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