured
17 in the PCA as power supply costs if not captured in base
18 rates. Staff agreed that Hoku revenues should be
19 included in base rates because they were actually being
20 generated. The Company i s intent was to hold net power
21 supply costs in base rates at levels previously approved
22 by the Commission. However, Staff did not believe it was
23 necessary or appropriate to include CSPP cost in base
24 rates because they were projected based on anticipated
25 project online dates and were not actually being
CASE NO. IPC-E-11-08
10/07/11 708 LOBB, R . ( Di ) 9
STAFF
1 incurred.If the proj ects do come on line and costs are.2 incurred,they will flow through the PCA at 100%if they
3 are not incl uded in base rates.Removing the
4 /
5 /
6 /
7
8
9
10
11
12
13.14
15
16
17
18
19
20
21
22
23
24
25.
CASE NO.IPC-E-I1-08 709 LOBB,R.(Di)9a10/07/11 STAFF
.
.
.
1 CSPP cost offset to the Hoku revenue significantly
2 decreases the required base rate increase and moves
3 recovery of the CSPP costs to the PCA if and when they
4 are actually incurred.
5 Q.How confident was Staff that its adjustments
6 could be justified on the record and accepted by the
7 Commission upon hearing?
8 A.Staff was reasonably confident that at least
9 some of the proposed adjustments would be accepted by the
10 Commission at hearing. Similar ROE and employee salary
11 adjustments were favorably addressed by the Commission in
12 the recent Pacificorp general rate case (PAC-E-10-7).
13 Staff also believed that the Commission would accept the
14 proposed treatment of future CSPP costs through the PCA.
15 However, other proposed adj ustments have not been
16 addressed at hearing and were less certain to be accepted
17 by the Commission. Staff was not as confident that it
18 could successfully defend the other adjustments on the
19 record in the face of rebuttal testimony provided by the
20 Company.
21 Q.Did any of the other parties propose
22 adj ustments to the Company i s requested revenue
23 requirement?
24 A.Yes. Other parties suggested adjusting ROE,
25 limiting test year proforma adjustments, modifying
CASE NO. IPC-E-11-08
10/07/11 710 LOBB, R. (Di) 10
STAFF
1 revenue normalization and adjusting non-labor O&M..2 However,most of these suggestions were already
3 incorporated in Staff
4 /
5 /
6 /
7
S
9
10
11
12
13.14
15
16
17
lS
19
20
21
22
23
24
25.
CASE NO.IPC-E-11-0S 711 LOBB,R.(Di)lOa10/07/11 STAFF
.
.
.
1 adjustments, previously decided by the Commission, or in
2 Staff i s view, were without sufficient support.
3 Consequently, Staff evaluated the revenue requirement
4 settlement primarily based on Staff adjustments alone.
5 Q.Why doesn i t the Stipulation specify a new ROE
6 and the other revenue requirement adj ustments?
7 . A.Rather than identifying a specific ROE, the
8 Stipulation specifies an overall ROR of 7.86% which
9 combines ROE, capital structure and cost of debt.
10 Specifying a ROR establishes a range of possible input
11 parameters and represents a compromise to facilitate
12 agreement on the overall revenue requirement.
13 Although the Stipulation is silent on the value
14 of many adjustments considered in arriving at the
15 specified revenue requirement increase, it does specify a
16 few. For example, the Stipulation incorporates Staff iS
17 proposed amortization of Bennett Mountain Combustor
18 Inspection costs over a four-year period and a ten-year
19 amortization of LIDAR survey cost. The Stipulation also
20 specifies the base level of Net Power Supply Expenses
21 (NPSE) for use in the PCA that includes Hoku sales
22 revenue but excludes offsetting CSPP costs.
23 Cost of Service
24 Q.Please describe the Stipulation as to customer
25 class Cost of Service and revenue spread among theclasses.
CASE NO. IPC-E-11-08
10/07/11 712 LOBB, R. (Di) 11
STAFF
.
.
.
1 A.The Stipulation does not accept any specific
2 class Cost of Service methodology in spreading the
3 revenue increase to the customer classes. The parties
4 agree that the Company i s class Cost of Service can be
5 used in this case for the limited purpose of establishing
6 fixed costs for the FCA mechanism, establishing an LCAR
7 for use in the PCA and for setting various rate
8 components within individual customer classes. Fixed
9 costs in the FCA and the LCAR for the PCA must be updated
10 periodically, as are base rate power supply costs, for
11 the mechanisms to function properly. The Company IS
12 proposed class Cost of Service provides a reasonable
13 basis for establishing these components.
14 Q.Why was the Company i s proposed Cost of Service
15 not used to spread the revenue increase among the
16 customer classes?
17 A.Class Cost of Service has always been one of
18 the most contentious issues addressed in general rate
19 cases. Appropriate Cost of Service methodology and
20 equitable revenue spread to customer classes was also an
21 important issue in this case. Acceptance of the
22 Company i s proposed class Cost of Service would have
23 resul ted in increases significantly above the overall
24 average for irrigators and high load factor industrial
25 customers while residential customers would see increases
CASE NO. IPC-E-11-0S
10/07/11 713 LOBB, R. (Di) 12
STAFF
1 below the average.The proposed uniform increase for all.2 customer classes
3 /
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5 /
6
7
8
9
10
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13.14
15
16
17
18
19
20
21
22
23
24
25.
CASE NO.IPC-E-11-08 714 LOBB,R.(Di)12a10/07/11 STAFF
1 represents a compromise that allowed the parties to.2 achieve a comprehensive revenue requirement settlement.
3 Q.Why did Staff agree to a uniform spread given
4 the results of the Company's COS?
5 A.Staff believes that some move toward Cost of
6 Service should be made based on the Company proposed Cost
7 of Service study. Therefore, in order to reach
8 compromise on rate spread, Staff evaluated the effects of
9 moving $23.9 million in CSPP costs from base rate
10 recovery to PCA recovery. Staff determined that if CSPP
11 costs are incurred in 2011/2012 as anticipated by the
12 Company, high energy users such as irrigators and large
13 industrial customers will pay a larger, disproportionate.14 share of the costs through the PCA. In fact, Staff
15 analysis showed that the spread of potential CSPP cost
16 combined with the uniform base rate increase results in
17 an overall revenue spread that generally reflects the
18 Company i s proposed class Cost of Service. Consequently,
19 Staff supports the uniform base revenue spread in this
20 case.
21 Q.Is it reasonable to further delay consideration
22 of class Cost of Service methodology until the next
23 general rate case?
24 A.Yes. If reasonable allocation can occur with
.25 the base rate settlement and subsequent treatment of
CASE NO. IPC-E-11-08
10/07/11 715 LOBB, R. (Di) 13
STAFF
1 future CSPP cost through the PCA,then class Cost of.2 Service litigation
3 /
4 /
5 /
6
7
S
9
10
11
12
13.14
15
16
17
18
19
20
21
22
23
24
25.
CASE NO.IPC-E-11-0S 716 LOBB,R.(Di)13a10/07/11 STAFF
1 can wait until the next general rate case..2 The reality of class Cost of Service is that it
3 is a moving target that is never fully resolved or fully
4 implemented. Nevertheless, the longer the Commission
5 goes without significant rate movement based on Cost of
6 Service the more difficul t it will be to implement in the
7 future.
8 Ra te Design
9 Q.How are individual rate components proposed to
10 be changed under the Stipulation?
11 A.The Parties agreed to accept, for the purposes
12 of this case, the Company proposal to adjust rate
13 components within each class based, in part, on the.14 Company i S proposed Cost of Service results.
15 Specifically, the Stipulation states that: "the signing
16 parties agree that the existing tariff rate components
17 for all schedules should be increased in a manner that is
18 consistent with the rate design originally filed by the
19 Company in this case..." For many rate components within
20 each customer class, the Company i s originally-filed rate
21 design incorporates a 5% move toward Cost of Service as
22 identified in the Company's Cost of Service study.
23 Q.How does the proposed rate design impact the
24 various customer classes?
25 A.For Residential Schedule 1 customers, the.
CASE NO. IPC-E-I1-08
10/07/11 717 LOBB, R. (Di) 14
STAFF
1 customer charge will increase from $4 to $5 per month..2 The increase
3 /
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6
7
8
9
10
11
12
13.14
15
16
17
18
19
20
21
22
23
24
25.
CASE NO.IPC-E-11-08 718 LOBB,R.(Di)14a10/07/11 STAFF
1 in the energy rate components will depend on the season.2 of the year. Summer energy rates for each block will
3 increase by approximately 4.1%. The first and
4 second-tier energy rates in the non-summer period will
5 increase by approximately 3.1%, while the third-tier
6 energy rate will remain unchanged.
7 For Residential Schedules 3, 4 and 5, the
8 Stipulation applies the Company-proposed change in the
9 customer charge from $4 to $5 per month. The energy rate
10 for Schedule 3, Master Metered Mobile Home Parks,
11 increases by 4.13%. With respect to The Energy Watch
12 Program (Schedule 4) and the Time-Of-Day (TOD) Program
13 (Schedule 5), the Stipulation accepts the Company IS.14 proposed modification from three daily TOD and tiered
15 block rates to seasonal peak and off-peak rates.
16 Rate Components for Small General Service
17 (Schedule 7), Large General Service (Schedule 9), Large
18 Power Service (Schedule 19) and Agricultural Irrigation
19 Service (Schedule 24), have all been modified based in
20 part on the Cost of Service study to achieve the revenue
21 requirement allocated to each class. The individual rate
22 components proposed for each class are shown in Exhibit
23 No. 3 to the Stipulation.
24 Q.Please explain Staff i s support for rate
.25 component modification based on the Company i s COS.
CASE NO. IPC-E-11-08
10/07/11 719 LOBB, R. (Di) 15
STAFF
1 A.Staff has generally supported the Company i s COS.2 with respect to class revenue requirement. Staff has not
3 necessarily supported Cost of Service to adj ust rate
4 components. However, in the spirit of compromise and
5 because Cost of Service can provide insight into the size
6 and relationship of the rate components within each
7 customer class, Staff agreed to the Company i s rate design
8 proposal in this case. Staff additionally notes that the
9 Company i s proposed Cost of Service adj ustment was
10 relatively modest and was made smaller by the reduced
11 revenue requirement increase.
12 Q.Why does Staff support the increase in the
13 residential customer charge?.14 A.Staff supports the customer charge increase as
15 part of the negotiated Settlement and to recognize the
16 Company i s increased investment to install sophisticated
17 automated meters and the customer information system
18 infrastructure needed for operation. The $5 customer
19 charge is also consistent with Avista i s monthly charge of
20 $5.25 and Rocky Mountain Power i s monthly customer charge
21 of $5.
22 Q.Could you please explain Staff's support for
23 the proposed changes in the residential non-summer energy
24 rates?
25 A.Yes. Staff agrees that energy production costs.
CASE NO. IPC-E-11-08
10/07/11 720 LOBB, R. (Di) 16
STAFF
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.
20
21
22
23
24
25.
1 in the non-summer period are lower than the summer period
2 and should therefore be reflected in the relative energy
3 rates
4 /
5 /
6 /
7
8
9
10
11
12
13
14
15
16
17
18
19
CASE NO. IPC-E-11-0S
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STAFF
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.
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1 paid by customers. Staff also recognizes that customers
2 with all electric homes are most severely impacted by the
3 third block energy rates in the non-summer period. Staff
4 believes that maintaining the third block non-summer
5 energy rate at its current level will moderate the impact
6 on this group of customers while continuing to provide a
7 reasonable price signal. Staff further believes that
8 rural Idaho Power customers with all electric homes have
9 few options to control winter electric consumption when
10 natural gas is not available. The proposed rate design
11 helps reduce the cost burden on those customers with
12 non-discretionary winter heating load.
13 Q.What is the impact of the stipulated changes on
14 residential and small commercial customer bills?
15 A.A residential customer using 1000 kWh per month
16 will see an average monthly bill increase of 4.54% from
17 $73.33 to $76.66. A residential customer using 4000 kWh
18 per month will see a bill increase of 2.44% from $329.09
19 to $337.13 per month. A small commercial customer using
20 1000 kWh per month will see an average monthly increase
21 of 3.01% from $92.33 to $95.11. Staff Exhibit No. 102
22 shows how residential and small commercial monthly bills
23 will change for different usage levels.
24 Q.Coùld you please describe Staff i s support for
25 the modification and expansion of the Company i s Energy
CASE NO. IPC-E-11-0S
10/07/11 722 LOBB, R. (Di) 17
STAFF
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1 Watch and Time-Of-Day Programs?
2 A.Yes. Staff fully supports expanding these
3 voluntary programs to allow customers to choose a rate
4 plan that best fits their needs. Expanding these
5 programs also better meets the Company i s needs in terms
6 of reducing load on peak hours and during critical peak
7 periods. Staff fully supports the rate design that
8 provides two, time-of-use rate periods throughout the
9 year. The rate design is easier for customers to
10 understand and better reflects the existing peak, off
11 peak, wholesale energy markets. Finally, expanding the
12 program makes better use of the Company i s recently
13 installed automated meter technology. These meters were
14 designed to provide just the type of hourly data that
15 allows these pricing programs to be implemented.
16 Separate Dockets
17 Q.The Stipulation removes two issues from
18 consideration in this case: 1) a permanent FCA mechanism,
19 and 2) changes to Rule H line extension tariff. Why were
20 separate dockets established to consider these issues?
21 A.The FCA mechanism was set up on a pilot basis
22 after more than two years of workshops and considerable
23 review by multiple parties. The pilot itself has been in
24 place for approximately 5 years. In 2010, the Commission
25 denied the Company i s request to make the FCA permanent
citing issues and concerns raised by various parties.
CASE NO. IPC-E-11-08
10/07/11 723 LOBB, R. (Di) 18
STAFF
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1 Consequently, Staff believes it is inappropriate to
2 consider whether the FCA should be made permanent as part
3 of this general rate case. Staff maintains that all of
4 the issues associated with the FCA should be heard in a
5 separate docket with appropriate parties focused on the
6 merits of a permanent FCA.
7 Likewise, Staff maintains that modifying the
8 Rule H line extension tariff should be considered outside
9 a general rate case. The proposed increase of overhead
10 charges is a non-recurring charge and may be properly
11 reviewed in a separate proceeding.
12 The Energy Efficiency Rider
13 Q.What is Staff's proposal with respect to the
14 Energy Efficiency Tariff Rider?
15 A.Staff proposes that the Energy Efficiency
16 Tariff Rider be reduced from the current 4.75% of billed
17 revenues to 4.0% of billed revenues for applicable
18 schedules. This reduction helps to mitigate the increase
19 in base rates and recognizes that approximately $16.5
20 million in annual DSM expenditures have been removed from
21 tariff rider recovery and included in base rates.
22 Q.Will the Company be required to reduce its
23 expenditures for DSM programs as a result of the tariff
24 rider reduction?
.25 A. No, the revenue provided to support DSM
programs
CASE NO. IPC-E-11-08
10/07/11 724 LOBB, R. (Di) 19
STAFF
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1 through a combination of base rates and the tariff rider
2 will be significantly greater than needed to support
3 existing Company DSM programs. In his testimony, Staff
4 wi tness English describes and breaks down the Company IS
5 annual DSM expenditures, the annual revenue needed from
6 the tariff rider and the annual revenue generated from
7 the tariff rider at 4.0% of billed revenues.
8 Q.Overall, how does the stipulated base rate
9 increase and the Energy Efficiency Tariff Rider reduction
10 impact customers?
11 A.The Stipulation specifies an overall base rate
12 increase of 4.19% and, when coupled with the 0.75%
13 reduction in the Energy Efficiency Rider, results in a
14 net rate increase of 3.44%.
15 Q.Does the Staff i s proposal to reduce the Energy
16 Efficiency Tariff Rider in any way represent a reduced
17 commi tment to DSM and energy efficiency?
18 A.No, not at all. Staff sees the partial shift
19 in DSM cost recovery as an opportunity to increase
20 funding for DSM programs while simultaneously mitigating
21 the impact of the proposed base rate increase. This
22 proposal results in enhanced ability to provide DSM
23 programs and a more limited overall rate increase in a
24 difficult economy.
.25 Q.Does this conclude your direct testimony
CASE NO. IPC-E-11-08
10/07/11 725 LOBB, R. (Di) 20
STAFF
1 in this proceeding?.2 A.Yes,it does.
3
4
5
6
7
8
9
10
11
12
13.14
15
16
17
18
19
20
21
22
23
24
25.
CASE NO.IPC-E-11-08 726 LOBB,R.(Di)2110/07/11 STAFF
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1 (The following proceedings were had in
2 open hearing.)
3 COMMISSIONER SMITH: Any questions?
4 MR. OTTO: I do have just a few
5 questions.
6 COMMISSIONER SMITH: Mr. Otto.
7
8 CROSS-EXAINATION
9
10 BY MR. OTTO:
11 Q Good morning, Mr. Lobb.
12 A Good morning.
13 Q So we just heard that you i re the policy
14 witness, so I want to ask you a few questions about
15 efficiency policy and really, they stem around a quote
16 from your direct testimony which begins on page 19 and
17 continues on to page 20, the question and answer. Are
18 you there?
19 A Yes.
20 Q And so your answer on the top of page 20,
21 let i s see, "a combination of base rates and the tariff
22 rider will be significantly greater than needed to
23 support existing Company DSM programs," so I want to ask
24 you what -- so significantly greater than needed, could
25 you maybe quantify that or expand on what you, you know,
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20
1 what does "significantly" mean?
2 A Well, the combination of tariff rider
3 funds and base rate funds for DSM total $51 million as
4 proposed. The actual expenditures in 2010 were $41
5 million, so that i s an approximately 25 percent increase
6 over the expenditures in 2010 for 2011 and 2012 and so
7 forth. The fact is if you look at the growth in DSM over
8 the years, much of it has been for irrigation load
9 control credit payments. Those have been moved into base
10 rates and have been recoverable through the PCA, so
11 really, what you have left -- and also, if you subtract
12 out the $5 plus million for the custom efficiency program
13 that are being deferred, the remaining balance is about
14 $26 million and so it i S really almost $10 million on the
15 $26 million remaining DSM programs covered through the
16 tariff rider, so that i s about a 38 percent increase. I
17 think that i s significant and certainly sufficient.
18 Q So I just got a little lost there, but
19 where did the $10 million come from?
A Well, the tariff rider was the total
21 funding source for the $41 million of expenditures in
22 2010. The stipulation proposes to move over $16 million
23 of that 41 million into base rate recovery, so the
24 combination of base rate recovery of 16.5 million,.25 approximately, in DSM expenditures, plus the revenue
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1 generated from the 4 percent tariff rider equals over $51
2 million in total DSM funding, not including low income
3 weatherization, so that i s a $10 million increase in
4 funding available as compared to actual expenditures in
5 2010.
6 Q Including both a demand response and the
7 energy efficiency; right?
8 A The demand response, the irrigation demand
9 response, and the custom efficiency cost, right.
10 Q So going forward, we i re in a situation now
11 where we have a big pie; right? The DSM pie is quite
12 large. It i s $51 million and we have two slices. We have
13 one slice for demand response that i s coming out of base
14 rates and another slice for energy efficiency that i s
15 coming out of the rider, and you also have an energy
16 program, custom efficiency, that i s in base rates, so what
17 Ilm getting at, though, is we have what I i II call, and
18 maybe we can agree on this, what I i II call the core
19 efficiency programs, which is energy efficiency without
20 custom efficiency, so, like, you know, energy house calls
21 and easy upgrades. I 1m just trying to define the
22 uni verse we i re talking about here.
23 A Well, it i S all remaining programs that
24 aren i t recoverable in base rates.
25 Q Right; so the expenses -- I think what we
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1 discussed is the expenses in 2007 were about -- in our
2 testimony we put 26 million. If you take the 41 million,
3 you subtract out the numbers for demand response and
4 custom efficiency, you get actually to about $20 million;
5 does that seem fair?
6 A I thought you said 2007.
7 Q I'm sorry, I meant 2010, I apologize.
8 A Okay. Well, Ilm not sure of your math.
9 It i S basically $41 million minus 16.5 would provide you
10 wi th the remaining programs required to be funded through
11 the tariff rider.
12 Q Okay, and that i s -- okay; so then we have
13 the difference between what the rider would fund and the
14 programs is about $12 million or 14, so $41 million in
15 rider funds, you i ve got about $26 million in expenses,
16 that i s the gap?
17 A Well, the number that I have is, itls
18 about $10 million over the current level, $10 million, so
19 if your base is 26 million, it i s 36 million total that i s
20 available to provide the remaining non-base-rate-funded
21 programs.
22 Q Okay, and I want to move on now to the
23 idea of you said this is enough to support existing
24 Company DSM programs. What time vintage are you
25 referring to?
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14
15
1 A Existing programs.
2 Q So 2010?
3 A Well, certainly , it recovers expenditures
4 associated with programs in 2010. Now, there i s 10
5 million additional dollars to recover expansion of those
6 programs in future years.
7 Q What i S your understanding of the level of
8 expansion that Idaho Power plans on?
9 A I don i t know what that is. I'm not
10 familiar with it exactly. I i ve read the IRP and reviewed
11 the IRP, and I know that they plan to expand their
12 programs. I i ve looked at Company Exhibit No. 50 and
13 identified some growth in their DSM programs, so that i s
my understanding.
Q So Exhibit 50 was on dollars. It was the
16 amount of money they expect to spend in the next few
17 years?
18
19
A Yes.
Q And the IRP is on, I think, the average
20 megawatts of energy savings.
21
22
A Right.
Q But you reviewed that, but you don i t know
23 the actual scale?
24
25
A I don't recall the actual numbers. I did
not try to calculate the dollars associated with their
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1 planned increase in average megawatts of savings.
2 Q In the past few years -- you i ve been doing
3 this a long time and you i ve seen the Company kind of set
4 some goals through the IRP and through DSM planning and
5 then seen their achievements, does the Company regularly
6 surpass their targets or goals?
7 A They have exceeded I have not really
8 compared their 2009 IRP with respect to planned DSM
9 programs to actual savings achieved in i 10 or i 11, but I
10 know that they i ve often exceeded their goals in DSM
11 savings.
12 Q My last probably two questions I 1m
13 actually going to refer to Ms. Hirsh i s direct testimony.
14 Do you have that with you?15 A I do.
16 Q And this is on page 12 of her direct
17 testimony. Do you recall reviewing this?
18 A Yes.
19 Q And this section of testimony kind of
20 talks about the potential that i s out there, what Idaho
21 Power is actually acquiring, and I noticed you or the
22 other Staff didn i t rebut these numbers, so what I 1m
23 wondering is if the Commission i s orders are to go and
24 pursue all cost-effective energy efficiency, looking at
25 these kind of numbers, do you think the Company is on a
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1 path towards really adequately pursuing all
2 cost-effective energy efficiency?
3 A Absolutely.
4 Q So, for example, less than 30 percent of
5 the economic potential is on the path towards pursuing?
6 A Well, theyl ve made some pretty big strides
7 in their DSM budgets over the years in the expansion of
S their programs and the savings that they i ve generated.
9 The potential study talks about how much you could get in
10 an ideal world. I think the real question is how far,
11 how fast, and I think what we i ve proposed in this case is
12 a significant increase in the dollars available for DSM
13 programs to continue to pursue cost-effective DSM in
14
15
accordance with Commission directive.
Q So these numbers came from the DSM
16 potential study. Have you had a chance to review that?
17
18
A I have not looked at it.
Q Then I won i t ask you any questions about
19 it. Okay, my last question is the continuation of that
20 answer talks about savings of a percentage of load and it
21 works out to be in 2010, Idaho Power saved about 1.39
22 percent of their sales. The IRP proj ects future growth
23 at 1.4 percent average and the peak to grow at 1.8
24 percent. Do you think that if our goal for efficiency is
25 to avoid supply side resources, do you think the level of
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19
1 efficiency achievements are adequate?
2 A I think they are. I think it i S a
3 reasonable portfolio of supply and demand side resources.
4 Certainly, demand side is growing significantly with
5 respect to the percentage of the total portfolio and I
6 think we want to continue to do that.
7 MR. OTTO: All right, that i s all I have.
8 COMMI S S IONER SMITH: Thank you. Mr.
9 Olsen.
10 MR. OLSEN: No questions.
11 COMMISSIONER SMITH: Mr. Nelson.
12 MR. NELSON: Thank you. No questions.
13 COMMISSIONER SMITH: Mr. Richardson.
14 MR. RICHARDSON: Just one, Madam Chair.
15
16 CROSS-EXAMINATION
17
18 BY MR. RICHARDSON:
Q Mr. Lobb, with reference to revenue
20 requirement impacts that result from implementing
21 possible changes in the facilities charge methodology,
22 how do you see those impacts as being spread over the
23 customer class responsibility for those changes?
24
25
A Well, if you read the stipulation, it
indicates that changes in the facilities charge or
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734 LOBB (X)Staff
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1 revenue requirement changes that occur because of the
2 facili ties charge will be spread to Schedule 19. Now,
3 this wasn i t an issue that the Staff weighed in on
4 heavily. Our understanding was that most all of the
5 significant facilities charges were for customers within
6 Schedule 19. My own personal opinion is -- and we
7 reviewed the settlement and the stipulation with respect
8 to that aspect, that most of the customers were in
9 Schedule 19, so it seemed if you changed facilities
10 charges, they would be in that class. Revenue impacts
11 would be mai~tained within that class.
12 Personally, if facilities charge customers
13 are in Schedule 26, it seems inappropriate to move
14 revenue impacts from Schedule 26 to Schedule 19, even
15 though the stipulation indicates that that i s what would
16 happen. Schedule 9, I understand, has some small amount
17 of facilities charges and it would seem inappropriate to
18 shift revenue impacts from one class to another. We
19 certainly were concerned about that and clarified that
20 there would be no impact on residential and commercial
21 customer classes that had no facilities charge
22 customers.
23 MR. RICHARDSON: Thank you. That i s all I
24 had, Madam Chair.
25 COMMISSIONER SMITH: Mr. Miller.
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14
1 MR. MILLER: No, thank you.
2 COMMISSIONER SMITH: Mr. Purdy.
3 MR. PURDY: I will be brief, I promise.
4
5 CROSS-EXAMINATION
6
7 BY MR. PURDY:
8 Q Mr. Lobb, the policy buck has stopped with
9 you, I guess, and you certainly have an ample amount of
10 experience. Many of us have been at this a long time, so
11 with that in mind, have you ever heard the expression
12 death by committee?
13 A I have heard that expression.
Q How about death by workshop? My
15 question
16
17
A I haven i t heard that one as much.
Q My question being just from a broad
18 perspective and with all that you know and believe and
19 without getting into what's fact and what isnlt, is it
20 really fair to push the WAQC funding decision off into
21 what we know can be very uncertain outcomes of workshops,
22 especially when we i re doing it on what, disagree with me
23 if you wish, but what is fairly characterized as new
24 ground, new theories and principles, is that really
25 fair?
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1 A I disagree. They i re not new theories and.2 principles and I think one of the things that we have to
3 do as a Staff and we're obligated, we have a
4 responsibili ty, to make sure that the dollars spent are
5 spent properly. You get the best bank for your buck, and
6 I don i t think you do that after you increase costs
7 significantly, like is recommended in this case. I think
8 if they i re concerned about cost effectiveness, you don It
9 do anybody any favors by not evaluating that before you
10 increase the funding levels. I don i t think you do low
11 income customers any favors.
12 I don i t think you do other ratepayers any
13 favors if you have significant questions about cost
.. 14 effectiveness of the programs, and we haven i t really
15 looked very closely at low income programs historically,
16 and there i s been a lot of discussion with regard to the
17 PacifiCorp case where PacifiCorp requested not to
18 evaluate the programs anymore because they didn i t look
19 good when they did. We don i t believe that i s the right
20 way to go about that, and in fact, welve had concerns
21 about Idaho Power and Avista i s programs before we ever
22 received the PacifiCorp program evaluation, questions
23 about oversight of Idaho Power of CAPAI, delivery of
24 those programs, what type of post implementation
.25 evaluation do they do, what role should Idaho Power play.
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1 They i re the Company that provides the money, it i s
2 ratepayer funds, what responsibility should they have.
3 We don i t have any control over CAPAI. We have control
4 over Idaho Power and the other utili ties in how they
5 moni tor their programs, so that i s our concern is how well
6 the money is spent.
7 We saw information from Avista with regard
8 to, I think the term was, realization rate for low income
9 customers. Regardless of what the cost-effectiveness
10 analysis says, were low income customers actually seeing
11 reductions expected in energy consumption after their
12 weatherization was undertaken, so we think
13 implementation, cost-effectiveness issues, proper
14 determination of funding, and we i ve talked about parity,
15 I think there needs to be some parity, but it i s how you
16 define parity, what you are trying to achieve and what iS
17 the basis for determining what i s necessary.
18 I don i t know that you can do that outside
19 of a collaborative consultation and we talk about
20 workshops and we want to do those very quickly, and it i s
21 kind of been a long answer, but I i m not sure you can
22 answer these questions that I think need to be answered
23 before you increase the funding without some sort of
24 collaborative consultation among the parties.
25 Q Well, my fairness question really, I
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738 LOBB (X)Staff
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1 think, took into account the fact that we i ve had ample
2 time since the last WAQC funding increase to do all the
3 things that you just outlined. Why havenlt they been
4 accomplished prior to now?
5 A Well, I think we i ve met periodically. We
6 met in, I think, August of 2010. Staff has been
7 participating with Avista in low income meetings in
8 Washington to understand the issues and try to get a
9 better handle on measurement techniques and
10 implementation techniques, and I don i t think we have
11 moved as fast as we probably should have, and I don i t
12 believe that low income weatherization funding increases,
13 to the extent we find that theyl re necessary and its cost
14 effective and appropriate, should be held hostage to rate
15 cases. I think we can do that outside of a case, too, so
16 I think we have been a little slow in getting the parties
17 together and resolving the issues.
18 Q Well, thank you for that honesty and in
19 light of that, are you prepared to make any kind of a
20 commitment in terms of a time frame for accomplishing
21 what Staff proposes to the Commission?
22 A Well, we i ve talked about it among the
23 Staff and we i re ready to proceed as quickly as possible.
24 Ms. Donohue talked about workshops in January. I think
25 if we can get some Orders from the Commission directing
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16
1 the parties to proceed expeditiously, we will do that.
2 We i ve tried to do that with the FCA portion of this case.
3 We opened a docket immediately. We would not hesitate to
4 proceed in that fashion, open a docket formally, if
5 necessary, and set a schedule.
6 Q The FCA matter has been pending for a
7 number of years, has it not?
8 A That i S true, but as part of the
9 stipulation and settlement in this case, we spun it off.
10 We immediately opened a docket and we have already set
11 timelines for that case.
12 Q Do you have any fear that this will sit
13 for a number of years before final resolution?
14 A No.
15 Q This being WAQC funding?
A Not discussion and resolution. Ilm not
17 sure exactly what the funding time frames would be or how
18 that would go, but I would expect that it would be
19 sometime next year.
20
21
22
23
MR. PURDY: One moment, please.
(Pause in proceedings.)
MR. PURDY: Than k you, Mr. Lobb .
24 Questions?
COMMISSIONER SMITH: Thank you.
25
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1 EXAMINATION
2
3 BY COMMISSIONER SMITH:
4 Q Randy -- I i m sorry, Mr. Lobb, I had one
5 question. On Exhibit 3, page 1 of 24 -- actually, I take
6 it back. I donlt know which number it is. Exhibit 101,
7 page 26 of 53, and it is the calculation of the revenue
8 impact on the residential service, Schedule 1.
9 A I think I i m on the right page.
10 Q Exhibit 101, page 26.
11 A Okay, I think I i m there.
Q One of my concerns in this case is that
13 the Commission doesn't get to directly meddle in rate.14 design the way the stipulation was put together and
15 spread and I noticed that there was no increase in the
16 non-summer block over 2,000 kilowatt-hours, so that i s one
17 of the things I was concerned about, but I still have
lS concerns that there needs to be adjustments, especially
19 in these blocks, in order to be more equitable, and I
20 don i t know if you share that concern or if you think that
21 doing it this way is adequate. I mean, we had public
22 testimony last night about this and I know people are
23 worried about it.
24 A I do share your concern with regard to the
.25 rate design and how it i S perceived and how it impacts
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1 various users. There is no rate moratorium in this case,.2 so we have an opportunity to take it up again if we get a
3 chance. I guess from my standpoint, the most crucial
4 portion of the rate was the non-summer third block. I
5 think that is the least discretionary level. We have a
6 lot of customers out there rural, all electric. I i ve
7 indicated that in my testimony. Should the blocks be
8 modified and changed? I think there i s an infinite number
9 of ways that you could slice and dice and somebody is not
10 going to like it, and I think one of the things that the
11 stipulation does as well is it increases the time of use
12 program available on a voluntary basis to customers, and
13 I don i t know if that i s going to be useful as an.14 al ternati ve to some of these customers that are impacted,
15 but it does give customers more options than they i ve had
16 in the past, and I think we i re going to continue to look
17 at rate design, and it i S been a common area of discussion
18 during settlement negotiations, and stipulations have
19 included workshops and other types of meetings to discuss
20 how we might modify these, what would be a better way to
21 do it and so welre going to continue to work on that.
22 Q Well, I'll just ask you or all the parties
23 that if you think this rises to the level of needing its
24 own case, then please let us know.
25 A We will certainly do that. Like I say,.
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1 we i re constantly looking at that and it should not also
2 be held hostage to a general rate case like this.
3 COMMISSIONER SMITH: I agree. Mr. Howell,
4 do you have any redirect?
5 MR. HOWELL: No redirect.
6 MR. WILLIAMS: Madam Chair, may the
7 Company have an opportunity to cross-examine this
8 witness?
9 COMMISSIONER SMITH: No. Sorry, Mr.
10 Williams, I forgot.
11 MR. WILLIAMS: That i s fine.
12
CROSS-EXAINATION
15 BY MR. WILLIAMS:
16 Very briefly, Mr. Lobb. Mr. Richardson
17 questioned you about the facilities charge provision in
18 the stipulation and I just want to understand this, does
19 the stipulation require that any change in the facilities
20 charge methodology or change in ownership that would
21 result in a deficiency to the revenue requirement for the
22 Company that the Company is responsible for paying that
23 deficiency.
24 A No, the stipulation does not require
25 that..
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17
18
1 Q In your opinion, then, I guess how would
2 the stipulation work if there i s a change in the
3 facilities charge methodology that results in the
4 Company i s revenue requirement being deficient? Who would
5 be responsible if not the Company from making up that
6 difference?
7 A Well, from my perspective, if the
8 Commission approves the stipulation and they change the
9 facili ties charge calculation so it impacts revenue
10 requirement, then the impact would flow through Schedule
11 19.
12 MR. WILLIAMS: Okay, thank you. No
13 further questions.
14 COMMISSIONER SMITH: My sincere apologies.
15 Thank you for your help, Mr. Lobb.
THE WITNESS: You i re welcome.
(The witness left the stand.)
19 ready for your witness.
COMMISSIONER SMITH: Mr. Purdy, we i re
20 MR. PURDY: Community Action calls Ms.
21 Ottens. Madam Chair, my understanding is that we are
22 putting both her direct and surrebuttal testimonies on at
23 the same time.
24 COMMISSIONER SMITH: That is your choice,
25 Mr. Purdy, but since shels the last witness, I donlt
CSB REPORTING
[phone]
744 LOBB (X)Staff
.
.
.
1 think anything else would make sense.
2
3
MR. PURDY: I don i t either. Thank you.
4 TERI OTTENS,
5 produced as a witness at the instance of the Community
6 Action Partnership Association of Idaho, having been
7 first duly sworn, was examined and testified as follows:
14
8
9
10
11 BY MR. PURDY:
12 Q
DIRECT EXAMINATION
Good morning, Ms. Ottens.
Good morning.
Are you the same Teri Ottens who filed
15 direct testimony in this case consisting of 29 pages and
13 A
Q
16 no exhibits?
17
18
A
Q
I am.
And are you the same Teri Ottens who filed
19 surrebuttal testimony in this case consisting of 21
20 pages, again with no exhibits?
21
22
A
Q
I am.
23 those testimonies?
Do you have any corrections to either of
24
25
A
Q
I do.
What are those?
CSB REPORTING
[phone]
745 OTTENS (Di)
CAPAI
.
.
.
16
17
1 A My direct testimony on page 4, line 24, I
2 state that the poverty rate was "14.4%" in 2010, that
3 should read "15.8."
4 Q Okay.
5 A And then on page --
6 COMMISSIONER SMITH: I i m sorry, I didn It
7 see 2008 there.
8 THE WITNESS: Oh, 2010, it should read
9 instead of "14.4" "15.8."
10 COMMISSIONER SMITH: Thank you.
11 THE WITNESS: On page 23, Line 14, based
12 on the most recent data I have for Ada and Elmore
13 counties--
14 COMMISSIONER SMITH: So what IS the line
15 again?
THE WITNES S : Line 14, page 23.
Q BY MR. PURDY: Why don i t you go ahead for
18 clari ty and read the sentence as you have revised it.
19 A "Based on the most recent data I have for
20 Ada and Elmore counties alone, there are 6,000 homes that
21 are eligible for WAQC funding."
22
23
24
Q Thank you, anything else?
A No, that would conclude my changes.
Q If I haven't already asked this, if I were
25 to ask you the same questions today as contained in your
CSB REPORTING
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746 OTTENS (Di)
CAPAI
.
.
19
1 direct and surrebuttal testimonies, would your answers be
2 essentially the same?
3 A They would.
4 MR. PURDY: Madam Chair, I would ask the
5 indulgence of one question that is a follow-up to
6 Ms. Drake i s cross that was information not contained in
7 any testimony.
8 COMMISSIONER SMITH: Please proceed.
9 MR. PURDY: Thank you.
10 Q BY MR. PURDY: Ms. Ottens, were you here
11 for Ms. Drake i s testimony yesterday?
12 A I was.
13 Q Did you hear the portion of her testimony
14 regarding the WAQC funding carryovers in, I think, years
15 2004 through l07?
16 A I did.
17 Q Do you have an explanation for those
18 carryovers?
A Yes. We went from several years of less
20 than 200,000 in funding to a million, two in one year,
21 and that was in 2004, so it took some time for our
22 agencies to basically ramp up, and we had many
23 discussions with Idaho Power on those carryovers and they
24 worked very well with us in allowing those carryovers to
.25 carryover to approximately three years by the time we
CSB REPORTING
[phone]
747 OTTENS (Di)
CAPAI
.
.
.
1 actually ramped up to be able to handle that volume.
2 Q Given that ARRA just recently expired, are
3 the CAP agencies relatively more ramped up today than
4 they were back then?
5 A They are.
6 MR. PURDY: That i s all I have, thank you,
7 and she i s ready for cross.
8 MR. HOWELL: Madam Chairman?
9 COMMISSIONER SMITH: I don i t think I said
10 that hearing no obj ection, we will spread the prefiled
11 direct and surrebuttal testimony of Ms. Ottens on the
12 record as if read and identify Exhibit 601.
13 COMMISSIONER SMITH: Mr. Howell.
14 MR. HOWELL: Thank you, Madam Chairman.
15 My question just goes to the or my motion goes to the
16 last point you just mentioned. There is attached at
17 least in the record an Exhibit 601 which is 57 pages of
18 discovery requests and answers. Now, both in the
19 introduction to the witness and in her direct testimony
20 on page 7, she says she has no exhibits to her testimony,
21 and so even though her testimony, her direct testimony,
22 does discuss or reference 13 discovery requests, the
23 Staff i s motion would be the 36 discovery requests and
24 answers that aren i t referenced in Ms. Ottens i direct
25 testimony be stricken from Exhibit 601 or you could
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( 2 0 8 ) 8 90 - 519 8
748 OTTENS (Di)
CAPAI
.
.
.
1 strike 601 entirely since she has no exhibits according
2 to her testimony.
3 COMMISSIONER SMITH: Mr. Purdy.
4 MR. PURDY: Madam Chair, I i m not quite
5 sure I follow along with Mr. Howell i s obj ection.
6 COMMISSIONER SMITH: What he i s saying is
7 that, first of all, your witness doesn't say she has an
8 exhibi t in her testimony, and second, that the exhibit is
9 a lot more information than she refers to in her
10 testimony.
11 MR. PURDY: That i s true, and the answer I
12 was about to give you is whether this was the appropriate
13 procedure, I don i t know, I i II find out momentarily, but I
14 submi tted my own affidavit on October 7th with the Idaho
15 Power discovery responses attached simply in order to
16 have them available to be put on the record should during
17 the cross-examination of Ms. Ottens that become an issue.
18 I don i t believe that -- she does talk about the discovery
19 responses.
20 COMMISSIONER SMITH: A few of them. Could
21 we whittle it down to what she actually talks about?
22 MR. PURDY: Sure, I think her testimony in
23 that respect speaks for itself, so we could whittle it
24 down to whatever she references.
25 COMMISSIONER SMITH: Okay; so would you
CSB REPORTING
(20S) S 90-5198
749 OTTENS (Di)
CAPAI
.
.
.
1 and Mr. Howell please see that Exhibit 601 gets conformed
2 to only include those questions and answers that are
3 referred to in Ms. Ottens i testimony?
4 MR. PURDY: Okay.
5 MR. HOWELL: For the record, I can
6 identify exactly what the discovery requests are, the 13
7 numbers.
8 COMMISSIONER SMITH: All right, Don.
9 MR. HOWELL: It i s discovery responses 1
10 through 3, 5, 7, 8 through 14 and 16.
11 COMMISSIONER SMITH: Okay.
12 MR. PURDY: Ilm sorry, Mr. Howell, what
13 are those, again?
14 MR. HOWELL: Those are your discovery
15 requests that are referenced in her direct testimony.
16 COMMISSIONER SMITH: All right; so Exhibit
17 601 will include only those requests and responses
18 because they i re the only ones relevant to her testimony.
19 All right, anything else?
20
21
MR. HOWELL: No, ma i am.
COMMISSIONER SMITH: Thank you.
22 (The following prefiled direct and
23 surrebuttal testimony of Ms. Teri Ottens is spread upon
24 the record.)
25
CSB REPORTING
[phone]
750 OTTENS (Di)
CAPAI
.
.
16
1 I. INTRODUCTION
2 Q:Please state your name and business address.
3 A:My name is Teri Ottens. I am the Policy
4 Director of the Community Action Partnership Association
5 of Idaho headquartered at 5400 W. Franklin, Suite G,
6 Boise, Idaho, 83705.
7 Q:On whose behalf are you testifying in this
8 proceeding?
9 A:The Community Action Partnership Association of
10 Idaho ("CAPAI") Board of Directors asked me to present
11 the views of an expert on, and advocate for, low income
12 customers of AVISTA.
13 Q:Please describe CAPAI i S organization and the
14 functions it performs, relevant to i ts involvement in
15 this case.
A:CAPAI is an association of Idaho i s six
17 Community Action Partnerships, the Community Council of
18 Idaho and the Canyon County Organization on Aging,
19 Weatherization and Human Services, all dedicated to
20 promoting self-sufficiency through removing the causes
21 and conditions of poverty in Idahols communities.
22
23
Q:What are the Community Action Partnerships?
A:Community Action Partnerships ("CAPs") are
24 private, nonprofit organizations that fight poverty.
.25 Each CAP has a designated service area. Combining all
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[phone]
751 OTTENS (Di) 2
CAPAI
.1 CAPS, every county in Idaho is served. CAPS design their
2 various programs to meet the unique needs of communities
3 located wi thin their respective service areas. Not every
4 CAP provides all of the following services, but all work
5 wi th people to promote and support increased
6 self-sufficiency. Programs provided by CAPS include:
7 employment preparation and dispatch, education assistance
8 child care, emergency food, senior independence and
9 support, clothing, home weatherization, energy
10 assistance, affordable housing, health care access, and
11 much more.
12 Q:Have you testified before this Commission in
13 other proceedings?.
20
21
22
23
24
25.
14 /
15 /
16 /
17
18
19
752 TERI OTTENS, DI 2a
CAPAI
.
.
.
1 A:Yes, I have testified on behalf of CAPAI in
2 numerous cases involving, among others, Idaho Power,
3 AVISTA, Rocky Mountain Power and United Water of Idaho.
4 II. SUMY
5 Q:Please summarize your testimony in this case?
6 A:First, CAPAI opposes the proposed settlement
7 executed by the other parties to this proceeding and
8 currently pending before the Commission by way of Motion
9 and Stipulation.
10 Q:Would you please briefly summarize the reasons
11 for your position and the issues and concerns that drove
12 CAPAI i S decision to not join in the settlement?
13 A:The proposed settlement seems to address the
14 issues and obj ecti ves of all parties except CAPAI and
15 low-income customers. CAPAI is concerned about Idaho
16 Power i s rising rates, the pressure and significance of
17 having multiple filings simultaneously pending before the
18 Commission, including general rate cases for the three
19 largest electric utilities and for Idaho i s largest
20 investor owned public water utilityl and a filing by
21 Rocky Mountain contending that its LIWA program is not
22 cost-effecti ve. In addition to rapidly rising utility
23 rates, the economy seems to be dissolving into recession,
24 unemployment is skyrocketing, federal assistance programs
25 for low-income customers are being reduced or eliminated
753 TERI OTTENS, DI 3
CAPAI
.
13
. 14
20
21
22
23
24
1 putting vulnerable low-income customers directly in the
2 path of a perfect storm. In spite of this, the
3 settlement agreement fails to include an increase in
4 Idaho Power i s low-income weatherization program (WAQC)
5 which hasn i t been increased in nearly a decade. CAPAI
6 simply could not justify joining in yet another black box
7 settlement agreement resulting in yet another rate
8 increase without any offsetting provision for low-income
9 customers.
10 /
11 /
12 /
15
16
17
18
19
.25 i United Water of Idaho; Case No. UWI-W-II-02.
754 TERI OTTENS, DI 3a
CAPAI
1 Q:Does this mean that CAPAI opposes every.2 identifiable element of the proposed settlement?
3 A:Not necessarily. CAPAI i S decision to not sign
4 the settlement in whole or in part was certainly not a
5 decision made lightly. There are certain aspects of the
6 settlement that are of obvious, positive value from
7 CAPAI i S perspective, such as the fact that the rate
8 increase was reduced from the proposed 9.9% to 4.07% and
9 Idaho Power agreed to not increase its monthly
10 residential service charge as originally requested. In a
11 vacuum, such compromises are obviously of benefit to
12 low-income customers who pay those rates and charges but
13 CAPAI, like every other party, assessed the proposed.14 settlement taking into consideration the totality of
15 everything it contains, as well as what it lacks.
16 Furthermore, CAPAI does not begin an analysis of any
17 requested rate increase with the presumption that some
18 degree of rate increase will ultimately be granted.
19 Thus, perhaps a more justifiable rate increase in this
20 case would be considerably less than 4.07 %; perhaps none
21 at all. Regardless, for reasons that I will explain in
22 greater detail, CAPAI came to the conclusion that
23 agreeing to the overall settlement as proposed would not
24 be in the best interests of low-income customers or.25 residential customers on the whole.
755 TERI OTTENS, DI 4
CAPAI
.
.
.
16 /
17 /
18
19
20
21
22
23
24
25
1 III. GENERA OVERVIEW
2 Q:Are the concerns and the positions you hold in
3 this proceeding limited strictly to the interests of
4 Idaho Power i s low-income customers?
5 A:In the past, the answer to that question would
6 be an obvious and simple yes. But, as everyone is well
7 aware, we are currently experiencing one of the most
8 severe economic crises in our nation i s history. One of
9 the many consequences of this is that the ranks of
10 citizens who qualify as "low-income" are swelling.
11 Poverty rates in Idaho have risen from 12.6% in 2005 to
12 15.8% in the 2010 census figures representing an
13 addi tional 25,000 Idaho ci tizens surviving under the
14 Federal Poverty Level. Simul taneously, federal
15 /
756 TERI OTTENS, DI 4a
CAPAI
.
.
.
1 funding of programs designed to assist low-income
2 customers are being reduced or entirely eliminated
3 including the termination of ARRA2 which provided a
4 substantial, but temporary, boost in federal low-income
5 weatherization funds. The backlog of households in Idaho
6 eligible for low-income weatherization is far too great
7 for AARA to have even come close to eliminating.
8 Q:Is there anything about this particular
9 proceeding that you believe warrants serious attention by
10 the Commission?
11 A:In my opinion, the present case provides a very
12 unique observation of serious events occurring on not
13 just a local or national scene, but globally. The
14 Commission is obviously aware, as are all Americans, of
15 the mounting economic problems faced by all sectors of
16 society. Because CAPAI represents the most vulnerable
17 element of that society , it is compelled to take on
18 issues and express concerns that it typically does not
19 address. The current pendency of general rate cases for
20 all three of Idaho i s electric utilities as well as its
21 largest regulated water utility, 3 a proceeding in which
22 low-income weatherization has been called into question,
23 combined with the problems I have referred to, could well
24 be unprecedented. Many residential customers who are
25 slightly above the low-income threshold as defined for
757 TERI OTTENS, DI 5
CAPAI
.1 the purpose of receiving federal and state benefits in
2 Idaho such as LIHEAP, are rapidly slipping below that
3 threshold, qualifying them as low-income. Furthermore,
4 many existing low-income customers have yet to avail
5 themselves of governmental and utility assistance
6 programs such as WAQC but eventually will, especially if
7 the economic crisis continues or spirals further
8 downward. Thus, the importance of every low-income
9 program, such as Idaho Power iS WAQC, continues to
10 increase.
11 /
12 /
13 /
. 14
19
20
21
22
23
15
16
17
18
24 2 The "American Recovery and Reinvestment Act."
3 United Water of Idaho; Case No. UWI-W-II-02..25
758 TERI OTTENS, DI 5a
CAPAI
.
.
.
1 Q:What role do you see CAPAI filling in terms of
2 its appearance before this Commission given what you have
3 described?
4 A:First, unlike in some other states, it should
5 be noted that there is no regular intervening party to
6 Commission proceedings who represents the exclusive
7 interests of residential customers. While the Commission
8 Staff certainly strives to seek a fair result for
9 residential customers in any given proceeding, its legal
10 mandate requires that it do so for all parties, including
11 the utility. As the percentage of Idaho Power IS
12 residential customers who qualify as low-income
13 increases, CAPAI' s involvement in proceedings before this
14 Commission expands in depth and scope. Programs that
15 provide direct benefits to low-income customers, such as
16 WAQC, also provide benefits to all customer classes.
17 Thus, while CAPAI i S mandate is to serve and represent the
18 interests of low-income customers, we must remain aware
19 that this particular population is rapidly expanding and,
20 unfortunately, will include customers who do not yet
21 qualify as low-income.
22 Q:Would you please summarize the more specific
23 considerations that led to CAPAI i s position in this case?
24 A:Specifically, I will address whether the
25 authorized return proposed in the settlement is fair,
759 TERI OTTENS, DI 6
CAPAI
.
.
.
1 just and reasonable or whether Idaho Power i s ratepayers,
2 particularly its residential class, are being asked to
3 shoulder the bulk of the weight caused by our current
4 economic crisis in this country, whether the revenue
5 allocation among customer classes is fair, just and
6 reasonable, whether the rate increase disproportionately
7 impacts low-income customers exclusively, and why the
8 failure of the parties to include in their proposed
9 settlement an increase in Idaho Power iS WAQC funding is
10 inconsistent with Idaho law, results in a substantial
11 dispari ty in the funding levels of Idaho i s three largest
12 electric
13 /
14
15 /
16
17
18
19
20
21
22
23
24
25
/
760 TERI OTTENS, DI 6a
CAPAI
.
.
.
1 utilities, fails to maximize what the Commission has
2 repeatedly deemed to be a prudent and desirable DSM
3 resources, and is inequitable for a host of other
4 reasons.
5 Q.Are there any exhibits to your testimony in
6 this case?
7 A.No.
8 iv. SUBSTANTIAL AN DISPROPORTIONATE IMPACT OF PROPOSED
9 RATE INCRESE
10 Q:What particular components of the rate increase
11 proposed in the settlement does your testimony address?
12 A:As the Commission is well aware, CAPAI
13 typically does not have sufficient financial means to
14 retain expert witnesses to analyze, and provide testimony
15 for, the gamut of components that comprise any given rate
16 increase and has historically limited its scope of issues
17 to very few low-income specific issues, such as LIWA
18 funding, rate design, minimum customer charge, etc.
19 Q:Is CAPAI expanding its scope of issues in this
20 proceeding?
21 A:To a certain extent, yes. This is necessitated
22 by several factors including the current economic crisis,
23 the unprecedented spate of general rate cases and other
24 proceedings currently pending before the Commission
25 including a PacifiCorp proceeding that calls into
761 TERI OTTENS, DI 7
CAPAI
.
.
20
21
22
23
24
25.
1 question the cost-effectiveness of that Company IS
2 low-income weatherization program (Case No. PAC-E-11-13),
3 the cumulative impact that frequent general rate case
4 filings by Idaho i s three largest electric public
5 utilities has had on residential and particularly
6 low-income customers, the fact that those utilities seem
7 increasingly shielded by various mechanisms that
8 stabilize their earnings putting them in a relatively
9 advantageous position in the economy but have shifted the
10 burden of risk to ratepayers and finally, the fact that
11 all of the other parties agreed to settle yet another
12 general rate case using a "black box" settlement that
13 does not specify a return on equity.
14 /
15 /
16 /
17
18
19
762 TERI OTTENS, DI 7 a
CAPAI
1 Q:Do you possess any expertise in analyzing the.2 appropriate rates of return for regulated public
3 utilities?
4 A:No, I do not possess expertise in the areas of
5 utility ratemaking, including calculating a fair and
6 reasonable return. I do have expertise in the
7 perceptions and realities of life for low-income
8 customers and the burden that ever-increasing utility
9 bills poses for those customers. It is in that spirit
10 that I offer my opinions.
11 Q:In light of your statement, is CAPAI taking any
12 specific position on revenue requirement issues?
13 A:Again, not in the technical sense. I believe.14 that Staff always conducts a very thorough analysis of
15 specific revenue requirement issues. CAPAI supports the
16 specific issues raised and positions taken by Staff but
17 notes that Staff i s settlement position is obviously the
18 result of compromise. It is entirely possible that had
19 every revenue requirement issue identified in this case
20 been litigated, the outcome might have been a lesser
21 revenue requirement and rate increase than settled upon.
22 Q:Please state your issues and positions from the
23 perspective you have identified.
24 A:It is my understanding that much has changed in
25 the past twenty years regarding Idaho Power i s rates..
763 TERI OTTENS, DI 8
CAPAI
.
.
.
1 Though I was not involved in utility matters at the time,
2 I am aware that up until the early to mid-1990s Idaho
3 Power often went for extended periods without general
4 rate increase filings. Southern Idaho experienced
5 record-setting droughts during the early to mid-1990s
6 placing considerable financial strain on Idaho Power.
7 Though reluctant to file general rate increases at the
8 time, Idaho Power did file for temporary rate relief in
9 the form of "drought surcharges." It was ultimately
10 deemed appropriate to establish Idaho Power i s first power
11 cost adjustment (PCA) mechanism that was designed to
12 strike a balance between providing financial stability
13 for the Company during drought years, but also capture
14 the benefits of high water years and also factor in other
15 variable
16 /
17 /
lS /
19
20
21
22
23
24
25
764 TERI OTTENS, DI Sa
CAPAI
.
.
.
1 components of power supply costs such as the cost of coal
2 and off-system power purchases.
3 Q:What other significant events took place during
4 this time period?
5 A:In the years that followed, Idaho Power, along
6 wi th other utili ties, was ordered to increase its
7 investment in conservation measures (DSM). As the
8 Company i s investment in DSM increased, the Company became
9 increasingly concerned that investing in measures that
10 reduce consumption also reduces sales revenue. This led
11 to a somewhat protracted process culminating in the FCA
12 pilot for which the Company seeks permanent approval in
13 this case. The FCA provides a mechanism by which the
14 disincentive for the Company to invest in DSM is somewhat
15 removed.
16 Q:What has transpired to the present?
17 The third and final leg of this historicalA:
18 progression is that, based on factors too numerous to
19 list, but including increased operating and power supply
20 costs, increased population and investment in plant
21 needed to supply that population, the need to upgrade
22 deteriorating plant and relicense hydroelectric
23 facilities, frequent general rate filings by Idaho Power
24 and other utilities have now become commonplace. The
25 days when a typical residential customer could read and
765 TERI OTTENS, DI 9
CAPAI
.
.
.
24
25
1 comprehend his or her bill with relative ease, and expect
2 that bill to remain largely unchanged for extended
3 periods of time, are in the distant past as additional
4 line items are added for everything from tariff riders to
5 PCA and FCA adjustments. Furthermore, Idaho Power is
6 often granted authority to recover a variety of other
7 accumulated, deferred expenses from ratepayers by rolling
8 them into the PCA. Though some of these effectively
9 reduce customers i bills, we all know that costs in
10 general always rise. For the typical residential
11 customer, this practice has rendered the PCA difficult if
12 not impossible to understand effectively negating any
13 price signals the PCA might have sent in any given year.
14 /
15 /
16 /
17
18
19
20
21
22
23
766 TERI OTTENS, DI 9a
CAPAI
.
.
.
1 What is CAPAI i S concern regarding the historyQ:
2 you have outlined?
3 My comments are intended to provideAA:
4 the perspective of a typical low-income customer rather
5 than constitute a critique. In fact, CAPAI supports some
6 of what has developed over the past two decades,
7 particularly increased investment in DSM and obviously
8 the WAQC program. CAPAI supports the ICL i s position in
9 this case on maintaining the current DSM tariff rider
10 funding level. CAPAI also understands that many of the
11 factors causing costs and rates to increase are not
12 avoidable by the Company. From CAPAIls perspective, the
13 PCA and FCA revenue stability mechanisms present both
14 benefi ts and detriments to low-income customers.
15 ***** (The following testimony was stricken from the
16 record. ) *****
17 / / /
18 / / /
19 / / /
20 / / /
21 / / /
22 / / /
23 / / /
24 / / /
25 / / /
767 TERI OTTENS, DI 10
CAPAI
.
.
.
1 Q:What are the detriments of revenue stability
2 mechanisms to low-income customers?
3 A:On the downside, residential customers in
4 general, and low-income customer in particular, have
5 experienced relatively rapid rate increases over the past
6 ten years. As power supply costs rise, the combination
7 of revenue stability mechanisms with frequent general and
8 single item rate increases, have created a condition in
9 which rates are perceived by many customers to be
10 increasing at an ever accelerating pace.
11 Q:What unique effect has this had on low-income
12 customers?
13 A:Low-income customers, due to a lack of
14 resources, have relatively limited ability to control
15 their consumption and their bills and constitute the most
16 vulnerable customer base
17 /
18 /
19 /
20
21
22
23
24
25
768 TERI OTTENS, DI lOa
CAPAI
.
.
.
1 to increasingly higher rates. For these customers, the
2 WAQC program is currently the only viable means to reduce
3 their electric bills.
4 Q:How does this factor into your concern about
5 risk-shifting mentioned earlier?
6 A:While very few entities or individuals are
7 completely escaping the current economic crisis Idaho
8 Power, through the means already discussed, has been
9 advantageously situated relative to other sectors of the
10 economy. This is why I have expressed concern regarding
11 black box settlements that do not identify or discuss the
12 risk component of overall return.
13 Q:Is it your belief that a lower authorized rate
14 of return is always in the best interests of ratepayers
15 or that it is always best for the Commission to specify
16 the Company i s authorized rate of return in its final
17 orders?
18 A:No. Though my knowledge in this area is
19 admittedly that of a layperson, I do realize that a
20 utility must occasionally borrow money to finance
21 investment in its business and that the utilityl s credit
22 rating affects the interest rate and other borrowing
23 costs which are ultimately passed on to ratepayers.
24 Because credit ratings can be influenced if a specific
25 authorized return on equity has been adopted by the
769 TERI OTTENS, DIll
CAPAI
.
.
.
18 /
19
20
21
22
23
24
25
1 Commission and what that rate of return is, this makes an
2 already complex balancing decision by the Commission
3 regarding rate of return even more difficult.
4 Q:Are you proposing a specific rate of return in
5 this case?
6 A:No. I do not purport to opine what an
7 appropriate rate of return is for Idaho Power in this
8 case. The purpose of my testimony is to convey the sense
9 of frustration and even futility that low-income
10 customers experience when they learn that a regulated
11 utility is granted what they often perceive, correctly or
12 incorrectly, as a "guaranteed profit," especially during
13 times when even large corporations are declaring
14 bankruptcy and many families are losing their jobs,
15 homes, and livelihoods.
16 /
17 /
770 TERI OTTENS, DI 11a
CAPAI
.
.
.
17
1 Q:Is it your belief that the Commission doesn It
2 already factor these considerations into its rulings on
3 rate of return?
4 A:No. In fact I want to emphasize my firm belief
5 that the Commission takes these perceptions into
6 consideration when it reaches its decision on rate of
7 return and makes the best decision it can considering all
8 circumstances. I offer this testimony mainly because of
9 the fact that while Idaho Power has already been granted
10 rate increases in roughly three of the past six years
11 (the residential energy rate alone has increased 81%
12 since 1989) 4 and has been granted authority to recover
13 certain expenses through numerous single item filings, it
14 has not increased its WAQC funding by a single penny
15 since its current funding level was ordered by the
16 Commission in the Companyls 2003 general rate case.5
Q:Why do you believe it is necessary to seek a
18 Commission order to obtain a WAQC funding increase for
19 WAQC?
20 A:When asked through discovery to provide its
21 rationale for not increasing WAQC funding in this case,
22 the Company responded, in part: "the Company has not
23 received any orders from the Commission since June 25,
24 2007, to alter its funding for WAQC. "6 Actually, the
25 June 25, 2007 order that Idaho Power refers to is Order
771 TERI OTTENS, DI 12
CAPAI
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. 14
20
21
22
23
24
25.
1 No. 30350 issued in Case No. IPC-E-07-09, did not "alter"
2 WAQC funding, but simply ordered the Company to
3 "continue" funding at the existing level of $1.2
4 million. 7 In reality, Idaho Power has not been ordered
5 to increase WAQC funding since the 2003 rate case.
6 Because WAQC is the only means most low-income customers
7 have to control their consumption, the failure to offset
8 Idaho Power i s rate increases and the frequently revised
9 revenue stability
10 /
11 /
12 /
13
15
16
17
18
19
4 See,Idaho Power Response No.2 to CAPAI Díscovery.
5 Case No.IPC-3-03-13 .
6 See,Idaho Power Response No.7 to CAPAI Díscovery.
7 Order No.30350 at p.4.
772 TERI OTTENS, DI 12a
CAPAI
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1 mechanisms has created a lop-sided situation disfavoring
2 customers and shifting the burden of increased economic
3 risk from shareholders to them.
4 Q:What is your response to those who contend that
5 simply keeping residential rates low is the best outcome
6 of a general rate case filing?
7 A:CAPAI believes that low-income customers should
8 not be put into a position where they choose between an
9 increase in WAQC funding or a lesser rate increase. The
10 cost to all ratepayers of the increase in WAQC funding
11 CAPAI proposes in this case is quite modest in comparison
12 to the benefits to low-income customers of addressing the
13 ever-widening gap between the need for some form of
14 assistance to reduce their bills through reduced
15 consumption and the degree of assistance available to
16 help them achieve that reduction. Current WAQC funding
17 ($ 1.2 million) constitutes only one-third of one percent
18 of total residential class revenues. 8
19 v.REVENU ALLOCATION
20 Q:What is CAPAI i s position with respect to the
21 uniform percentage revenue allocation between customer
22 classes proposed in the settlement agreement?
23 A:Though I am not a rate analyst and have no
24 expertise in evaluating a utilityl s cost of service, I am
25 aware that cost of service models attempt to determine
773 TERI OTTENS, DI 13
CAPAI
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.
20
21
22
23
24
1 the total cost of serving each of a utility i s customer
2 classes. I am also aware that they are, by nature,
3 subj ecti ve and often a maj or point of contention in
4 general rate cases. Finally, I understand that the
5 Commission takes cost of service studies into
6 consideration when rendering its decisions, but has
7 generally chosen to not bind itself to any particular
8 study.
9 Q:Why do you oppose a uniform revenue allocation
10 in this case?
11 A:I have reviewed Idaho Power witness Matthew
12 Larkins i Exhibit No. 38, page 9 which is a summary of the
13 Company i s cost of service model results prepared for the
14 test year.
15 /
16 /
17 /
18
19
25 8 See, Idaho Power Response No. 3 to CAPAI Discovery.
774 TERI OTTENS, DI 13a
CAPAI
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1 That exhibit demonstrates that customers taking service
2 under Schedule Nos. 1-5, the Residential Class, are
3 currently paying rates that are 103% in terms of their
4 cost of service. Idaho Power i s special contract
5 customers are paying rates between 91% and 93% of their
6 cost of servic~, and the Irrigation class is paying 66%
7 of its cost of service. This means that, accepting the
8 cost of service study as accurate, other customer classes
9 are paying less than their respective cost of service and
10 are arguably being subsidized, in part, by residential
11 customers including low-income.
12 Q:Does the settlement agreement address this
13 potential subsidy?
14 A:No. The proposed uniform percentage allocation
15 simply maintains any existing allocation unfairness that
16 might exist. There is no way to speculate how the
17 Commission would rule if this were litigated. CAPAI i s
18 concern is that this is just one more concession that has
19 been given away through settlement that affects the
20 residential class as a whole, and low-income customers in
21 particular.
22
23
24
VI . WAQC FUING
Q:What is CAPAI i S proposal regarding WAQC?
A:CAPAI seeks the $1.5 million increase necessary
25 to simply bring Idaho Power into relative parity with
775 TERI OTTENS, DI 14
CAPAI
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.
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1 AVISTA. Combined with the current funding of $1.2
2 million, this would result in total annual funding for
3 WAQC of $2. 7 million.
4 Q:Would you please outline your position on Idaho
5 Power iS WAQC program?
6 A:To fully explain CAPAI' s position on WAQC, a
7 brief history of the program is useful. The program,
8 initially referred to as "LIWA," was implemented in 1989
9 pursuant to application of Idaho Power in Case No.
10 IPC-E-89-6. Idaho Power was ordered to initially fund
11 the program at $320,000 annually for a period of three
12 years, and increased to $500,000 for another two years.
13 The future of the program was left open. For reasons
14
15 /
16 /
17
18
19
20
21
22
23
24
25
/
776 TERI OTTENS, DI 14a
CAPAI
.
.
.
1 not entirely clear, the original "LIWA"9 program was
2 funded at an average annual level of $175,000 for roughly
3 thirteen years (1989 through 2003). Based on increasing
4 concerns by low-income customers regarding the amount of
5 their utili ties bills, CAPAI, along with AARP, intervened
6 in Idaho Power iS 2003 general rate Case No. IPC-E-03- 13.
7 Because it appeared that LIWA had never been fully funded
8 as originally ordered, and based on the benefits the
9 program provides to low-income customers and Idaho
10 Power i s entire system, CAPAI sought an annual funding
11 level on a going-forward basis of $1.2 million, a
12 proposal that was granted by the Commission.10
13 Q:Has CAPAI sought an increase in funding for
14 WAQC since 2003?
15 A:CAPAI has attempted on numerous occasions by a
16 variety of means to reach an agreement with the Company
1 7 to increase WAQC funding.
18 Q:Why has CAPAI not sought an order from the
19 Commission for a funding increase since Idaho Power iS
20 2003 rate case?
21 A: Following the 2003 case order, CAPAI turned its
22 limi ted resources toward the comparable programs of Rocky
23 Mountain Power and AVISTA. The reason then, as it is
24 now, was to achieve parity between the funding levels of
25 Idaho i s three largest electric public utilities.
777 TERI OTTENS, DI 15
CAPAI
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13 /
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15
16
17
18
19
20
21
22
1 Q:Why is parity important to CAPAI?
2 A:Pari ty is a very important principle and
3 obj ecti ve from CAPAI' s view for several reasons. First,
4 it is not fair, just or reasonable for one utility to
5 fund at significantly different rates than others. After
6 2003, Idaho Power i s funding level was higher than Rocky
7 Mountain and AVISTA so CAPAI felt it not only desirable
8 for low-income customers, but also equitable to Idaho
9 Power to seek relatively equal funding levels from the
10 other utili ties.
11 /
12 /
23 9 There is no practical difference between the acronyms "LIWA" and
"WAQC."
24 10 Order No. 29505.
25.
778 TERI OTTENS, DI 15a
CAPAI
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1 The principle of parity also applies to all Idaho
2 customers of the three utilities. If there is
3 substantial funding disparity between the three
4 utili ties, then customers of those utili ties are either
5 being treated preferentially or discriminated against.
6 Because the costs of low-income weatherization programs
7 are passed on to ratepayers, there exists a legitimate
8 concern about whether rates are fair, just and
9 reasonable, at least to the extent that they are affected
10 by LIWA funding.
11 Q:What events have occurred since 2003 that have
12 caused disparity in LIWA funding?
13 A:AVISTA i S and Rocky Mountain iS LIWA programs
14 have been increased several times, including within the
15 past year. AVISTA agreed to nearly double its funding
16 from $465,000 to $700,000 through settlement approved by
17 the Commission in Case No. AVU-E-10-01. Rocky Mountain iS
18 funding was doubled from $150,000 to $300,000 and its
19 allocation of Company (as opposed to federal) funds used
20 on each LIWA household from 75% to 85% by Commission
21 Order No. 32196 in Case No. IPC-E-10-07 issued February
22 28 of this year.
23 Q:How do the current funding levels of the three
24 utilities compare now?
25 A:AVISTA funding is currently the highest per
779 TERI OTTENS, DI 16
CAPAI
.
.
.
1 capita and is more than 200% higher than Idaho Power and
2 roughly 25% higher than Rocky Mountain Power.
3 Q:Please explain how you arrived at this
4 conclusion?
5 A:I divided the total program funding by the
6 number of each utilityl s Idaho electric residential
7 customers. The customer numbers were obtained from each
8 utility and is the most recent data I had at my disposal
9 when I made these calculations. To the extent that there
10 exists a more accurate customer count, CAPAI would
11 obviously prefer that figure for comparison purposes.
12 AVISTA funds at $700,000 and has 104,609 Idaho electric
13 customers for a per capita level of $6. 69/customer.
14 Rocky Mountain Power funds at $300,000 and has 56,430
15 Idaho electric customers for a per capita level of $5.32.
16 Idaho
17 /
18 /
19 /
20
21
22
23
24
25
780 TERI OTTENS, DI 16a
CAPAI
.
.
.
1 Power funds at $1.2 million and has 391,759 Idaho
2 electric customers for a per capita level of $3.06.
3 Q:Do your calculations of per capita funding and
4 comparison between utili ties include the utili ties i
5 internal administrative overhead?
6 A:No. The significance of this only recently
7 came to my attention. In its Discovery Responses to
8 CAPAI i s First Discovery Requests, Idaho Power states that
9 it is funding WAQC at more than the $1.2 million ordered
10 by the Commission. For instance, Idaho Power states that
11 n(i)n addition to the $1.2 million per year, Idaho Power
12 funds administrative overheads. "11 The use of the word
13 "overheads," in the plural is what caught my attention.
14 Addi tionally, Idaho Power states that during the test
15 year its WAQC expenditures total $1,321,132. Using this
16 higher funding level, and a residential customer class
17 population more recent and higher than that used in my
18 calculations, the Company concludes that it is funding
19 WAQC at $3.21 per residential customer compared to my
20 calculation of $3.06.12
21 Q:What is your explanation of this apparent
22 discrepancy?
23 A:It appears that in calculating the per capita
24 WAQC funding level, Idaho Power is including the
25 administrative overhead costs of both itself and what it
781 TERI OTTENS, DI 17
CAPAI
.
13 /
. 14
.
1 pays to CAPAI to administer the program. CAPAI isn i t
2 disputing that Idaho Power has administrative overhead
3 resul ting from WAQC but has no way of verifying what that
4 expense it. Regardless, it isnlt important to CAPAI how
5 Idaho Power i s funding level is calculated solely to
6 arri ve at a comparison point between utili ties. When I
7 calculated the respective funding levels of AVISTA and
8 Rocky Mountain, I used only the total money paid to the
9 communi ty action agencies that implement their LIWA
10 programs and did not include
11 /
12 /
15
16
17
18
19
20
21
22
23 11 Idaho Power Response to Request No. 1 (d) of CAPAI' s First
Discovery.
24 12 See, Idaho Power Response to Request No.5 of CAPAI's First
Discovery.
25
782 TERI OTTENS, DI 17a
CAPAI
.
.
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13
14
15
1 those utili ties i respective overheads. Thus, to compare
2 apples to apples , either AVISTA i S and Rocky Mountain IS
3 funding levels must be increased by their respective
4 administrative overheads, or Idaho Powerls should be $1.2
5 million, the money it actually pays to the agencies.
6 Furthermore, Idaho Power i s more accurate residential
7 customer population data is higher and if used for per
8 capi ta calculation purposes, would yield a lower dollar
9 amount for Idaho Power. This might also be true for
10 AVISTA and Rocky Mountain so CAPAI proposes that
11 population data be amended for all three utilities for
12 arri ve at a fair comparison.
Q:So would you please elaborate on CAPAI i s
attempts to obtain an increase to WAQC funding?
A:During the past several years when CAPAI was
16 participating in AVISTA and Rocky Mountain general rate
17 cases, it was in fairly frequent contact with Idaho Power
18 senior management to discuss a WAQC funding increase.
19 These communications seemed quite positive and, based on
20 long-standing relationships with particular individuals
21 and the Company in general, and the desire to resolve the
22 issue without litigation before the Commission, CAPAI
23 genuinely believed that it would not be necessary to
24 incur the expense of intervening in a general rate filing
25 for Idaho Power or to petition the Commission directly in
783 TERI OTTENS, DI 18
CAPAI
.
.
.
1 order to achieve the desired outcome.
2 Q:Was there anything in particular that prevented
3 these discussions from coming to fruition?
4 A:There were several things that interrupted
5 CAPAI i S attempts to obtain increased funding. First,
6 Idaho Power had prioritized completion of its
7 collaborati ve decoupling process culminating in the
8 proposed permanent approval of the FCA in this case.
9 Though the FCA was not a priority issue for CAPAI, we
10 accepted the Company i s representations that the FCA
11 required its full focus and resources. In addition,
12 there was a key personnel
13 /
14
15 /
16
17
18
19
20
21
22
23
24
25
/
784 TERI OTTENS, DI 18a
CAPAI
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.
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1 change involving the individual with whom CAPAI had been
2 discussing a funding increase. Following these events,
3 CAPAI resumed discussions with Idaho Power but the
4 Company changed course and declined further consideration
5 of a WAQC funding increase. Moreover, Idaho Power
6 indicated that it had no intention to consider any
7 increase pending the results of a cost-effectiveness
8 study of the program scheduled for completion sometime
9 near the end of 2012. This position, if accepted by the
10 Commission, will mean that Idaho Power will have not
11 increased funding for more than a decade during which its
12 rates have climbed considerably. The present case is the
13 first viable opportunity CAPAI has had to seek a formal
14
15
ruling from the Commission to increase funding.
Q:Is it possible for CAPAI to file an application
16 for LIWA funding increases outside the context of a
17 pending general rate case?
18 A:To my knowledge, any individual or entity may
19 file an application or petition with the Commission at
20 its discretion but it is not always financially feasible
21 for CAPAI to do so. A pending general rate case offers
22 advantages for an organization with limited resources
23 such as CAPAI. I am not an attorney and do not profess
24 to have any legal expertise. I am, however, familiar
25 with the basic elements of Idaho law and the Commission iS
785 TERI OTTENS, DI 19
CAPAI
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20
21
22
23
24
25
1 procedural rules pertaining to intervenor funding. There
2 are a number of criteria that an intervenor must satisfy
3 in order to be entitled to a funding award. Absent the
4 possibili ty of obtaining such an award, it is a financial
5 strain for CAPAI to formally intervene in proceedings
6 before the Commission. Furthermore, there are
7 essentially economies of scale that exist when a general
8 rate case is pending for a utility that constitute an
9 economic opportunity for CAPAI to have its issues
10 addressed. Because the Commission generally allows any
11 and all issues to be raised during the course of a
12 general rate case, it
13 /
14 /
15 /
16
17
18
19
786 TERI OTTENS, DI 19a
CAPAI
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.
.
1 is procedurally less complicated and costly for CAPAI to
2 intervene in a pending case than to initiate a new one.
3 Q:Has CAPAI been successful in past requests for
4 intervenor funding?
5 A:Yes, and I wish to emphasize that the
6 Commission has never denied CAPAI intervenor status in
7 any proceeding and has been quite generous and
8 encouraging in its rulings on CAPAI i S intervenor funding
9 requests. Still ~ a general rate case presents
10 considerable opportunities that might not exist
11 otherwise. Thus, a deferral of CAPAI' s WAQC funding
12 increase proposal in this case will result in additional
13 costs for CAPAI if it becomes necessary to initiate a new
14 and separate proceeding. CAPAI submits that it is in the
15 best interests of all concerned to maximize the
16 opportunity and convenience that the current proceeding
17 provides to resolve this issue.
18 Q:Are you aware of any hesitation on the part of
19 other parties to an increase for Idaho Power in this
20 case?
21 A:Though I do not wish to speak for others, it is
22 CAPAI i S perception that Staff has certain concerns and
23 objectives regarding the evaluation of low-income
24 weatherization in general that might be presenting an
25 obstacle to Staff agreeing to a WAQC funding increase in
787 TERI OTTENS, DI 20
CAPAI
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.
.
14
1 this case.
2 Q:What do you perceive Staff i s concerns and
3 obj ecti ves to be?
4 A:Staff has expressed a desire for some time now
5 to obtain guidance from the Commission regarding how to
6 evaluate the cost-effectiveness of all three utili ties i
7 LIWA programs, especially given the unique
8 characteristics of LIWA including what are sometimes
9 referred to as "non-energy benefits." These benefits
10 include the many positive effects of LIWA programs that
11 do not directly affect energy consumption including such
12 things as reduced billing and collection costs, improved
13 cash flow, reduced bad debt write-off and others. These
benefits are very real and beneficial to a utility's
15 entire customer base, but
16 /
17 /
18 /
19
20
21
22
23
24
25
788 TERI OTTENS, DI 20a
CAPAI
.
.
.
1 as of yet, there has not been an established methodology
2 mandated by this Commission for their valuation and
3 evaluation.
4 Q:Does CAPAI obj ect to Staff iS obj ecti ve as you
5 interpret it?
6 A:No. CAPAI believes that the three LIWA
7 programs are being and have been implemented in a
8 cost-effective manner but welcomes a formal recognition
9 of the non-energy or "system-wide" benefits that inure
10 from LIWA programs and will cooperate fully in any
11 proceeding or investigation initiated for that purpose.
12 Q:Are there other objectives that you perceive
13 Staff has?
14 A:There might be many and I do not purport to
15 necessarily know or understand them fully yet. I am of
16 the perception that Staff also seeks a sort of parity or
17 uniformity in the cost-effectiveness evaluation
18 methodologies used for the three utilities i programs.
19 Again, CAPAI has no objection to this objective though
20 the unique characteristics of the three programs might
21 require some accommodation.
22 Q:What concerns do you perceive that Staff has
23 about the LIWA programs?
24
25
A:I am of the belief that Staff wishes to know
whether the programs are, in fact, cost-effective under
789 TERI OTTENS, DI 21
CAPAI
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20
21
22
23
24
25
1 whatever methodology the Commission ultimately approves.
2 It is quite understandable that Staff would want this
3 information and CAPAI certainly has no objection. I
4 suspect that Staff likely has had this wish for some time
5 but there has been an intervening event that seems to
6 have possibly turned that wish into a concern.
7 Q:Please identify that intervening event?
8 A:It is the filing by Rocky Mountain Power of an
9 application (Case No. PAC-E-11-13) for authorization to
10 cease further evaluations of the cost-effectiveness of
11 its LIWA program. The Company bases its application on a
12 study by a third-party contractor filed with the
13 Company i s application which purports to show that Rocky
14 Mountain iS LIWA program is not cost-effective when
15 evaluated under traditional standards. Rocky Mountain
16 contends
17 /
18 /
19 /
790 TERI OTTENS, DI 21a
CAPAI
.
.
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1 that the cost of evaluations, which are an added cost of
2 the program, merely exacerbate what it contends is a
3 program that is not cost-effective. Rocky Mountain
4 acknowledges the importance of its LIWA program and
5 requests that the Commission acknowledge the program as
6 an acceptable part of the Company's DSM program
7 portfolio.
8 Q:What is CAPAI i s position in response to Rocky
9 Mountain i s filing?
10 A:CAPAI agrees that Rocky Mountain i s program is
11 beneficial and has intervened in that proceeding. CAPAI
12 strenuously disputes, however, not only the results of
13 the study supporting the application, but the study
14 itself which, CAPAI believes, is seriously flawed and
15 understates the total value of Rocky Mountain iS LIWA
16 program. I appreciate that this is not the appropriate
17 forum in which to address and debate the issues presented
18 by Rocky Mountain i s filing, but to the extent that the
19 filing has caused any reticence on the part of Staff or
20 any other party to defer ruling on whether to increase
21 funding to Idaho Power i s WAQC program, then it becomes an
22 issue in this case. It is CAPAI i s position that Rocky
23 Mountain i s application should have absolutely no bearing
24 on CAPAI i S proposal to increase WAQC funding now.
25 Q:On what do you base this position?
791 TERI OTTENS, DI 22
CAPAI
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.
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20
21
22
23
24
25
1 A:First, though all three LIWA programs share
2 common obj ecti ves and must adhere to identical
3 implementation standards dictated by the U. S. Department
4 of Energy, a cost-effectiveness evaluation by one utility
5 of one program should not be deemed to have any bearing
6 on what results would occur if the other programs were
7 similarly evaluated. This is true if for no other reason
8 than the IIhuman element" that is at play whenever
9 weatherization measures are installed under a LIWA
10 program and how the resulting energy savings are
11 estimated, audited, and measured. Thus, though similar
12 in many respects, the LIWA programs might yield
13 significantly different results from a cost-effectiveness
14 standpoint.
15 /
16 /
17 /
18
19
792 TERI OTTENS, DI 22a
CAPAI
.
.
.
1 Are there negative consequences of deferring aQ:
2 ruling on whether to increase WAQC funding in this case?
3 Yes, and many have already been stated. TheA:
4 program funding levels are substantially
5 disproportionate, resulting in disparity and unfairness
6 for utilities and ratepayers. Second, there are economic
7 consequences to losing the opportunity to present the
8 issue to the Commission in a pending general rate case.
9 Third, unlike AVISTA and Rocky Mountain, Idaho Power has
10 gone nearly a decade without a funding increase while its
11 customers continue to be hit with increasing bills
12 through rate filings or revenue stability mechanisms
13 without any meaningful ability to alter their consumption
14
15
to offset the effect of these bill increases.
Q:What data do you have regarding the existing
16 backlog of Idaho Power customers eligible for WAQC in
17 light of increased poverty?
18 A:I will have updated data near year i send.
19 Based on the most recent data I have for Ada and Elmore
20 counties alone there are 6000 homes that are eligible for
21 WAQC funding. Based on current levels of funding, this
22 equate to an average 20 year waiting list for these
23 applicants. Obviously, this is so long that people on
24 the waiting list might never receive weatherization and
25 the backlog continues to grow.
793 TERI OTTENS, DI 23
CAPAI
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20
21
22
23
24
25
1 Q:Do you have additional information relevant to
2 the increasing backlog you describe?
3 A~There is a particularly frustrating aspect of
4 attempting to estimate the real need for increased WAQC
5 resources. For example, customers who apply for LIHEAP
6 must qualify by having incomes below 60% of the state
7 median income. WAQC allows participants whose incomes
8 are up to 200% of the Federal Poverty Level. Because
9 LIHEAP recipients often apply for WAQC assistance as
10 well, and because of the limited funding of WAQC, those
11 funds are often exhausted long before all WAQC-eligible
12 customers are served. Thus, while establishing WAQC
13 eligibility at 200% FPL is a good
14 /
15 /
16 /
17
18
19
794 TERI OTTENS, DI 23a
CAPAI
.
.
.24
1 thing, the reality is that the program comes nowhere
2 close to having sufficient funding to serve all customers
3 who qualify.
4 Q:Are there other practical reasons to not defer
5 increasing WAQC funding now?
6 A:Yes. CAPAI simply does not understand how the
7 Commission i s ruling in the Rocky Mountain 11-13 filing
8 will determine whether WAQC is cost-effective. Even if
9 the Commission determines that Rocky Mountain iS LIWA
10 program is not cost-effective, this will not mean that
11 any other utilityl s program is not. If the Commission
12 determines that Rocky Mountain i s program is
13 cost-effective, an opportunity to resolve the disparity
14 wi th WAQC in this case will have been lost. Regardless
15 of whether the Commission determines Rocky Mountain iS
16 LIWA program to be cost-effective, even if the Commission
17 adopts an evaluation methodology in that case, neither
18 Idaho Power nor AVISTA are parties to that case and could
19 legitimately complain if a Commission ruling in that
20 proceeding were applied to their own programs.
21 Therefore, allowing the Rocky Mountain filing to serve as
22 an impediment to resolving the WAQC funding disparity in
23 this case creates a procedural conundrum.
Q:Has Idaho Power indicated its opinion of
25 whether WAQC is a prudent, cost-effective program?
795 TERI OTTENS, DI 24
CAPAI
.
.
.
1 A:Yes. In its Response to CAPAI' s First
2 Discovery Requests, Idaho Power confirmed that WAQC is
3 both prudent and cost-effective and has been evaluated
4 for cost-effectiveness. 13
5 Q:Do you have a proposal that addresses both
6 CAPAI i s position and what it believes to be that of Staff
7 and all three utili ties?
8 A:Yes. I propose that the Commission bring Idaho
9 Power into parity with AVISTA with an increase to WAQC of
10 $1.5 million (or whatever amount is ultimately deemed
17
18
19
20
21
22
23
11 necessary to achieve parity using updated population
12 figures), that the Commission then determine
13 /
14 /
15 /
16
24 13 See, Responses Nos. 8-14, 16 of Idaho Power's Response to CAPAI
Discovery.
25
796 TERI OTTENS, DI 24a
CAPAI
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1 whether the Rocky Mountain filing will provide what is
2 desired by the parties as it is currently framed, or
3 whether a generic proceeding should be structured so that
4 there is no collateral objections to any attempt to apply
5 the Commission i s ruling on other utili ties. Meanwhile,
6 CAPAI represents that it has retained an expert to assist
7 it in analyzing the Rocky Mountain evaluation study and
8 will likely propose changes or an entirely different
9 evaluation methodology. Either way, CAPAI will
10 participate fully in whatever proceeding ultimately
11 results from the current procedural spate of cases and in
12 the event that at the end of the process it is determined
13 that changes should be made to improve the efficacy of
14 the LIWA programs, the community action agencies that
15 implement them will certainly comply with applicable
16 Commission directives. This should give Staff the
17 direction it seeks while shoring up the disparity in LIWA
18 funding for Idaho Power by bringing it in line with
19 AVISTA. Simultaneously, Rocky Mountain Power i s concerns
20 regarding the cost of further LIWA evaluations will be
21 fully addressed.
22 VII. CONCLUSION
23 Q:How would you summarize your testimony in
24 conclusion?
25 I greatly appreciate the opportunity to presentA:
797 TERI OTTENS, DI 25
CAPAI
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1 a low-income customer i s perspective on the many issues
2 and challenges facing that customer today. I also
3 appreciate the Commission i s consideration of this
4 perspecti ve. My testimony is obviously not that of an
5 expert in the technical aspects of a general ratemaking
6 such as determining revenue requirement and allocation.
7 The purpose of my testimony is to explain why the type of
8 settlement currently before the Commission is quite
9 unbalanced from the point of view of a low-income Idaho
10 Power customer who struggles with the fact that his or
11 her bill seems to constantly increase. The frustration
12 that accompanies this is elevated by that same customer IS
13 inability to do anything to modify his or her
14 consumption. A settlement that does nothing but
15 exacerbate the many inequities I suggest exist by failing
16 to simply
17 /
18 /
19 /
20
21
22
23
24
25
798 TERI OTTENS, DI 25a
CAPAI
1 increase funding of the only resource available to.2 low-income customers is neither fair,just nor
3 reasonable.
4 Q.Does this conclude your testimony?
5 A.Yes,it does.
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799 TERI OTTENS,DI 26
CAPAI
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1 I. INTRODUCTION
2 Q:Please state your name and business address.
3 A:My name is Teri Ottens. I am the Policy
4 Director of the Community Action Partnership Association
5 of Idaho headquartered at 5400 W. Franklin, Suite G,
6 Boise, Idaho, 83705.
7 Q:On whose behalf are you testifying in this
8 proceeding?
9 A:The Community Action Partnership Association of
10 Idaho ("CAPAI") Board of Directors asked me to present
11 the views of an expert on, and advocate for, low income
12 customers of AVISTA.
Q:Have you previously submitted pre-filed
testimony in this proceeding?
A:Yes, on October 11, 2011 I submitted direct
16 testimony.
17 Q:What is the purpose of this surrebuttal
18 testimony?
19 A:The purpose of this testimony is to respond to
20 the rebuttal testimony filed by Ms. Stacey Donohue of the
21 Commission Staff on November 16, 2011.
22 Q:Does your surrebuttal testimony respond to any
23 other testimony than that of Ms. Donohue?
24
25
A:No.
Q:Please explain why you are responding to Ms.
800 TERI OTTENS, SUR 2
CAPAI
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1 Donohue i s rebuttal testimony?
2 A:I am responding because Ms. Donohue, for the
3 first time in this proceeding and to an extent for the
4 first time to my knowledge, raises certain issues and/or
5 makes certain recommendations to the Commission that bear
6 directly on CAPAI i S involvement in this case. No Staff
7 witness submitted direct testimony addressing the same
8 issues and containing the same recommendations as those
9 addressed and contained in Ms. Donohue i s rebuttal. In
10 fact, it is fair to say that Staff i s direct testimonies
11 simply supported the proposed settlement stipulation in
12 this case to which CAPAI is not a party
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801 TERI OTTENS, SUR 2a
CAPAI
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1 but did not address the primary issue of concern to CAPAI
2 and its constituents. Thus, CAPAI had no way to
3 anticipate the scope, nature and extent of the positions
4 Staff has now taken through Ms. Donohue i s rebuttal and
5 had nothing to rebut as of the rebuttal testimony
6 deadline. CAPAI, therefore, filed no rebuttal.
7 Q: Is it CAPAI i S contention that it was completely
8 unaware that Staff generally opposed CAPAI i S proposal for
9 a funding increase to Idaho Power i slow-income
10 weatherization program known as "WAQC?"
11 No, CAPAI was aware that Staff had certainA:
12 reservations about CAPAI i s position going into the filing
13 of my direct testimony. In fact, my direct testimony
14 specifically addresses many of those reservations, as I
15 percei ved them at that time. In her rebuttal, Ms.
16 Donohue testifies that my characterization of Staff's
17 concerns and objectives was "fairly accurate." Reb. Test.
18 S. Donohue, p. 5, ln 12.
19 To what extent was CAPAI aware of Staff ISQ:
20 reservations you refer to?
21 Though I am not an attorney, I do understandA:
22 that issues and positions discussed during the settlement
23 proceedings in this case are confidential and cannot be
24 disclosed by me or anyone else. Thus, my answer to your
25 question must, to a certain extent, be couched in
802 TERI OTTENS, SUR 3
CAPAI
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1 generalities.
2 Wi th that qualification understood, to whatQ:
3 extent was CAPAI aware of Staff iS position on CAPAI iS
4 positions and recommendations in this case?
5 Since its first intervention before thisA:
6 Commission, CAPAI has routinely and fairly frequently
7 communicated with Staff regarding issues affecting the
8 poor and how best to address and resolve those issues.
9 From CAPAI' s view, those communications have resulted in
10 a long-standing cooperative and positive relationship.
11 CAPAI still holds this view and understands that
12 reasonable minds can and do differ. But had CAPAI known
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803 TERI OTTENS, SUR 3a
CAPAI
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1 the full extent of Staff iS positions and recommendations
2 set forth in Ms. Donahue i s rebuttal testimony, it would
3 certainly have presented testimony and exhibits
4 challenging that testimony.
5 Prior to the filing of Ms. Donohue i s rebuttal,Q:
6 what did you understand Staff's reservations about the
7 proposal you made in your direct testimony to be?
8 Generally speaking, CAPAI perceived that StaffA:
9 had reservations about increasing Idaho Power's WAQC
10 funding because of doubts over the cost-effectiveness of
11 Rocky Mountain Power i s low-income weatherization program
12 (LIWA) resulting from the filing last spring of Case No.
13 PAC-E-11-13 (referred to as the "RMP 13 case"). The
14 primary purpose of Rocky Mountain i s application in that
15 case is to relieve Rocky Mountain of any obligation to
16 conduct future cost-effectiveness studies of its LIWA
17 program. Rocky Mountain bases its filing on an extremely
18 abbreviated and confusing study that ignores or
19 contradicts past Commission Orders and policy regarding
20 the proper valuation of low-income weatherization
21 programs. I also noted in my direct testimony why an
22 unsubstantiated filing and inappropriate request by Rocky
23 Mountain should not be used as a basis to oppose
24 increasing WAQC funding.
25 Is there another Staff position that you wereQ:
804 TERI OTTENS, SUR 4
CAPAI
.1 aware of prior to filing your direct testimony?
2 A:Yes, Staff suggested that my per capita LIWA
3 funding level comparison between Idaho Power and AVISTA
4 was not a valid comparison because of the latter
5 utility i s gas customers. That Staff perception was
6 confirmed in Ms. Donohue i s rebuttal and will be addressed
7 later.
8 Q:What aspects of Ms. Donohue i s rebuttal do you
9 contend is novel or different in some manner such that
10 CAPAI could not have predicted it in Staff rebuttal?
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805 TERI OTTENS, SUR 4a
CAPAI
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1 The maj ori ty of Ms. Donohue i s testimonyA:
2 constitutes a departure from prior Staff positions, as I
3 will discuss later.
4 II . ARGUMNT
5 Ma thema tical Calculation of Per Capita Funding
Compari.son
A.
6
7 First, do you believe that there any specificQ:
8 factual error in Ms. Donohue i s testimony?
9 Yes. On p. 3, In. 9 of her rebuttal, Ms.A:
10 Donohue states that she Ilagrees" with my calculation of
11 Idaho Power and Rocky Mountain i s funding levels of $3.21
12 and $5.32 , respectively. I never testified that Idaho
13 Powerl s per capita funding level (the amount of WAQC
14 funding divided by number of residential customers) is
15 $3.21. See, Testimony of Teri Ottens, p. 17, lns 3-14
16 through p. 18, lns 1-8. In fact, I specifically noted
17 that in response to CAPAI i s discovery requests, Idaho
18 Power made the per capita calculation of $3.21 but that
19 this figure apparently includes the Company
i sown
20 internal administrative costs of its relatively limited
21 role of actually administering the WAQC program. Id. My
22 per capita calculations for all three utilities do not
23 include internal administrative costs. CAPAI has never
24 calculated per capita funding in the manner Ms. Donohue
25 suggests because we don't know what any of the utilities i
806 TERI OTTENS, SUR 5
CAPAI
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1 internal administrative costs are. CAPAI only knows what
2 its own administrative costs are (based on a percentage
3 of total funding). To be consistent, therefore, I
4 deducted Idaho Power i s internal administrative costs so
5 that its per capita funding level was calculated in the
6 same manner as the other two. Utilizing this approach
7 yields a per capita funding level for Idaho Power of
8 $3.08. rd. The manner in which I made the simple
9 ari thmetic calculation of per capita funding cannot
10 logically be challenged and is not affected by whether
11 one accepts my comparison of the three utilities for
12 other reasons.
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807 TERI OTTENS, SUR 5a
CAPAI
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1 Q:What are the consequences of Ms. Donohue i s use
2 of $3.21 per capita funding for Idaho Power?
3 A: The difference between $3.21 and $3.08 is
4 $49,065. Ms. Donohue contends, however, that the
5 appropriate AVISTA funding level for comparison purpose
6 (after excluding gas customers from the equation) is
7 $3.98. Rebuttal Test S Donohue, p. 3, ln 24. She then
8 compares this to Idaho Power i s supposed funding level of
9 $3.21. Given the relatively larger size of Idaho Powerls
10 customer base, the difference in funding disparities
11 between Idaho Power and AVISTA, accepting Ms. Donohue IS
12 calculations, is $348,686. Even if CAPAI agreed that the
13 AVISTA relative funding level is $3.98, which CAPAI does
14 not agree to, this is a considerable sum of money. Thus,
15 Ms. Donohue i s statement that "( a) ccordingly, Idaho
16 Power i s low-income weatherization investment of
17 $3. 21/customer is similar to AVISTA i S and achieves
18 relati ve i pari ty i even as defined by Ms. Ottens is
19 factually inaccurate. In any event, I disagree with
20 Staff i s position that it is necessary to deduct AVISTA IS
21 gas customers from the equation when calculating parity.
22 B.Is Per Capita Funding Comparison Fair Because AVISTA
Serves Gas Customers?
23
24 Q:On page 3, ln 13 of her rebuttal, Ms. Donohue
25 testified that in calculating AVISTA i S per capita level
808 TERI OTTENS, SUR 6
CAPAI
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1 of LIWA funding, you "ignore that when the Commission
2 ordered AVISTA to spend $700,000 annually on low-income
3 weatherization in Idaho, that amount was for both its gas
4 and electric low-income weatherization programs." What
5 is your response to this assertion?
6 A:First, I did not "ignore" the fact that AVISTA
7 provides low-income weatherization funding for both its
8 gas and electric customers. The Commission approved a
9 settlement agreement reached by the parties in Case No.
10 AVU-E-10-01 in Order No. 32070. Consistent with prior
11 orders, the Commission did not distinguish between
12 customers
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809 TERI OTTENS, SUR 6a
CAPAI
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1 based on their heat source. AVISTA i S practice of funding
2 both gas and electric weatherization has been found
3 prudent by the Commission for many years. Most
4 importantly, the AVISTA total funding level for both gas
5 and electric customers has been the benchmark that CAPAI
6 and Staff have used for parity comparison purposes since
7 2003 when CAPAI first appeared as a party before the
8 Commission proposing a $1.2 million increase in LIWA
9 funding to bring Idaho Power to parity with AVISTA.
10 Q:How do you respond to Staff iS substantive
11 argument that AVISTA i S gas customers should be deducted
12 from the calculation for the purpose of comparing per
13 capi ta funding between the three utili ties?
14 A:The important point to remember is that all of
15 AVISTA i S gas customers are also electric customers. An
16 AVISTA electric heater benefits from weatherizing the
17 home of a gas heater to the same extent that all non-low
18 income residential customers benefit from low-income
19 weatherization. That benefit is in the form of what are
20 generally referred to as "system-wide benefits." These
21 include such things as reduced arrearages, debt
22 collection costs, bad debt write-off and improved cash
23 flow among others. AVISTA gas heaters pay a combined
24 bill that includes electric consumption. Electric
25 heaters receive the same system-wide benefits resulting
810 TERI OTTENS, SUR 7
CAPAI
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1 from reduced gas consumption as non-low income customers
2 benefit from providing low-income weatherization to any
3 electrìc customer regardless of heat source.
4 Furthermore, it requires electricity to run a gas furnace
5 so there is a nexus between gas heat and electric
6 consumption.
7 Another point to consider is that many of Idaho
8 Power i s and Rocky Mountain's customers are gas heaters.
9 Even though those two utili ties do not provide gas
10 service, their gas heating customers pay for electric
11 low-income weatherization when they pay their bills and
12 derive the same system-wide benefits I've described.
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811 TERI OTTENS, SUR 7a
CAPAI
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1 The Commission has never qualified or
2 conditioned any of its orders related to low-income
3 weatherization, based on a customer i s heat source.
4 C.Criteria for Comparing Relative Funding
5 Q:I s there another aspect of Ms. Donohue i s
6 testimony that you believe is unique?
7 A:Yes. Ms. Donohue seems to entirely dismiss the
8 significance of comparing funding levels on a per capita
9 basis. In response to a question whether the Commission
10 should "seek to attain parity" when reaching a final
11 determination of the appropriate funding level for Idaho
12 Power, Ms. Donohue states: "No. It makes more sense to
13 provide similar funding based on need, not on the basis
14 of total residential utility customers as proposed by Ms.
15 Ottens." Testimony, S. Donohue, p.4, lns 3-7. She goes
16 on to argue that requiring parity in funding levels is
17 "arbitrary." Id. She recommends that the appropriate
18 comparison criterion is "need" in the respective service
19 territories of the three utilities.
20 Q:Do you necessarily disagree with a need-based
21 approach for the Commission to adopt when setting funding
22 levels?
23 A:I disagree with any contention that, assuming
24 one accepts parity as a valid principle to be followed,
25 my per capita comparisons are inaccurate or inappropriate
812 TERI OTTENS, SUR 8
CAPAI
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1 based on the existing policy approved by the Commission.
2 CAPAI does not necessarily obj ect, however, to the notion
3 of a need-based determination of funding in the future.
4 In fact, the Staff report created in Case No.
5 GNR-U-OS-01focuses on "need" as a driving force behind
6 determining energy affordabili ty in general. That same
7 report proposes that LIWA funding should be addressed in
8 cases before the Commission, such as this one. If the
9 appropriate criterion for establishing funding levels for
10 LIWA is "need," then the funding levels of all three
11 utilities should be substantially increased and CAPAI i s
12 proposed $ 1.5 million increase to WAQC in this case is
13 seriously short of satisfying need. To truly
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813 TERI OTTENS, SUR 8a
CAPAI
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1 satisfy need, it would be necessary to fund all LIWA
2 programs at a level that eliminates the already
3 tremendous waiting list for LIWA eligible customers. In
4 fact, in order to satisfy "need" in Idaho Power i s service
5 territory, a funding level of $55,529,500 would be
6 needed.
7 Q:On page 4, lns 17-24, Ms. Donohue discusses
8 Staff i s perspective on what criteria to rely upon in
9 determining appropriate LIWA funding levels for all
10 utilities. She states: "It would be better to compare
11 proportional funding levels among the utilities based on
12 factors measuring relative need..." She further states:
13 "Possible methods could include the number of low income
14 customers, number of homes needing weatherization, and
15 poverty rates." Test. S. Donohue, p. 4, lns 17-19. What
16 is your response to this proposal?
17 A:I frankly do not see how Ms. Donohue proposes
18 anything other than the exact method by which CAPAI has
19 always approached LIWA funding. As my testimony in this
20 and virtually every other case I have testified in before
21 this Commission regarding LIWA funding reveal, I have
22 advocated for funding level targets based on the number
23 of low-income customers in each utilityl s service
24 terri tory, the number of homes needing weatherization
25 (i.e., the Ilwaiting list") identified in my testimony,
814 TERI OTTENS, SUR 9
CAPAI
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1 and poverty rates (my calculation of the percentage of
2 Idaho Power i s low-income customers based on the criteria
3 used for determining LIHEAP eligibility (i. e., Federal
4 Poverty Level and percentage of state median income). I
5 simply fail to understand how Ms. Donohue i s statement
6 just quoted reflects anything other than the status quo.
7 To that extent, it is consistent with CAPAI i S approach
8 and is acceptable to CAPAI.
9 Q:On page 4, lines 21-23 Ms. Donohue states that
10 "determining equitable funding levels is complicated
11 issue (sic) that would be best resolved through the
12 previously mentioned workshops." What is your response
13 to this proposal?
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815 TERI OTTENS, SUR 9a
CAPAI
1 A:CAPAI has always fully participated in relevant.2 workshops and often collaborates with Staff to achieve
3 resul ts that the Commission has ultimately found
4 acceptable. CAPAI does not, however, support deferring a
5 resolution of WAQC funding in this case to future
6 workshops. Workshops can be an effective means of
7 creati ve resolution to complex issues.
8 In other situations, workshops might result in
9 a substantive end result, but not resolve anything from a
10 practical standpoint. A good example of this is the
11 generic, multi-party low-income affordability case Ilve
12 already discussed. Although many encouraging conclusions
13 and recommendations are set forth in Staff i s final.14 report, it is difficult to state that the generic case
15 directly resulted in any tangible end product. In fact,
16 Staffl s position to defer ruling on WAQC funding now
17 seems contradictory to its final report in the generic
18 case.
19 Where the parties to an issue have reached the
20 type of impasse such as in this case, however, a workshop
21 simply results in the needless delay of achieving
22 important objectives. As I stated in my direct
23 testimony, Idaho Power responded to CAPAI discovery
24 requests that it has not increased WAQC funding since its.25 2003 general rate case because it has not been ordered to
816 TERI OTTENS, SUR 10
CAPAI
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20
21
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24.25
1 do so by the Commission. The Company remains steadfast
2 in this respect and, as I i ve noted above, Staff proposes
3 addressing the issue of WAQC funding through the use of
4 the same criteria that it and CAPAI have been using, and
5 the Commission has been adopting since 2003.
6 There is no information that will be available
7 in a workshop that hasn i t already been introduced into
8 evidence in this case. It is CAPAI i s position,
9 therefore, that deferring this critical low-income issue
10 to workshops will result in continued impasse and force
11 CAPAI to file an entirely new proceeding seeking the same
12 resolution it seeks from
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817 TERI OTTENS, SUR lOa
CAPAI
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1 the Commission in this case, entirely negating the value
2 of CAPAI i S efforts. I can see no reason from either a
3 factual or policy viewpoint to justify the scenario I
4 just described.
5 Q:Has the Commission been presented with this
6 scenario before?
7 A:Yes. In fact, this case is quite similar to
8 Idaho Power's 2003 general rate case. i In that case, the
9 Commission, in Final Order No. 29505 issued May 25, 2004,
10 noted Idaho Power i s position that "the rate case was not
11 the appropriate proceeding to consider" changes to the
12 Company iS WAQC funding and the Company "suggested that
13 CAPAI i S proposals be addressed outside the rate case."
14 Order 29505, pp. 31-32. The Commission elected to not
15 push the issue of low-income weatherization off into a
16 separate proceeding and, instead, ordered an increase to
17 Idaho Power i s funding level from roughly $250,000 to $1.2
18 million, the full amount of CAPAI i S proposal, and
19 increased the administrative costs paid to CAPAI to
20 implement the program. Id., p. 32. This proceeding
21 presents the same scenario and CAPAI submits that there
22 is no reason to not resolve a fully-addressed and
23 familiar issue now and avoid requiring CAPAI to further
24 invest its limited resources in advancing the same
25 arguments and presenting the same evidence put forth in
818 TERI OTTENS, SUR 11
CAPAI
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1 this case in a future proceeding that workshops will
2 inevi tably lead to. Had the parties to the proposed
3 settlement agreement been inclined to resolve this issue,
4 there was ample opportunity to do so. The fact that it
5 wasn i t settled casts serious doubt on whether workshops
6 will be able to accomplish what couldn i t be during
7 settlement.
8 D.RMP 11-13 filing
9 Q:On page 2, lines 16-19 of her rebuttal
10 testimony, Ms. Donohue states that Staff has "uncertainty
11 regarding. . . (LIWA) program cost-effectiveness." Please
12 describe CAPAI i s perspective of the basis for this
13 contention.
14 /
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18
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23
24 i Case No. IPC-E-03-13.
25
819 TERI OTTENS, SUR 11a
CAPAI
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1 A:CAPAI believes that Staff i s uncertainty is the
2 result of, at least in part, the RMP 11-13 filing.
3 Though CAPAI understands that Staff has desired a
4 Commission-approved methodology for evaluating the
5 cost-effectiveness of LIWA for some time, Staff i s support
6 of a LIWA funding increase for Rocky Mountain in the same
7 year as its position in this case strongly suggests that
8 the RMP 11-13 filing was a trigger of sorts for Staff's
9 turn-around.
10 Initially, Rocky Mountain i s filing caught CAPAI
11 by surprise. Rocky Mountain filed the 11-13 case on
12 April 29, 2011, merely four months after the Commission
13 had approved a $300,000 LIWA funding increase for the
14 Company in its 2010 general rate case in Interlocutory
15 Order No. 321511 issued December 27, 2010 in Case No.
16 PAC-E-10-07 and increased the Company's investment on a
17 per proj ect basis from 75% utility funds to a cap of 85%.
18 In the 2010 general rate case, CAPAI had
19 proposed an increase to Rocky Mountain iS LIWA program of
20 $250,000. Staff, however, proposed an increase of
21 $300,000. Furthermore, RMP was allowed continued
22 recovery of its LIWA investment by the Commission on the
23 basis that the investment was reasonable. Id. RMP never
24 even suggested that the program was not cost-effective
25 when its witnesses took the stand earlier this year. The
820 TERI OTTENS, SUR 12
CAPAI
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1 2010 RMP general rate case is not even closed yet. Thus,
2 there are simultaneously pending two cases, one in which
3 the Company contends, by inference if not assertively,
4 that its LIWA investment is reasonable and should be
5 recovered through rates, and one in which the Company
6 contends that LIWA is not cost-effective and RMP should
7 be allowed to defer future cost-effectiveness
8 evaluations.
9 CAPAI pointed out this inconsistency in its
10 comments in the RMP 11-13 case and the untenable position
11 in which the Commission has been placed. From CAPAI i s
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821 TERI OTTENS, SUR 12a
CAPAI
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1 perspective, the RMP 11-13 case unnecessarily taints the
2 LIWA well. Staff itself pointed out in the 2010 rate
3 case that Rocky Mountain i s cost-effectiveness evaluation
4 of LIWA was overdue. The Company i s reaction, after being
5 ordered to increase LIWA funding and recover that
6 investment through rates, was to file a case seeking what
7 is essentially a waiver of the requirement to conduct
8 cost-effectiveness evaluations of LIWA. Instead of
9 supporting its request by legitimate facts, RMP performed
10 an about-face and cast unsubstantiated doubts about LIWA
11 and asked the Commission to forgo an analysis of whether
12 LIWA is reasonable and prudent in the future. This is
13 the awkward conundrum that places the Commission in an
14 untenable position.
15 Q:Is CAPAI aware of any factual occurrence in the
16 four months from the issuance of the 2010 rate case order
17 and the filing of the RMP 11-13 application that
18 substantiates the contention that LIWA is no longer
19 cost-effective?
20 A:No. CAPAI simply cannot comprehend how a
21 long-standing DSM program approved by the Commission as
22 reasonable and prudent could suddenly no longer be
23 reasonable and prudent. The only logical explanation is
24 that the cost-effectiveness evaluation filed in support
25 of the RMP 11-13 application is simply inaccurate. But
822 TERI OTTENS, SUR 13
CAPAI
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21
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1 because Staff suddenly seemed concerned about the LIWA
2 program, CAPAI felt compelled to retain an expert in the
3 field of low-income DSM cost-effectiveness evaluations to
4 assess LIWA. Again, that assessment is on record in the
5 RMP 11-13 case and CAPAI is confident that the RMP LIWA
6 program, when properly evaluated using appropriate
7 criteria, will prove to be reasonable and prudent as all
8 parties and the Commission have believed it to be for
9 years.
10 E.Staff's Desire to Establish Evaluation Methodology
No Basis to Defer Ruling
11
12 Q.Beginning on page 6, line 2 of her rebuttal,
13 Ms. Donohue outlines a number of "problematic
14 inconsistencies ii among the three utilities i respective
15 LIWA programs and
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823 TERI OTTENS, SUR 13a
CAPAI
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1 expresses a number of other concerns as a basis to oppose
2 increased WAQC funding at this time. Do you have a
3 response to this?
4 A.Yes. First, I will address Ms. Donohue IS
5 statement that "(a) recent evaluation of Rocky Mountain
6 Power i s low income program by an independent evaluator
7 revealed problems with program delivery, oversight, and
8 possibly cost effectiveness." Reb. Test. s. Donohue p. 6,
9 lns 3-6. This is the RMP 11-13 case discussed elsewhere
10 in my testimony. The sudden collapse of what was deemed
11 this very year to be a reasonable DSM investment is
12 curious at best, and most likely to somehow collaterally
13 call into question Idaho Power iS WAQC program. As Ms.
14 Donohue herself notes, "is it (sic: it is) clear that all
15 three utili ties have very different standards for
16 measuring energy savings, recording measure level data,
17 providing oversight of Community Action Partnership
18 ( i CAP i) agencies, and calculating cost effectiveness."
19 Id. at lns 8-12." To the extent that Staff wishes to
20 establish a cost-effectiveness evaluation method that is
21 "reasonably similar"2 CAPAI has fully supported Staffl s
22 obj ecti ve. This was covered in my direct testimony.
23 Q: Beginning on page 7 through page 8 Ms. Donohue
24 outlines a number of technical questions that Staff
25 apparently wishes to resolve before WAQC funding changes
824 TERI OTTENS, SUR 14
CAPAI
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1 can be made. What is your response to these technical
2 questions or issues?
3 A:Regarding Ms. Donohue's elaborate discussion of
4 a myriad of "problematic inconsistencies" or conceivable
5 issues that exist in attempting to compare utility LIWA
6 programs, the overarching issue can be boiled down quite
7 simply. When Ms. Donohue critiques the basis of my
8 direct testimony (on page 8 lns. 21-25 of her rebuttal)
9 which she notes includes poverty rates, the economy, the
10 backlog of WAQC-eligible homes (i. e. ,
11 /
24 2 Reb. Test. S. Donohue, p. 4, In 14.
25.
825 TERI OTTENS, SUR 14a
CAPAI
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1 the "need"), she is simply listing the very things that
2 she herself states on page 4, lines 5-11 a funding
3 decision should be based upon.
4 The point to bear in mind is that any perceived
5 inconsistencies have likely been in place for many years
6 and have not prevented Staff from supporting or the
7 Commission from approving LIWA funding increases up until
8 now. Staff is inj ecting new issues and concerns for the
9 first time in rebuttal testimony in a case that CAPAI
10 participated in settlement discussions to resolve its
11 issues and clearly was not successful. It is patently
12 unfair to Idaho Power i s low-income customers to switch
13 horses in mid-stream when they are receiving considerably
14 less assistance through a viable DSM program than
15 customers of AVISTA or Rocky Mountain. The fact that
16 Idaho Power i s funding level has not been increased for
17 nearly a decade is reason enough to not defer into the
18 indefini te future possible increases.
19 Q:Do you necessarily dispute Ms. Donohue i s list
20 of stated differences between the three LIWA programs and
21 whether to reconcile them?
22 A:Not at all. I wish to emphasize that Ms.
23 Donohue has clearly taken Staff i s technical level of
24 analysis of LIWA to a new high watermark. This is both.25 impressive and commendable. CAPAI will certainly be
826 TERI OTTENS, SUR 15
CAPAI
.
.
.
13 /
14
15 /
16
17
18
19
20
21
22
23
24
25
1 willing to engage Staff in the many questions Ms. Donohue
2 identifies and do its best to assist Staff and each of
3 the three utilities involved in wading through and trying
4 to come to resolution on those questions in the future.
5 CAPAI i s position for this case, however, is that Staff is
6 changing course fairly radically from its prior approach
7 to assessing the validity of LIWA funding increases. To
8 reinvent the wheel following on the heels of a recent
9 near doubling of AVISTA iS LIWA funding level, the current
10 state of the economy, the fact that it has been several
11 years since Idaho Power has filed a general rate case,
12 the protracted attempts over the past
/
827 TERI OTTENS, SUR 15a
CAPAI
1 several years by CAPAI to reach an informal agreement.2 wi th Idaho Power on increased funding, and the fact that
3 Idaho Power i s funding has not increased in nearly a
4 decade in which its rates continued to rise and will
5 possibly rise again in this case is what CAPAI objects
6 to. To put it mildly, Staff's change of course could not
7 have been made at a worse time.
8 Q:Ms. Donohue states that "Idaho Power has yet to
9 complete a post implementation evaluation of its low
10 income weatherization program." Id. at p. 6, lns 6-8.
11 Should this result in postponement of a WAQC funding
12 increase?
13 A:Absolutely not. Staff pointed out in the Rocky.14 Mountain 2010 rate case that RMP was considerably late in
15 filing its evaluation which it finally did in the RMP
16 11-13 case. I stated in my direct testimony that CAPAI
17 is of the belief that Idaho Power does not intend to file
18 its evaluation until sometime in late 2012. Even if it
19 were to commence such an evaluation this instant, it
20 would still take until well into 2012 to complete. Idaho
21 Power is obviously waiting for the Commission i s final
22 ruling in this and the RMP 11-13 case before it even
23 commences its evaluation. By the time Staff i s proposed
24 workshops are fully completed, Idaho Power i s evaluation.25 is completed, any proposed changes to WAQC funding are
828 TERI OTTENS, SUR 16
CAPAI
.
.
.
1 filed, reviewed, approved by the Commission and
2 implemented, it will almost certainly be well into the
3 year 2013 before any changes would be made to WAQC
4 funding. That is so far out into the future as to render
5 it meaningless. By the year 2013, the need for
6 assistance through WAQC will have increased substantially
7 simply by virtue of the difficult economic conditions I
8 discuss in my direct testimony.
9 Q:Has CAPAI previously expressed the obj ections
10 you just outlined?
11 A:Yes. In both the RMP 11-13 case and the Rocky
12 Mountain 2011 rate case, I expressed deep concern over
13 the domino effect that the RMP 11-13 filing might have.
14 CAPAI was
15 /
16 /
17 /
18
19
20
21
22
23
24
25
829 TERI OTTENS, SUR 16a
CAPAI
.
.
.
1 immediately concerned about this consequence when it
2 reviewed the RMP 11-13 filing last spring and has shared
3 that concern with Staff since that filing. What hasn It
4 been shared until rebuttal testimony in this case are Ms.
5 Donohue i s many technical queries and a complete diversion
6 from Staff i s historic approach to the subj ect. CAPAI i s
7 deep concerns have, unfortunately, fully proven out.
8 III. CONCLUSION
9 Q:Would you please summarize your testimony?
10 A:First, CAPAI wishes to express its appreciation
11 for Staffl s collective knowledge, expertise, and support
12 on low~income issues over the years. Nothing in my
13 testimony should be interpreted to the contrary. This is
14 simply a case where CAPAI, for all of the reasons I i ve
15 stated, disagrees with Staff on some very significant
16 issues of fact and policy.
17 Q:Would you please sum up those issues?
18 A:CAPAI still believes that parity, the
19 fundamental notion of fairness, should continue to be a
20 guiding principle for the Commission when establishing
21 LIWA funding levels. It does not need, and probably
22 shouldn i t be, the only guiding principle. CAPAI believes
23 that Staff has raised many legitimate inquiries that
24 warrant further examination. CAPAI strongly disagrees,
25 however, that rebuttal testimony, filed shortly before a
830 TERI OTTENS, SUR 17
CAPAI
.
13 /
. 14
15
16
20
21
22
23
24
25.
1 technical hearing, is not the time or place for parting
2 ways with the past. Furthermore, CAPAI emphasizes the
3 substantial period of time since Idaho Power i s last
4 funding increase, and the fact that over the course of
5 nearly a decade, AVISTA and Rocky Mountain have had
6 several funding increases and program design changes
7 approved by the Commission. CAPAI has been attempting to
8 reach resolution with Idaho Power on this issue for some
9 time. To pull the plug on that process at this point
10 would not be the wisest course of
11 /
12 /
17
18
19
831 TERI OTTENS, SUR 17a
CAPAI
.
.
20
21
.
1 action, particularly considering that realistically, the
2 result of Staff i s procedural proposal would be to push
3 off WAQC funding for well into the future.
4 CAPAI believes that pushing this issue into the
5 uncertain future would have profound consequences for
6 Idaho Power i s low-income customers during these
7 extraordinarily trying times. CAPAI respectfully submits
8 that the Commission should approve its requested funding
9 increase to WAQC of $1.5 million bringing the Company
10 into parity. The Commission could then order the parties
11 to engage in workshops to resolve the many new issues
12 raised by Staff in rebuttal wi thout depriving low-income
13 customers of any form of increased assistance since 2003.
14 Q:Does that conclude your surrebuttal testimony?
15 A:Yes it does.
16
17
18
19
22
23
24
25
832 TERI OTTENS, SUR 18
CAPAI
.
.
.
1
2 open hearing.)
(The following proceedings were had in
COMMISSIONER SMITH: Ms. Nordstrom, do you
MS. NORDSTROM: I do.
CROSS-EXAMINATION
Good morning.
Good morning.
You indicate on page 1, line 8 of your
13 direct and rebuttal testimony , respectively, that you
3
4 have questions?
5
6
7
8
9 BY MS. NORDSTROM:
10 Q
14 advocate for the low income customers of Avista. Did the
17 A
11 A
15 CAPAI board of directors also authorize you to advocate
12 Q
16 on behalf of Capai in Idaho Power i s service territory?
18 Q
That i S correct.
You have recommended a $1.5 million
19 increase in WAQC funding in this case, which is a 125
20 percent increase over current funding. Do you agree if
21 approved this new level of funding will increase the
22 rates of all Idaho Power customers?
23
24
25
A
Q
A
I do.
Even low income residential customers?
Yes.
CSB REPORTING
[phone]
833 OTTENS (X)
CAPAI
.
.
.
1 Q On Page 13 of your testimony, direct
2 testimony, you state that low income customers shouldn i t
3 have to choose between increased WAQC funding or a lesser
4 rate increase, but absent some sort of charitable request
5 to fund WAQC, what alternative is there?
6 A I think when I made that statement -- what
7 line was that on, please?
8 Q Lines 5 and 6.
9 A When I made that statement, we were in a
10 position of well, I know there i s rules where we cannot
11 discuss settlement discussions. Our position is that no
12 matter what we ask for in an increase in WAQC, we
13 recognize it i s going to mean a rate increase, but we also
14 recognize that rate increase is basically pocket change
15 compared to the overall rate increase. We i re talking, I
16 think, one-third of one percent of total revenues that
17 you receive and we cannot be put in the position of
18 being -- having the choice of well, either you don i t want
19 to raise rates or you want a WAQC program. I think you
20 can have both, that the WAQC program has been shown to be
21 in our opinion cost effective. It also has shown in
22 many, many national studies to offer a rate of return to
23 the customers in the orders of benefits that's much
24 greater than the amount of money that i s spent, and so we
25 don i t think that comparison is fair.
CSB REPORTING
[phone]
834 OTTENS (X)
CAPAI
.1 Q So in your opinion, if low income
2 customers had to choose between the two, which option
3 would they choose to fund to have lower rates?
4 A Unfortunately, not all low income
5 customers are able to benefit from the program because
6 there i s not enough funding to serve all low income
7 customers, but we can increase the number of low income
8 customers that will have long-term benefits by about 250
9 per year with this increase, and we feel particularly
10 those that receive this benefit certainly would choose
11 this benefit, and we feel that the other low income
12 customers overall receive a benefit just as non-low
13 income customers of the utility receive, so the choice,.14 if they were asked on the street, I can i t tell you what
15 they would say. I can tell you what we know.
16 Q Are you familiar with the rebuttal
17 testimony filed by Idaho Power witness Theresa Drake in
18 this case?
19
20
A I am.
Q Ms. Drake testifies that Idaho Power will
21 spend over $2 million on special needs programs in
22 addition to the $1.2 million that it currently directs to
23 fund the WAQC program.
24 MR. PURDY: I i m sorry, can we have a page.25 reference?
CSB REPORTING
[phone]
835 OTTENS (X)
CAPAI
.
.
.
1 MR. HOWELL: Page 12, line 21.
2 MS. NORDSTROM: Thank you.
3 Q BY MS. NORDSTROM: Are you familiar with
4 that testimony?
5 A Yes, I am.
6 Q Does that level of funding in any way
7 affect your request for an additional $ 1.5 million of
8 WAQC funding?
9 A No, it does not and there's several
10 reasons. First of all, I compliment Idaho Power for
11 looking out for the needs of their low income and
12 slightly over low income customers and we i re certainly
13 grateful for whatever programs that they have offered us.
14 The problem that we have is that it leaves a gap between
15 the need of our low income and those that you i re serving
16 that are slightly above low income, and I refer to low
17 income as the federal definition of low income for the
18 WAQC program, which is 200 percent or below, so there i s a
19 slight overlap, but there is much more need lower down on
20 the income scale that we still feel has to be met.
21 Q Turning your attention to page 11 of your
22 direct testimony, lines 6 through 8, you express concern
23 about black box settlements that do not identify the risk
24 component of overall return. Paragraph 6 (c) of the
25 settlement stipulation identified a rate of return of
CSB REPORTING
[phone]
836 OTTENS (X)
CAPAI
.
.
.
1 7.86 percent as being fair and reasonable. Why was that
2 not sufficient in your view?
3 A I think as stated in my testimony, our
4 overall obj ection as one of the few consumer, residential
5 consumer, advocates in this room is that we have seen a
6 number of black box settlements. I am not an expert on
7 rate of return. I i m not an expert on revenue allocation,
8 but over the years we i ve seen a number of these
9 settlements that donlt go to hearing that, in essence,
10 somewhat remove the public from being able to comment.
11 It i S also very difficult for the public to
12 understand what the black box settlements mean, and all
13 they see is that their rates are going up and that i s why
14 I mentioned in my testimony that as a residential
15 advocate, we feel there are times when the settlement
16 process might not be as forthcoming for the residential
17 consumers as it could be.
18 Q Again, directing your attention to lines 6
19 through 8 of page 11, you indicate that the reason why
20 you have expressed concern for these settlements is that
21 they do not identify or discuss the risk component of the
22 overall return. What is it about the settlement and the
23 sipulation that calls out an overall return? What is it
24 about that that causes you concern with regard to rate of
25 return?
CSB REPORTING
[phone]
837 OTTENS (X)
CAPAI
1 MR. PURDY: Madam Chair, I obj ect to this..2 The witness has indicated she i s not an expert on return
3 and its various components; nonetheless, she made a good
4 faith attempt to answer and I think did answer the
5 question.
6 COMMISSIONER SMITH: I disagree, Mr.
7 Purdy. I think this is a question about what is it in
8 the settlement that leaves her unsatisfied.
9 MR. PURDY: Okay.
10 THE WITNESS: I don i t know how to answer
11 that question other than what I i ve already said. I'm
12 sorry.
13 MS. NORDSTROM: I would move to strike the.14 testimony, Teri Ottens i testimony, that refers to risk
15 and rate of return.
16 COMMISSIONER SMITH: Ms. Nordstrom, you Ire
17 going to have to give me pages and lines.
18 THE WITNESS: May I ask a clarification?
19 COMMISSIONER SMITH: No.
20 THE WITNESS: Okay.
21 MS. NORDSTROM: Ms. Ottens starts
22 testifying to black box settlements at the bottom of page
23 7. At the top of page 8, she states that she does not
24 possess expertise inutility ratemaking, including the.25 calculation of a fair and reasonable return.
CSB REPORTING
[phone]
838 OTTENS (X)
CAPAI
.1 MR. PURDY: Ilm sorry, is that the portion
2 that is the subj ect of a motion to strike?
3 MS. NORDSTROM: I guess I would be
4 satisfied if we could strike page 10 and 11.
5 COMMISSIONER SMITH: So you i re not moving
6 to strike anything on page 7 from line 24 through page 8
7 or not? Are you just focusing now on pages 10 and 11? I
8 need help.
9 MS. NORDSTROM: Well, I think the whole
10 line of questioning talks about risk and return and areas
11 that are beyond the ability of this witness to offer
12 credible testimony, but because this language is
.
.
13 intermixed with some lay opinion, Ilm struggling to try
14 and separate the two in fairness.
15 COMMISSIONER SMITH: So Ms. Nordstrom, how
16 about if we do this: How about if I deny your motion to
17 strike, but acknowledge your point that the witness has
18 no expertise in this area and the Commission is fully
19 capable of giving that portion of the testimony the
20 weight to which it i S entitled?
21 MS. NORDSTROM: That will satisfy me.
22 Thank you.
23 COMMISSIONER SMITH: All right, further
24 cross-exam?
25 MS. NORDSTROM: Yes.
CSB REPORTING
[phone]
839 OTTENS (X)
CAPAI
.
.
.
1 Q BY MS. NORDSTROM: On page 10 of your
2 testimony, direct testimony, lines 11 through 12, you
3 refer to earnings bands that are found in revenue
4 stabili ty mechanisms like the power cost adj ustment and
5 the fixed cost adj ustment. What do you consider to be an
6 earnings band for purposes of this statement?
7 A Ilm sorry, earnings band?
8 MR. PURDY: Obj ection. Could you please
9 identify which lines you i re referring to?
10 Q BY MS. NORDSTROM: Lines 11 through 12,
11 "These revenue stability mechanisms create a band
12 identified by outside parameters beyond which earnings
13 cannot fall or rise," and I think theyl re commonly
14 referred to as earnings bands, so what is your
15 understanding of what an earnings band is?
16 A My understanding of an earnings band is
17 there is a rate of return that the Company is entitled
18 to.
19 Q And how does that pertain to the power
20 cost adj ustment?
21 A Once again, Ilm not an expert.
22 MS. NORDSTROM: I would ask that this
23 particular sentence be struck.
24 COMMISSIONER SMITH: Okay, page?
25 MS. NORDSTROM: Page 10, lines 11 through
CSB REPORTING
[phone]
840 OTTENS (X)
CAPAI
1 12..2 MR. PURDY: Madam Chair, in response to
3 that motion, Ms. Ottens -- this is being taken out of
4 context. She is talking about the power cost adjustment
5 mechanism and the stability it provides to the utility in
6 terms of predictability in income. She i s not talking
7 specifically about the return, return on equity, overall
8 return.
9 COMMISSIONER SMITH: Mr. Purdy, I think
10 you know that, but I don i t think she knows that.
11 MR. PURDY: I was just reading the
12 testimony, I i m sorry.
13 COMMISSIONER SMITH: And I i m listening to.14 her response.
15 MR. PURDY: Okay.
16 Q BY MS. NORDSTROM: Ms. Ottens, did you
17 draft this testimony?
18 A Yes, I participated in drafting this
19 testimony.
20 Q Did you draft this section of testimony?
21 A Yes, I had discussions with Mr. Purdy
22 about this testimony. I i m sorry, I'm not as familiar
23 with this section only because I did my study on -- I am
24 not an expert. I did my study on all the low.25 income-related questions, so I prepared myself for all
CSB REPORTING
[phone]
841 OTTENS (X)
CAPAI
1 the low income-related questions, but Mr. Purdy and I did.2 have a discussion on this and now that I i ve read the
3 whole thing, I remember exactly what we talked about.
4 Q Turning now to your surrebuttal
5 COMMISSIONER SMITH: I still haven i t ruled
6 on your motion. Where are we on that?
7 MS. NORDSTROM: I would still like it to
8 be struck. Neither of these mechanisms have an earnings
9 band and she i s not familiar with how they operate or what
10 they are and it's factually inaccurate and she doesn't
11 have the foundation in order to be able to credibly
12 testify to these terms.
13 MR. PURDY: Madam Chair, I obj ect to the.14 motion, because Ms. Ottens is clearly being put on the
15 stand on a very technical issue. She i s indicated that
16 she has now read the whole thing and she
17 understands generally what she stated what she stated,
18 but I find it hard to believe that this is of such
19 importance to this overall case and to Ms. Ottens i
20 testimony as to be appropriate for a motion to strike.
21 MS. NORDSTROM: I disagree. She has
22 opposed the settlement stipulation in this case, which is
23 the foundation of what we're doing here today, and one of
24 the reasons why she i s opposing it is because of the.25 supposed black box settlements which fail to take into
CSB REPORTING
[phone]
842 OTTENS (X)
CAPAI
.
.
.
1 account risk components, and she can i t articulate and
2 doesn i t have the background to be able to testify to
3 these matters and that iS -- and in particular, she isn't
4 familiar with the mechanics of these two mechanisms that
5 she specifically describes and it isn i t appropriate to
6 remain in the testimony as is filed with the
7 Commission.
8 MR. PURDY: Madam Chair, Ilm sorry, but
9 Ms. Nordstrom is imputing a return on equity to this
10 section of testimony about the PCA. Ms. Ottens testified
11 that she misunderstood, if I heard her testimony
12 correctly, and she i s read this entire thing and she
13 offered her explanation.
14 COMMISSIONER SMITH: She did and I believe
15 that the testimony on line 9 beginning with the words
16 "they certainly provide" through line 15 "investment
17 decisions" should be stricken from the record.
18 More questions, Ms. Nordstrom?
19 MS. NORDSTROM: Yes.
20 BY MS. NORDSTROM: Directing yourQ
21 attention now to your surrebuttal testimony, the bottom
22 of page 7, your surrebuttal testimony generally discusses
23 per capita funding comparisons that include Avista i s gas
24 customers. At the bottom of page 7, you testify that gas
25 heating customers that take service from Idaho Power and
CSB REPORTING
[phone]
843 OTTENS (X)
CAPAI
.
10
.
.
1 Rocky Mountain Power pay for electric low income
2 weatherization and derive the same systemwide benefits;
3 is that correct?
4 A That is correct.
5 Q To your knowledge, does Idaho Power iS WAQC
6 program currently weatherize homes regardless of heat
7 source?
8 A It does not.
9 Q What types of homes does it fund?
A Primary heat source has to be electric.
11 Q On the top of the next page, page 8, you
12 state that the Commission has never qualified or
13 conditioned any of its orders related to low income
14 weatherization based on a customer i s heat source. Do you
15 believe that low income electric customers would support
16 paying for weatherization of gas heated homes?
17 A Idaho Power customers --
18 Q Yes.
19 -- is that what you're asking me?A
20 Q Specifically, yes.
21 A Probably not.
22 Q On page 9, line 3 of your surrebuttal
23 testimony, you testify that a funding level of
24 $55,529,500 would be needed to satisfy the need for low
25 income weatherization services in Idaho Power i s service
CSB REPORTING
[phone]
OTTENS (X)
CAPAI
844
.
10
11
.
20
21
1 terri tory. Is this calculation demonstrated anywhere in
2 an exhibit or workpaper?
3 A No, it is not, but it could be deducted
4 from the Idaho Power's exhibit, Exhibit 51 49, Ilm
5 sorry.
6 Q How did you calculate this number?
7 A I took the number of homes on the waiting
8 list and I timesed it by the current DOE standards for
9 weatherization, average standard, $6,500.
Q And which waiting list was this?
A It was the waiting list that we did not
12 give as an exhibit, but it was the exhibit to Ms. Drakels
13 testimony and I can give you the number.
14 COMMISSIONER SMITH: 49.
15 THE WITNESS: 49, right.
16 Q BY MS. NORDSTROM: And is this the same
1 7 wait list that contains numbers of weatherized homes that
18 are not in Idaho Power's service area?
19 A Are you speaking to the Exhibit --
Q Yes.
A 49? Yes, it contains the number of
22 weatherized homes throughout the state, but it does
23 specify Idaho Power IS -- the agencies that serve Idaho
24 Power territory..25 Q Including the two CAP agencies that serve
CSB REPORTING
[phone]
845 OTTENS (X)
CAPAI
.1 customers served by Rocky Mountain Power, municipalities
2 and cooperatives?
3 A No. In coming up with this 55 million, I
4 only took CCOA, El-Ada and SCCAP numbers, all of which
5 are entirely in Idaho Power i s terri tory. I did not take
6 into account any of the homes in Idaho Power territory
7 that might be served by CAP or by the -- up north or by
8 EICAP or SEICAA.
9 Q Does it include homes by any heat source
10 or only electric homes?
11 A Yes, let me explain the current wait list.
12 The current wait list right now, those numbers that you
13 see consist of all those eligible customers who have.14 applied for LIHEAP that also applied for weatherization.
15 Now, to be clear, LIHEAP eligible applicants are only up
16 to 165 percent of federal poverty level. Weatherization
17 is up to 200 percent, so it does not include numbers of
18 eligible applicants who might fall wi thin that 165 to 200
19 percent level, because we have no way of capturing those.
20 We have so many on the wait list under 165 that we don i t
21 even market to the ones over 165 to get them on the wait
22 list, so the wait list includes all LIHEAP recipients, so
23 they have been qualified per their income and per their
24 heating source, but we don't have -- we won't know what.25 funds that they i re eligible for, whether it be DOE, Idaho
CSB REPORTING
[phone]
846 OTTENS (X)
CAPAI
.
10
1 Power, some of the other funds until such time we
2 actually can conduct an energy audit on the home and
3 figure out what their primary heating source is and then
4 figure out what funds are out there to pay for them.
5 Ilm sorry, did you say that this 55.5Q
6 million includes only electric homes or all homes
7 regardless of heat source?
8 Right now it is all of the homesA
9 regardless of heat source that are on our wait list.
Q And if I understand your response before
11 last, this is a number for pre-audit homes.
.
.
12 A That's correct.
13 So we don i t know whether these homes willQ
14 actually have fundable measures that could be
15 completed?
16 That is correct. The reason that they IreA
17 pre-audit is that we cannot afford to do an audit on
18 8,000 homes. We prioritize the customers based on three
19 things: disability -- well, obviously, theyl re low
20 income, that i s the first priority. Then we prioritize
21 based on disability, whether they're elderly or whether
22 they have children in the home, and then they get placed
23 on a priority list. As that list comes up, an audit is
24 done on those homes to determine whether or not they
25 qualify for weatherization services.
CSB REPORTING
[phone]
847 OTTENS (X)
CAPAI
.
.
.
1 So this number, this $55.5 million number,Q
2 really isn It reflective of what might actually be funded
3 under the current provisions of Idaho Power iS WAQC
4 program?
5 It is reflective of the low incomeA
6 customers of LIHEAP that have indicated they would like
7 weatherization services. That is the need out there as
8 we can identify it. It does not include non- or low
9 income customers that have not applied for LIHEAP, nor
10 does it include weatherization eligible customers that
11 are above the LIHEAP level of 165 percent of poverty
12 level. Now, I need to clarify just for the Staff. 165
13 percent of federal poverty level is the federal
14 guideline. We have chosen to use 60 percent of state
15 median, but they work out to be approximately the same
16 percentage.
17 MS. NORDSTROM: Thank you. I have no
18 further questions.
19 MR. PURDY: Madam Chair?
20 COMMISSIONER SMITH: Mr. Purdy.
21 MR. PURDY: Ilm sorry, I don i t know if you
22 intended to take a lunch break.
23 COMMISSIONER SMITH: There is no lunch.
24 We can take five minutes and then we i re going to go back
25 at it until we i re done.
CSB REPORTING
[phone]
848 OTTENS (X)
CAPAI
.1
2
3
MR. PURDY: Thank you.
(Recess. )
COMMISSIONER SMITH: We had just been
4 through the cross-examination by Ms. Nordstrom. Mr.
5 Olsen.
6 MR. OLSEN: No questions.
7
8
9
10 right?
11
12
13 questions?.14
15
16
17
18
19 BY MR. OTTO:
20 Q
COMMISSIONER SMITH: Mr. Nelson.
MR. NELSON: Thank you, no questions.
COMMISSIONER SMITH: I already asked you;
MR. OTTO: You did not.
COMMISSIONER SMITH: Do you have
MR. OTTO: I do. I just have two.
COMMISSIONER SMITH: Okay.
CROSS-EXAMINATION
Ms. Ottens, how long have you been working
21 for low income electricity users?
22
23
A
Q
Since 2002.
Have you been kind of surveying the need
24 that i s out there since then?.25 A Yes. We monitor that on almost a daily
CSB REPORTING
[phone]
849 OTTENS (X)
CAPAI
.
.
.
1 basis.
2 Q So over the past 10 years, what has been
3 the trend of need?
4 A Well, obviously, the need, the poverty
5 rate has crept up, and then when we hit 2007, of course,
6 which was the beginning of the troubles in our economy,
7 it has risen steadily since then, and we i ve seen -- we
8 saw a two percent increase from 2001 to 2007 from 12
9 percent to 14 percent, and now just in the last year with
10 the Census report we i ve seen another two percent increase
11 in the poverty rate. Two percent doesn i t seem like very
12 much, but it is about 50,000 more residents in Idaho that
13 are under the poverty level, and if you count the number
14 of people at 150 percent of poverty, that i s over 660,000
15 residents in Idaho that now are eligible for low income
16 programs.
17 Q And in the testimony that i s been filed in
18 this case, have you seen anybody else address the level
19 of need that i s out there?
20 A No, I have not.
21 MR. OTTO: Thank you. That's all I have.
22 COMMISSIONER SMITH: Thank you, Mr. Otto.
23 It looks like Mr. Howell.
24 MR. HOWELL: Thank you, Madam Chairman.
25
CSB REPORTING
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850 OTTENS (X)
CAPAI
.1 CROSS-EXAMINATION
2
3 BY MR. HOWELL:
4 Q I guess it i s good afternoon. I would like
5 to ask you a couple of questions about CAPAI i s opposition
6 to the settlement stipulation and then go into another
7 area about low income.
8 A Okay.
9 Q First of all, on page 3 of your direct
10 testimony, on lines 16 and 17 you state that employment
11 is skyrocketing and I was wondering what you meant by the
13.
20
12 term "skyrocketing."
A I think it was "unemployment." I think
14 you said "employment is skyrocketing."
15 Q Thank you for that correction.
16 A And I think that the unemployment rate is
17 now up to nine percent in Idaho. We enj oyed a five
18 percent not more than about five years ago, so to me,
19 that i s skyrocketing.
Q Would it surprise you to know that the
21 Idaho Department of Labor has calculated the current
22 seasonally adjusted unemployment rate as 8.8 percent for
23 the month ending October 2011?
.24 A No, that would not surprise me.
25 Q Would it surprise you if the Department
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851 OTTENS (X)
CAPAI
.1 said that that rate is lower than the national
2 unemployment rate?
3 I think there iS -- it would not surpriseA
4 me, but I think there i s a danger of comparing ourselves
5 to the national rate.
6 Q And point well taken comparing to the
7 national rate. Then my next question is would it
8 surprise you to know that the unemployment rate for Idaho
9 in October of 2011 is the lowest in Idaho in nearly two
10 years?
11
.
.
A I don i t have those figures, but I i II take
12 your word for it.
13 Ms. Nordstrom was asking you a couple ofQ
14 questions about revenue requirement and rate of return.
15 I was wondering whether you would concede that you are
16 not an expert in the Company i s cost of service.
17 Yeah, I think my testimony says that.A
18 And in your testimony on pages 13 and 14,Q
19 you refer to Mr. Larkins i Exhibit 38 saying that that
20 demonstrates residential customers are currently paying
21 rates that are 103 percent in terms of their cost of
22 service. Do you remember that testimony?
23 A Yes, I do.
24 Is that correct, to the best of yourQ
25 knowledge.
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852 OTTENS (X)
CAPAI
1 A To the best of my knowledge, yes, that i s.2 what it appears like to me.
3 MR. HOWELL: And may I approach the
4 witness?
5 COMMISSIONER SMITH: You may.
6 (Mr Howell approached the witness.)
7 Q BY MR. HOWELL: And your reference to Mr.
8 Larkins i Exhibit No. 38 on page 9 of 9, when you said the
9 residential service was 103 percent of the cost of
10 service index, is that what you were referring to?11 A I was.
12 Q And isn i t it true that this exhibit takes
13 the Company i s proposed cost of service as initially filed.14 and uses that in the test year 12 months ending December
15 31st, 2011, so it doesnlt really represent the current
16 cost of service alignments between classes?
17 A It says the 12 months ending December
18 31st, 2011.
19 Q And that reference is to the test year, is
20 it not?
21 A That i S my understanding.
22 Q And so this, Mr. Larkins i exhibit,
23 proposes a cost of service that was not adopted in the
24 settlement stipulation and so his 103 number is not.25 representative of current rates?
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853 OTTENS (X)
CAPAI
1 A It i S my understanding that my comparison.2 in the -- on page 14 was trying to get at the point that
3 it looks like residential is subsidizing other classes.
4 I when looking at this exhibit frankly looked at it as
5 the current rate. If that was incorrect, then I stand
6 corrected.
7 Q All right. Let i s move on to questions
8 about the low income weatherization program. Can you
9 tell me what electric utility service area has the
10 highest poverty rate in the state?
11 A Currently my figures differ from the
12 Staff i s because I did not include counties that were not
13 primarily served by the utilities, so I excluded some.14 counties that I think Staff may have included. Right now
15 my figures on the 2009 Census show that Rocky Mountain
16 Power has a 14.4 percent poverty rate, Avista has a 14.1,
17 which is different from Staffl s, it shows them at 16, and
18 the Idaho Power has 13.98.
19 Q So obviously, given those numbers that you
20 just. said, Idaho Power has the lowest poverty rate of the
21 three utilities?
22 A That is correct.
23 Q Now, on page 23 of your direct testimony,
24 on line 7 you mention that Idaho Power has gone nearly a.25 decade without a funding increase and I assume you Ire
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854 OTTENS (X)
CAPAI
.
.
.
1 talking there about low income weatherization?
2 A Yes, I am.
3 Q And is that a still correct statement
4 after having Ms. Drake testify about the Company i slow
5 income. weatherization Solutions program?
6 A I i ve got to read what I said again.
7 MR. PURDY: Counsel, could you give me the
8 reference one more time?
9 MR. HOWELL: Sure, page 23 and starting at
10 lines 7 through the end of the question.
11 MR. PURDY: Okay.
12 THE WITNESS: Well, I think since my
13 testimony has to do with the WAQC program that this line
14 also refers to the WAQC program. No, it does not take
15 into account the Solutions program which serves an
16 entirely different customer subset.
17 Q BY MR. HOWELL: Well, you just testified
18 that it serves an entirely different customer subset.
19 Isn i tit true that the Company iS WAQC program serves
20 incomes up to 200 percent of the national poverty?
21 A That i s the standard of the WAQC program.
22 In practicality, it does not.
23
24
Q But that is the eligibility criteria?
A That is the eligibility requirement,
25 yes.
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855 OTTENS (X)
CAPAI
.
.
1 Q Isn i t it true that the Solutions program,
2 according to Ms. Drake i s testimony, serves income levels
3 between 175 and 250 percent?
4 A That is correct, but we i re mixing apples
5 with oranges again. We i re mixing a program that serves
6 the definition of low income under the federal guidelines
7 wi th a program that serves primarily above that level.
8 Q But if the Solutions start below the low
9 income eligibility threshold, there is some overlap where
10 it serves low income customers, is there not?
11 A There is some overlap.
12 Q I i d like to, if you could, refer to
13 CAPAI i S production request to Idaho Power, which is
14 nominally referred to as exhibit or identified as Exhibit
15 49 of Ms. Drake i s testimony. Do you have that in front
16 of you?
17 A I do.
18 Q And just to give the Commission some kind
19 of idea, do you know how much American Recovery and
20 Reinvestment Act funds the State of Idaho received for
.
21 weatherization programs?
22 A Yes, let me look at my notes. It i S about
23 38 million, but I want to confirm that. We received 38
24 million in the initial ARRA, which was a three-year
25 program, of which 31 million went to weatherization. 6.9
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856 OTTENS (X)
CAPAI
.1 million additionally was received on a special ARRA grant
2 for weatherization innovation, and this was for
3 non-typical innovations, such as solar water heaters and
4 that type of thing.
5 Q And with that money, do you know how many
6 homes were weatherized in Idaho with the ARRA money?
7 A Yeah, 2,000 plus homes. I don't know the
8 exact number.
9 Q And is that roughly double the amount that
10 was pre-ARRA?
11 A Yeah, pre-ARRA was -- just a minute, I i ve
12 got those figures. Pre-ARRA was approximately 1,437.
13 You know, the difference in that is that pre-ARRA the.14
.
average was in the $3,000 range that we could spend on a
15 home, like 3,700, and now it i s 6,500.
16 Q And that 1,400 number you just said, that
17 would be roughly a total of the column on page -- on
18 Exhibit 49 of the column Pre-ARRA Annual Production; is
19 that correct?
20 A You are correct.
21 Q And that number is an entire statewide
22 number?
23 A Yes.
24 Q And that number includes energy sources
25 other than electricity?
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.
10
1 A It does.
2 Q And it includes numbers that are outside
3 the Idaho Power service terri tory?
4 A It does.
5 MR. HOWELL: Thank you. I have no further
6 questions for this witness.
7 COMMISSIONER SMITH: Thank you,
8 Mr. Howell. Mr. Miller, do you have questions?
9 MR. MILLER: I don It.
COMMISSIONER SMITH: How about questions
11 from the Commission?
12
.14
COMMISSIONER REDFORD: I do, a couple of
13 questions.
COMMISSIONER SMITH: Commissioner Redford.
15
16 EXAINATION
17
18 BY COMMISSIONER REDFORD:
19 Q Maybe you i ve testified to this, Ms.
20 Ottens, but I must have missed it if you did, what is the
21 backlog of eligible electrically heated homes for each
.
22 CAP agency, do you know?
23 A For each CAP agency?
24 Q Yes.
25 A We don i t have the backlog of specifically
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858 OTTENS (Com)
CAPAI
.
10
.
.
1 electric heated homes in our records. We determine
2 heating source at the time that we get to that person on
3 the priority list, which is at the same time we determine
4 how it i S paid for.
5 Q So you don i t -- just to restate that, you
6 don i t have a list of backlog?
7 A We have a backlog of all LIHEAP applicants
8 who have asked to be on the weatherization waiting
9 list.
Q Do you know how many that is?':;:,,"
11 A Yes.
12 Q How many?
13 A Itls on Section 49 -- I mean, Exhibit 49.
14 Let me just relook at that. 12,998 homes.
15 Q Do you have any idea what the percentage
16 of households is below the poverty level in each of the
1 7 utility i s service areas?
18 A Yes. Below the federal poverty level,
19 yes.
20 Q Could you tell me that again?
21 A Yes. According to my calculations, which
22 I said differs slightly from Staff, we have Avista at
23 14.1 percent of households, we have Rocky Mountain Power
24 at 14.4
25 Q Oh, okay, I --
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859 OTTENS (Com)
CAPAI
.
.
1 A -- and Idaho Power at 13.98.
2 Q You answered that question, I believe,
3 from Mr. Howell.
4 A Now, I need to stress that those figures
5 are poverty level or below, but the LIHEAP program is at
6 165 percent of poverty level, that weatherization is at
7 200 percent of poverty level, so that doesn i t include all
8 of those households that are eligible. It just includes
9 the percentage that are under the federal poverty
10 level.
11 Q So the criteria is the federal poverty
12 level?
13 A The criteria for weatherization is 200
14 percent of federal poverty level.
15 Q Does Idaho keep the kind of records that
16 determine what the poverty level is based upon
17 calculations for the State of Idaho?
18 A We use the Census data.
19 Q And what are those numbers, do you have
20 any idea?
21
22
.
A Right now the 2009 Census, which is where
my figures I i m sorry, the 2010 Census, which is where
23 my figures come from, show an overall poverty rate of
24 14.4.
25 Q Is that a combination of the other
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.
.
20
23
24.25
1 three?
2 A Yeah, it i S basically the overall rate for
3 all the counties whether you i re served by a utility or
4 not.
5 Q So you use the federal level? The state
6 uses the federal level?
7 A That's correct. Now, just -- yes, that i s
8 correct.
9 Q Do you have any idea what the recent
10 percentage of unemployment in each of the utility IS
11 service area is?
12 A I have not calculated that at this point,
13 sorry. I don't have those in front of me.
14 Q One other thing I wanted to ask you about
15 and maybe it doesn i t have to do with Idaho Power as much
16 as the others, how do you evaluate the evaluation done, I
17 believe, by a consultant hired by the PUC Staff or is
18 there one?
19 A Ilm sorry?
Q How do you evaluate the performance of
21 these programs?
22 A How do we evaluate them?
Q Yes.
A Our weatherization programs are evaluated
on a regular basis in two ways: One is our peer
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861 OTTENS (Com)
CAPAI
.
.
.
1 evaluation that we i re required to do where we bring in
2 peers from other weatherization programs that come in and
3 evaluate the program; and then the other one is the DOE
4 can come in and audit us.
5 Q Are there any utili ties that have an
6 evaluation program?
7 A Oh, utilities?
8 Q Yes.
9 A I think they all work together and we work
10 with the utili ties in evaluating the programs.
11 Q And are you satisfied with those
12 evaluations?
13 A Well, I think I can say this, that the
14 CAPAI has no objections to working with the PUC, the PUC
15 Staff, and the utilities and if there is a need for
16 further evaluation to determine such things as need, cost
17 effecti veness, that type of thing, we have no obj ections
18 to that. Our obj ection comes in that it came in very
19 late in this case and now of all the time in the last 10
20 years to delay a program, an increase in a program, that
21 benefits the low income during this economy doesn't seem
22 to make a lot of sense based on that.
23 Q Wouldn i t you rather have us do a workshop
24 that will flush out the actual and accurate figures
25 that's done in January than to have some sort of a knee
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862 OTTENS (Com)
CAPAI
.
.
1 jerk evaluation done right now by the Commission?
2 A I can tell you this, I don i t think it i s
3 been knee jerk, because we use the same criteria that
4 we've used in the past several rate cases in asking for
5 this increase. We do not obj ect to a workshop. We just
6 object to delaying this decision since our criteria was
7 based on previous Commission decisions and direction at
8 this time of need.
9 Q How do you update the evaluation done then
10 and one that would be done in January? I mean, your
11 numbers are going to change, aren't they?
12 A Yes. Yeah, the numbers change constantly,
13 but, once again, we do not object to a workshop. What we
14 obj ect to is delaying a decision in this case pending a
15 workshop, because it's going to be two years, most
16 likely, until we see some kind of results from that
17 workshop.
18 Q Well, I guess that IS, I guess, presuming
19 that we act slowly.
20 A Well, with your indulgence, we had a
21 workshop in 2009 on low income energy issues that I don't
22 think a single recommendation has been adopted yet and
23 not all those recommendations were under the PUC IS
24 purview, but weI ve had some issues..25 COMMISSIONER REDFORD: I have no further
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863 OTTENS (Com)
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1 questions and thank you, Madam Chairman..2 COMMISSIONER SMITH: Thank you,
3 Commissioner Redford.
4
5 EXAMINATION
6
7 BY COMMISSIONER SMITH:
8 Q Ms. Ottens, I want to be sure that I
9 understand Exhibit 49.
10 A Okay.
11 Q So it looks to me like the letters on the
12 far left are acronyms for Community Action agencies; is
13 that correct?.14 A That i S correct.
15 Q And so, for example, the SCCAP, it looks
16 like the word "CAP" is in the middle, so I concluded
17 that i s kind of southern central Idaho?
18 A Yes, South Central Community Action
19 Partnership.
20 Q Thank you; so would that include, like,
21 the City of Burley and the City of Rupert and Raft
22 River?
23 A It does.
24 Q Are those communi ties served by Idaho.25 Power?
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864 OTTENS (Com)
CAPAI
.1
2
3 River.
4
5
6
A
Q
A
Q
A
Yes. Some of them are.
I just said Rupert, Burley, and Raft
Ilm sorry, okay, Rupert and Burley --
And Raft River.
-- Raft River, I think, is in Rocky
7 Mountain Power i s territory.
8
9
10
Q
A
Q
But you could be wrong?
Yes.
So when you responded to Ms. Nordstrom
11 about choosing only the CAP agencies that served Idaho
12 Power, I believe you included SCCAP.
.13
14
A
Q
I did.
But there are communi ties there that are
15 not served by Idaho Power.
16 A Well, all of the agencies have some
17 communi ties not served by Idaho Power because
18
19
20
A
Q
Q
Thank you, that clarifies it for me.
Okay.
Finally, did you know that the Commission
21 held public hearings for this case?
22
23
A
24 meetings?.25 A
.
Q
Yes.
Did you attend any of those public
I have not attended those.
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865 OTTENS (Com)
CAPAI
.1
2
3
Q
A
So you weren i t here last night?
I was not.
COMMISSIONER SMITH: Well, I would just
4 say that the people who testified here last night did not
5 think any part of this was pocket change.
6 Do you have any redirect, Mr. Purdy?
10
7
8
9
11 BY MR. PURDY:
12 Q
MR. PURDY: A couple.
REDIRECT EXAMINATION
Ms. Ottens, regarding the question about
13 overlap between the Solutions program and WAQC --.14
15
A
Q
Yes.
-- do you know to what extent the
16 Solutions program, the Solutions program might cover low
17 income customers eligible under WAQC? Do you have any
18 idea of the number of customers?
19
20 It would be
21 you talking
22
23
24.25 yesterday?
A
Q
A
Q
I have not gotten that from the agencies.
are you talking about the overlap or are
The overlap.
Yeah.
Did you hear Ms. Drake testify
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866 OTTENS (Di)
CAPAI
.
.
.
1 A I did.
2 Q Do you recall whether she knew what the
3 over lap number was?
4 A I don i t believe that was brought up.
5 Q Okay. You were asked about unemployment
6 rates and you started to mention a danger of comparing
7 state unemployment rates with national. Did you finish
8 or could you elaborate on what that danger is?
9 A Well, I just think that what happens in
10 Idaho, oftentimes the statistics can lie and comparing
11 ourselves to other states in that particular case, 8.8
12 percent unemployment, 9 percent unemployment is a serious
13 issue.
14 Q And it was suggested to you in a question
15 that currently or recently Idaho was experiencing the
16 lowest unemployment rate in two years. My question is
17 does the need for WAQC assistance always go in lockstep
18 with the unemployment rates?
19 A No, I don't think so. I think that
20 sometimes you see unemployment rates and two years later
21 you see the effects of what that unemployment has
22 brought, as people have time to go through their savings
23 and that type of thing. Also, I donlt think that -- you
24 know, whether or not we i re the lowest in the nation or
25 not, once again, 8.8 percent is a difficult rate to deal
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867 OTTENS (Di)
CAPAI
.1 with.
2 Q You were asked whether Idaho Power has the
3 lowest overall poverty rates wi thin its service terri tory
4 of the three utili ties. I believe you testified it did.
5 Does this in your mind negate the need for additional
6 WAQC funding?
7 A No, it does not, and 14 percent poverty
8 rate is shameful.
9 Q And regarding Exhibit 49, you were asked a
10 number of questions by a number of people. I just wanted
11 to clear something up. If it includes non-electric
12 heaters and customers outside of Idaho Power i s service
13 territory, why did you use this? What value does this.14
15
table have?
A It i s the closest record that we have of
16 eligible homes, homes that we know are eligible for the
17 program. We could speculate. We could go out there and
18 get the Census figures and speculate how many more are
19 out there based on the 200 percent poverty, but our issue
20 is that it's not only based on the age of the home, it IS
21 also based on who iS living in the home at the time, and
22 that number is a moving number. As low income may move
23 in and out of a home, families may have a high income and
24 become low income in a year, that number is a moving.25 number. All we can do is know who has actually applied
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868 OTTENS (Di)
CAPAI
.
.
.
1 for the program at this point.
2 Q Okay. Then finally, in regards to
3 Commissioner Smith i s last question, I simply wanted to
4 make sure there isn i t a misimpression. Is it your
5 testimony that to the people that might have attended
6 last night i s public hearing or to any low income customer
7 or any Idaho Power customer at all that WAQC funding is
8 unimportant and doesn i t matter to them or were you making
9 some other comparison?
10 A I think what I was saying is that when it
11 came to having a low income customer should never have
12 to choose between getting a benefit and a small rate
13 increase. They shouldn i t have to choose between the two,
14 and I didn i t think that WAQC was even on the table last
15 night when it came to the public hearing. I was -- maybe
16 that was a topic of discussion. I should have been at
17 the hearing, I guess.
18 MR. PURDY: All right. That's all I have.
19 Thank you.
20 COMMISSIONER SMITH: So I do think that
21 you totally missed my point that the people who testified
22 last night don i t think a million-and-a-half dollars is
23 pocket change, which is what you called it. They donlt
24 think anything is insignificant.
25 THE WITNESS: I understand that. Thank
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869 OTTENS (Di)
CAPAI
.
.
.
1 you.
2 COMMISSIONER SMITH: Thank you.
3 (The witness left the stand.)
4 COMMISSIONER SMITH: I think that brings
5 us to the end of our witnesses. Yesterday one of you
6 asked about closing statements and I don i t recall, but is
7 that in anyone i s vision? Mr. Miller.
8 MR. MILLER: I believe that was me that
9 made the inquiry.
10 COMMISSIONER SMITH: And is that still
11 your heart i s fondest desire? If it is, you need to find
12 yourself a microphone.
13 MR. MILLER: Well, I think that the points
14 I probably wished to make were apparent through my
15 cross-examination and I probably don i t need to summarize
16 them for you.
17 COMMISSIONER SMITH: Thank you,
18 Mr. Miller. Does anyone else feel the need to make a
19 closing statement? Does anyone see any open legal issues
20 that require a brief by the parties? I see a lot of
21 heads shaking no.
22 All right, so we have the one item of
23 information that the Company is going to provide to
24 Commissioner Redford and the rest of us per his request;
25 however, I believe the record is going to be closed when
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870 COLLOQUY
.
.
15
1 we adj ourn this hearing, so the Commission i s decision
2 will be based upon the evidence that i s in the record as
3 of today, and I think I said yesterday, but I i m happy to
4 say I remember it again today, that requests for
5 Intervenor funding should be filed seven days from today,
6 so that would be next Tuesday, and I am really happy I
7 remembered this, too, all exhibits previously identified
8 are now admitted.
9 (All exhibits previously marked for
10 identification were admitted into evidence.)
11 COMMISSIONER SMITH: Is there anything
12 else that needs to be attended to?
13 COMMISSIONER REDFORD: Madam Chairman?
14 COMMISSIONER SMITH: Commissioner Redford.
COMMISSIONER REDFORD: In the interest of
16 time, Ilm going to withdraw my request for the detailed
17 information that we requested from Idaho Power. I think
18 during the pendency of the hearing I i ve gotten a pretty
19 good idea of how it is you calculate and how it is you
20 log repairs and other things as far as the facilities are
21 concerned, so seeing the details is probably not going to
22 advance things very much, so you i re relieved of that and
23 I apologize if you had to do a great deal of work because
24 of it, so I echo the Chairman in that the matter is.25 closed.
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.
.
16
17
18
19
20
21
22
23
24.25
1 COMMISSIONER SMITH: You never know, you
2 might want to open up a whole new case just on that based
3 on what you find out, so it i s up to you.
4 COMMISSIONER REDFORD: Well, if you want
5 to send it to me just for fun, go ahead.
6 COMMISSIONER SMITH: I also want to thank
7 all the parties for their courtesy and ci vili ty to each
8 other during the course of the proceeding. It always
9 makes it more efficient and enj oyable for all of us, and
10 thank you all for being here and we i re adjourned.
11 (The Hearing adjourned at 12: 40 p.m.)
12
13
14
15
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.1 AUTHENTICATION
2
3
4 This is to certify that the foregoing
5 proceedings held in the matter of Idaho Power Company for
6 authori ty to increase its rates and charges for electric
7 service in Idaho, commencing at 9:30 a.m., on Monday,
8 December 5, and continuing through Tuesday, December 6,
9 2011, at the Commission Hearing Room, 472 West Washington
10 Street, Boise, Idaho, is a true and correct transcript of
11 said proceedings and the original thereof for the file of
12 the Commission.
.13 Accuracy of all prefiled testimony as
14 orig~nally submitted to the Reporter and incorporated
15 herein at the direction of the Commission is the sole
16 responsibili ty of the submitting parties.
17
18
19
20
21
22
.
23
(J 0l:S+&M 0-,- ci'
CONSTANCE S. BUCY
Certified Shorthand Reporter
\ \ \ \ \ \ I ¡ r ii If '"'11'\Cy '1/11.." o.v //..... V.\\1Itiilllili ..
.: c;. ;"..,.." "\ 11Jiii 0,. //..2 ~ :f ~_ 1 )~'\ ~~ /~ () f ~~ t..~. .'0 D::z:1= _.1'-:: d. :. 0.. IoL- ." . C:: 'f 'c. l'!¡~ ~""''I .... .'"¥
-;/'/~o 6"""'" ~'\ t':
IlllllIII:I. \ ..-
24
25
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873 COLLOQUY