Loading...
HomeMy WebLinkAbout20121115IPC to Staff 30-42.pdfRECEIVED WSPOMRo LANORDSTROM 21? NOV 32 5 j %: An IDACORP Company Lead Counsel ON Inordstroid m ah opower.com UTtUTES COM November 15, 2012 VIA HAND DELIVERY Jean D. Jewell, Secretary Idaho Public Utilities Commission 472 West Washington Street Boise, Idaho 83702 Re: Case No. IPC-E-11-19 FCA Permanent Program - Response to the Idaho Public Utilities Commission Staffs Second Production Request Dear Ms. Jewell: Enclosed for filing please find an original and three (3) copies of Idaho Power Company's Response to the Second Production Request of the Commission Staff to Idaho Power in the above matter. Also, enclosed are four (4) copies of non-confidential disk containing information being produced in response to Staffs Second Production Request. Very truly yours, ;& T Lisa D. Nordstrom LDN:evp Enclosures 1221 W. Idaho St. (83702) P.0. Box 70 Boise, ID 83707 LISA D. NORDSTROM (ISB No. 5733) DONOVAN E. WALKER (ISB No. 5921) Idaho Power Company 1221 West Idaho Street (83702) P.O. Box 70 Boise, Idaho 83707 Telephone: (208) 388-5825 Facsimile: (208) 388-6936 lnordstromcidahopower.com dwaIkeridahopower.com Attorneys for Idaho Power Company RECEIVED 212NOV 15 PM 1:32 IDAHO Fii..JC UTILITIES LOMMISU BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF THE APPLICATION OF IDAHO POWER COMPANY FOR AUTHORITY TO CONVERT SCHEDULE 54— FIXED COST ADJUSTMENT - FROM A PILOT SCHEDULE TO AN ONGOING PERMANENT SCHEDULE. CASE NO. IPC-E-11-19 IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER COMES NOW, Idaho Power Company ("Idaho Power" or "Company"), and in response to the Second Production Request of the Commission Staff to Idaho Power dated October 25, 2012, herewith submits the following information: IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER -1 REQUEST NO. 30: Please explain in greater detail how the current FCA mechanism "captures and fairly allocates the risk of fluctuations in economic activity" between customers and the Company, specifically in regard to the customer count metric. RESPONSE TO REQUEST NO. 30: The current annual Fixed Cost Adjustment ('FCA") true-up amount is determined according to the following formula: FCA = (CUST X FCC) - (NORM X FCE) Where: FCA = Fixed Cost Adjustment CUST = Actual number of customers, by class FCC = Fixed Cost per Customer, by class NORM = Weather-normalized energy, by class FCE = Fixed Cost per Energy, by class Risks of fluctuations in economic activity influence two factors in the FCA formula: (1) the actual number of customers and (2) the weather-normalized energy. The first section of the FCA formula (CUST X FCC) establishes the Company's level of authorized fixed cost recovery. As stated in Attachment 1, page 2, of Idaho Power's compliance filing, the customer growth rate decreased during the period of economic downturn, starting in 2007. A reduction in the number of customers results in a reduction of the level of authorized fixed cost recovery. Likewise, the growth in the level of authorized fixed cost recovery is directly related to the growth in number of customers. IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER -2 The second section of the FCA formula (NORM X FCE) establishes the Company's actual level of fixed cost recovery. While changes in the economy may influence fluctuations in energy use and impact the actual level of fixed cost recovery, the FCA formula ensures that the Company recovers only the level of authorized fixed costs, no more and no less. The current FCA mechanism, based on the established FCA formula, is effective because it allows no opportunity for an over or under collection due to fluctuations in economic activity. The response to this Request was prepared by Zachary Harris, Regulatory Analyst, Idaho Power Company, in consultation with Lisa D. Nordstrom, Lead Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER -3 REQUEST NO. 31: Does IPC assume the 0.72% historical decline in use per customer is attributable wholly or mainly to the Company's DSM efforts? Please explain. RESPONSE TO REQUEST NO. 31: The Company assumes that the historical decline in use per customer is attributable to many factors, including the Company's energy efficiency activities. However, the Company has not performed any analysis to identify or determine what specific factors influenced the historical decline in use per customer. The response to this Request was prepared by Zachary Harris, Regulatory Analyst, Idaho Power Company, in consultation with Lisa D. Nordstrom, Lead Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER -4 REQUEST NO. 32: Does the proposed 2% UPC cap hold statistical significance? Please explain. RESPONSE TO REQUEST NO. 32: The proposed 2 percent is not the use per customer ("UPC") cap; rather, the 2 percent is applied as the deviation from the historical average annual change in use per customer of -.72 percent to derive the proposed lower UPC cap of -2.72 percent and the upper UPC cap of 1.28 percent. The frequency analysis performed on the annual change in use per customer for the Residential customer class indicated that the 19 years of data ranged from -4.04 percent to 1.47 percent. The 2 percent deviation from the mean removes the two outlier years and establishes a significant confidence level. By applying a 2 percent deviation from the mean, the Company is 89.5 percent (17 years/1 9 years) confident that in any given year the change in annual use per customer change will be between the upper and lower UPC cap. Use of the 2 percent deviation also allows the Company to actively pursue energy efficiency activities without a financial disincentive that may exist under more stringent capping restrictions. The response to this Request was prepared by Zachary Harris, Regulatory Analyst, Idaho Power Company, in consultation with Lisa D. Nordstrom, Lead Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER -5 REQUEST NO. 33: Please provide the data used to derive the charts on page 4 of the compliance report in executable format. RESPONSE TO REQUEST NO. 33: Please see the Excel file provided on the enclosed CD. The response to this Request was prepared by Zachary Harris, Regulatory Analyst, Idaho Power Company, in consultation with Lisa D. Nordstrom, Lead Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER -6 REQUEST NO. 34: Please provide a similar analysis as that on page 4 of the compliance report for the small commercial segment. Please provide the data in executable format. RESPONSE TO REQUEST NO. 34: Please see the Excel file provided on the enclosed CD. The response to this Request was prepared by Zachary Harris, Regulatory Analyst, Idaho Power Company, in consultation with Lisa D. Nordstrom, Lead Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER -7 REQUEST NO. 35: What is the rationale for applying the UPC cap to increases in use per customer relative to the Company's energy efficiency efforts? RESPONSE TO REQUEST NO. 35: Idaho Power believes that its energy efficiency efforts should result in after the fact annual changes in average use per customer within the deviations established by the UPC caps. The rationale for applying the UPC cap to increases in use per customer is not directly related to the Company's energy efficiency efforts. The proposed cap provides symmetry to the capping methodology in that the lower UPC cap limits the recovery on one end of the spectrum, the upper UPC cap symmetrically limits refunds at the other end of the spectrum. Idaho Power believes that the Idaho Public Utilities Commission has found merit in the symmetrical methodologies used in other mechanisms. Also, an increase in the annual use per customer beyond the UPC cap may result in increases in fixed costs that would be appropriately recovered and retained by the Company through the FCA mechanism. The response to this Request was prepared by Zachary Harris, Regulatory Analyst, Idaho Power Company, in consultation with Lisa D. Nordstrom, Lead Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER -8? REQUEST NO. 36: Please explain why the Company proposes one aggregate UPC cap as opposed to a cap specific to each customer segment. RESPONSE TO REQUEST NO. 36: The Company is not proposing one aggregate UPC cap. The Company proposes one UPC cap for both customer classes based on the historical average annual change in use per customer for the residential customer class data. Because the small general service customer class has a relatively small customer count and energy use when compared to the residential customer class, its inclusion does not cause a significant change in the historical average annual change in use per customer. Please refer to the Company's response to Staffs Request No. 37 which shows that when aggregated, the historical average annual change in use per customer shifts only slightly. One UPC cap for both customer classes is also consistent with the current rate cap methodology, which places a 3 percent cap on annual increases to both customer classes. The response to this Request was prepared by Zachary Harris, Regulatory Analyst, Idaho Power Company, in consultation with Lisa D. Nordstrom, Lead Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER -9 REQUEST NO. 37: How does the 0.72% historical decline in residential use per customer change when aggregated with the small commercial class? Please provide any workpapers in executable format used in preparing this response. RESPONSE TO REQUEST NO. 37: The historical average annual change in use per customer would change slightly when both the residential and small general service customer classes are aggregated. The historical average annual change in use per customer would change modestly from -.72 percent to -.75 percent. Please refer to the Excel file provided on the enclosed CD analysis. The response to this Request was prepared by Zachary Harris, Regulatory Analyst, Idaho Power Company, in consultation with Lisa D. Nordstrom, Lead Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER -10 REQUEST NO. 38: How often would IPC propose to update historical average change in use per customer? What timeframe would be used in this calculation? RESPONSE TO REQUEST NO. 38: Idaho Power proposes to monitor the FCA mechanism and will subsequently request authority to update the historical average change in annual use per customer if needed. The response to this Request was prepared by Zachary Harris, Regulatory Analyst, Idaho Power Company, in consultation with Lisa D. Nordstrom, Lead Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER -11 REQUEST NO. 39: Does IPC anticipate the UPC band to remain at +1- 2%, or will it update the band over time? If so, what would cause the UPC band to be updated? RESPONSE TO REQUEST NO. 39: Yes. Idaho Power believes that the +1- 2 percent UPC band will be appropriate for near years. The Company has not proposed a systematic update of the UPC band or the historic average annual change in use per customer. Idaho Power will monitor the FCA mechanism and request authority to update the +1- 2 percent deviation if needed. The response to this Request was prepared by Zachary Harris, Regulatory Analyst, Idaho Power Company, in consultation with Lisa D. Nordstrom, Lead Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER -12 REQUEST NO. 40: Please provide documentation to support Mr. Cavanagh's (Supplemental, p.4) claim that customer count was viewed by workshop participants as a "proxy for annual changes in the economy." RESPONSE TO REQUEST NO. 40: Mr. Cavanagh was an active participant in all of the workshops, and this is his vivid recollection. The group looked for alternative indices and could not identify a superior one. Mr. Cavanagh believes that Randy Lobb will corroborate his recollection on these points. The response to this Request was prepared by Ralph Cavanagh, Energy Program Co-Director, Natural Resources Defense Council, in consultation with Lisa D. Nordstrom, Lead Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER -13 REQUEST NO. 41: On page 4 of Mr. Cavanagh's supplemental testimony, he cites a study in which "the per-customer index led all competing indices of economic activity by a margin of 27-7." Did the study state that the per-customer metric was chosen as an index for economic activity? Please explain. RESPONSE TO REQUEST NO. 41: The study did not address the issue explicitly, but Mr. Cavanagh is unaware of any alternative rationale for a per-customer index. He believes that the rationale was articulated initially by the Washington Commission, in the order approving the Northwest's and nation's first per-customer revenue decoupling mechanism (for Puget Sound Energy in 1991). The response to this Request was prepared by Ralph Cavanagh, Energy Program Co-Director, Natural Resources Defense Council, in consultation with Lisa D. Nordstrom, Lead Counsel, Idaho Power Company. IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER -14 REQUEST NO. 42: Regarding the study referenced in production request No. 14, please list the electric utilities that are represented in 34 utilities cited. Which of these electric utilities employ revenue per-customer decoupling mechanisms? RESPONSE TO REQUEST NO. 42: Mr. Cavanagh reviewed but did not author the study; as a result, he does not have this information. The response to this Request was prepared by Ralph Cavanagh, Energy Program Co-Director, Natural Resources Defense Council, in consultation with Lisa D. Nordstrom, Lead Counsel, Idaho Power Company. DATED at Boise, Idaho, this 15th day of November 2012. X'6; ~' ~7 , /. w21 LISA D. NORDSTROM Attorney for Idaho Power Company IDAHO POWER COMPANY'S RESPONSE TO THE SECOND = PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER- 15 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on this 15 th day of November 2012 I served a true and correct copy of IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER upon the following named parties by the method indicated below, and addressed to the following: Commission Staff Weldon Stutzman Deputy Attorney General Idaho Public Utilities Commission 472 West Washington (83702) P.O. Box 83720 Boise, Idaho 83720-0074 NW Energy Coalition Nancy Hirsh, Policy Director NW Energy Coalition 811 First Avenue, Suite 305 Seattle, Washington 98104 Idaho Conservation League Benjamin J. Otto Idaho Conservation League 710 North Sixth Street Boise, Idaho 83702 Carl B. Linvill, Ph.D. Director of Integrated Planning and Analysis Aspen Environmental Group 2655 Portage Bay East, Suite 3 Davis, California 95616 Micron Technology, Inc. Thorvald A. Nelson Frederick J. Schmidt Brian T. Hansen Mary V. York HOLLAND & HART, LLP 6380 South Fiddlers Green Circle, Suite 500 Greenwood Village, Colorado 80111 X Hand Delivered U.S. Mail Overnight Mail FAX X Email weldon.stutzmanpuc.idaho.gov Hand Delivered X U.S. Mail Overnight Mail FAX X Email nancynwenergy.orq _Hand Delivered X U.S. Mail Overnight Mail FAX X Email bottoidahoconservation.orq Hand Delivered X U.S. Mail Overnight Mail FAX X Email clinvillaspenep.com Hand Delivered X U.S. Mail Overnight Mail FAX X Email tnelson(ãholIandhart.com fschmidtchol land ha rt. com bhansen(äThollandhart.com myork(ãhol land ha rt. com lnbuchanan(ãtholland hart. corn IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER -16 Richard E. Malmgren Senior Assistant General Counsel Micron Technology, Inc. 800 South Federal Way Boise, Idaho 83716 Hand Delivered X U.S. Mail Overnight Mail FAX X Email remalmqrenmicron.com EIieth Paynte KLegal Secretary IDAHO POWER COMPANY'S RESPONSE TO THE SECOND PRODUCTION REQUEST OF THE COMMISSION STAFF TO IDAHO POWER -17