20130626Technical Hearing Volume II.pdf

BEFORE THE IDAHO PUBLTC UTILITIES COMMISSION ?i!!1 ltiri'! i ' J=;
rN THE MATTER OE IDAHO POWER
COMPANYIS APPLICATION EOR
AUTHOR]TY TO MODIEY TTS NET
METERING SERVICE AND TO INCREASE
THE GENERATION CAPAC]TY LIM]T
CASE NO.
rPc-E-L2-21
TECHNICAL
HEARING
HEARING BEEORE
COMMISSIONER MARSHA H. SMITH (Presiding)
COMMISSIONER PAUL KJELLANDER
COMMISSTONER MACK A. REDFORD
PLACE:Commission Hearing Room
472 West Washington StreetBoj-se, Idaho
June LL, 20L3
II Pages 15 - 195
DATE:
VOLUME
POST OFFICE BOX 578
BOISE, IDAHO 83701
208-336-9208
HEDRIGK
COURT REPORTING
ORIGINAL
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{.i}fili B: h9
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,9enuig, tlo &N anauvtf at;r* gA
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HEDRICK COURT REPORTING
P. O. BOX 5'7I , BOTSE, rD
For the Staff:
Eor Idaho Power Company:
For Snake River Al-l-iance:
For Idaho Cl-ean Energy
Association, fnc.:
For Idaho Conservati-on
League:
Eor Pj-oneer Power, LLC:
For City of Boise:
APPEARANCES
KARL KLEIN, Esq.
Deputy Attorney General-
472 West Washj-ngton
Boise, Idaho 83102
LISA D. NORDSTROM, Esq.
and JULIA A. HILTON, Esg.
Idaho Power Company
1227 West Idaho Street
Bo j-se, Idaho 837 02
KEN MILLER
Cl-ean Energy Program Director
Snake River All-iance
Post Office Box l13L
Boise, Idaho 83701
McDEVITT & MILLER, LLC
by DEAN J. MILLER, Esq.
420 West Bannock Street
Boise, Idaho 83102
BENJAMIN J. OTTO, Esg.
Idaho Conservation League
710 North Sixth Street
Boise, Idaho 83702
RICHARDSON & O'LEARY
by PETER J. RICHARDSON, Esq.
515 North 27th Street
Boise, Idaho 83702
BATT F]SHER PUSCH & ALDERMAN, LLP
by JOHN R. HAMMOND, JR., Esq.
101 South Capitol Boulevard,
Suite 701
Boise, Idaho 83102
and
R. STEPHEN RUTHERFORD, Esq.
Boise City Attorney's Office
Post Office Box 500
Boise, Idaho 83701-0500
83701
APPEARANCES
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INDEX
WITNESS EXAMINAT]ON BY PAGE
Matthew T. Larkin
(Idaho Power Company)
Ms. Nordstrom (Direct)
Prefiled DirectPrefiled RebuttalMr. Hammond (Cross)
Mr. D. Mil-l-er (Cross)
Mr. Richardson (Cross)
Mr. Otto (Cross)
Mr. Klein (Cross)
Commissi-oner Kj ellander
Commissioner Redford
Commissioner Smi-th
Mr. Otto (Dlrect)
Prefiled Direct
Commissioner SmithMr. Otto (Redirect)
Mr. Richardson (Direct)
Prefiled Direct
Ms. Hilton (Cross)
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85
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143
752
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159
767
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1BB
193
R. Thomas Beach
(Idaho Conservation League)
Dawn Marie Cardwel-I
(Pioneer Power)
EXHIBITS
NUMBER PAGE
Eor Idaho Power Company:
1.Rate Schedule Comparison Premarked
Admitted
Premarked
Admi-tted
Premarked
Admitted
Premarked
Admitted
B5
Schedule 6,Residential-
B5
Schedule 8,
Schedule 12,Non-Utility
Smal-l General
Interconnect ions
Generation
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85
to
HEDRICK COURT
P. O. BOX 578,
REPORT]NG
BOISE, ID
INDEX
EXH]BITS83701
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HEDRICK COURT REPORTING
P. O. BOX 5'lB, BOTSE, rD
5. Schedule 84, Large Customer PremarkedAdmitted 85
6. Frequently Asked Questions PremarkedAdmitted B5
1 . Response to Request No. 1 PremarkedAdmitted B5
8. Resolution of Net Metering Premarked
Interconnection fssues Admitted 85
For Idaho Conservation League:
20L. Curriculum Vi-tae for R. Thomas Beach Premarked
Admitted tB2
202. Evaluation of Net Metering j-n Vermont PremarkedAdmitted tB2
203. (Confidential) PremarkedAdmitted L82
204. Idaho Power Response to ICL
Production Request No. 1
PremarkedAdmitted ]-82
205. Idaho Power 20L3 IRP DSM Status Update Premarked
October 17, 2013 Admitted LB2
For Pioneer Power:
401. Dawn Marie Cardwel-l- Curriculum Vitae Premarked
Admitted l- 93
402. Photograph Premarked
Admitted 193
83701
EXHIBITS
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HEDRICK COURT REPORTTNG
P. O. BOX 578, BOTSE, rD
BOISE, IDAHO, TUESDAY, JUNE 11, 2013, 9:30 A.M.
COMMISSIONER SMITH: This is the time and place
set for hearing before the Idaho Publ-ic Utitities Commission in
Case No. IPC-E-L2-21. It is further identified as In the
matter of Idaho Power Company's Applicatj-on for authority to
modify its net metering service and to increase the generation
capacity limit.
We'11- begin today by acknowledging that we have
Thomas E. Dayley, a state representative from District 27lr-, and
we're pleased to have him join us today.
We'1I start with appearances and with the
Company.
MS. NORDSTROM: Good morning. Lisa Nordstrom and
.Iul-ia Hilton on behalf of Idaho Power Company.
COMMISSIONER SMITH: And for the Staff.
MR. KLEIN: Karl- Klein for the Staff .
COMMISSIONER SMITH: Al,l- right. And for the
Idaho Conservation League.
MR. OTTO: Ben Otto with the Idaho Conservation
League.
COMMISSIONER SMITH: We have been notified that
PowerWorks, LLC, who's an Intervenor in this case, does not
intend to appear or participate today.
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COLLOOUY
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HEDRICK COURT REPORTTNG
P. O. BOX 5'78, BOTSE, rD
Pioneer Power.
MR. RICHARDSON: Good morning, Madam Chair.
Peter Richardson on behalf of Pj-oneer Power, and with me is
Dawn Marie Cardwell with Pioneer Power.
COMMISSIONER SMITH: Thank you.
City of Boj-se.
MR. HAMMOND: Thank your Madam Chair. John
Hammond, Eisher Pusch & Alderman, for the City of Boise, along
with Steve Rutherford, the chief deputy at the City Attorney's
office, who's sltting right behind me.
COMMISSIONER SMITH: Thank you. Snake River
Alliance.
MR. K. MfLLER: Oh, good morning, Madam Chair.
MR. HAMMOND: I bl-ew that, didn ' t I ?
MR. K. MfLLER: Ken Mill-er with the Snake River
Afliance.
COMMISSIONER SMITH: Thank you, Ken.
And the fdaho Cl-ean Energy Association.
MR. D. MILLER: Thank you, Madam Chairman.
Dean J. Mill-er of the firm McDevitt and Mil-l-er on behal-f of the
Idaho Clean Energy Association.
COMMISSIONER SMITH: According to our Notice of
Parties, those are al-l- the partj-es in this case.
Do any of the parties have any preliminary
matters that need to come before us?
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COLLOQUY
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HEDRICK COURT REPORTING
P. O. BOX 5'7 B , BOTSE, f D
LARKTN (Di)
Idaho Power
A TELEPHONIC VOICE: Whatrs that?
A TELEPHONIC VOICE: (Inaudible. )
COMMISSIONER SMITH: So, would you people on the
phone please put your phones on mute.
Seeing nothing prelimJ-nary, we'l-1 start with you,
Ms. Nordstrom.
MS. NORDSTROM: Thank you. Idaho Power cal-Is
Matt Larkin as its first witness.
MATTHEW T. LARKTN,
produced as a wltness at the i-nstance of Idaho Power Company,
being f irst duly sworn, was examined and test j-f i-ed as fol-l-ows:
DIRECT EXAMINATION
BY MS. NORDSTROM:
O. Good morning.
A. Good morning.
O. Pl-ease state your name and speI1 your l-ast name
for the record
A. Matt Larkj-n, L-A-R-K-I-N.
O. By whom are you employed and in what capacity?
A. I'm employed by ldaho Power Company as a
regulatory analyst.
a. Are you the same Matt Larkin that filed dj-rect
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HEDRICK COURT REPORTING
P. O. BOX 5'7 B , BOTSE, f D
LARKIN (DT)
Idaho Power
testimony on November 30, 20L2, and prepared exhibits numbered
one through five?
A. I am.
O. Are you the same Matt Larkin that filed rebuttaL
testimony on May 31, 20L3, and prepared Exhibit Nos. 6 through
8?
A. Yes.
O. Do you have any changes or corrections to your
prefiled testj-mony or exhibits?
A. No.
O. If I were to ask you the same questions set out
in your prefiled testimony, wou1d your answers be the same
today?
A. Yes.
O. On page t2 of your direct testimony, you describe
participation in the net metering service year to date through
November 30, 20L2. Pl-ease update the record as to the current
instal-led net metering capaci-ty on ldaho Power's system.
COMMISSIONER SMITH: So could I have that number
agai-n, please?
MS . NORDSTROM: Page 1"2 .
THE WITNESS: Yes. So the numbers as of June 1st
of 20L3, the Company now has a total of 386 net metering
customers -- that includes active and pending applications
for a generat j-on capacity of 2.7 6 megawatts.
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HEDRICK COURT REPORTING
P. O. BOX 5'78, BOTSE, rD
LARK]N (Di)
Idaho Power
MR. RICHARDSON: Can you teII me what l-ine on
page 12 you are referring to?
MS. NORDSTROM: I was referrj-ng in particular to
the chart that's on I guess I'm on it is page 77, and
there is a chart on the bottom of page 10. So I apologize for
the page numbers.
a. BY MS. NORDSTROM: Since the case was filed on
November 30, 2012, has the Company experienced a change in the
volume of net meterj-ng applications relative to prior years?
A. Since the case was fil-ed on November 30th, the
Company has received 21 net metering applications, compared to
previous years in both 2071 and 201,2, over the same November
30th to June time frame, that number was 25 in each year.
MS. NORDSTROM: I have no further questions for
this witness at this time and will make him availabl-e for
cros s -exami-nation .
COMMISSIONER SMITH: If therers no objection, we
wiIl spread the prefiled direct testj-mony of the witness across
the record as if read, and admit the exhibits that accompany
it. Seeing noner so ordered.
Mr. Hammond, do you have questions?
MR. HAMMOND: I apologi-ze. We had discussed sort
of an order, but I wil-l- go first unless --
MR. RICHARDSON: Madam Chair, just a point of
cl-arification: Is rebuttal testj-mony also spread on the record
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HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
LARKIN (Di)
Idaho Power
and is he available for cross-examination on that as wel-l?
MS. NORDSTROM: He is.
COMMISSIONER SMITH: Okay. So we will spread
both the direct and rebuttal- testimony across the record and
admit the exhibits that accompany it.
(The fol-lowing prefiled direct and
rebuttal- testimony of Mr. Larkin is spread upon the record. )
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0. Please state your name and business address.
A. My name is Matthew T. Larkin. My business
3 address is l22l West. Idaho Street, Boise, fdaho.
O. By whom are you employed and in what capacity?
5 A. I am employed by Idaho Power Company ("Idaho
6 Power" ot "Company") as a Regulatory Analyst II in the
7 Regulatory Affairs Department.
B Q. Please describe your educational background.
A. I received a Bachelor of Business
10 Administration degree in Finance from the University of
11 Oregon in 2001. In 2008, I earned a Master of Business
L2 Administration degree from the University of Oregon. I
13 have also attended electric utility ratemaking courses,
14 including ?he Basics; Practical Regulatory Training for the
15 Electric Industry, a course offered through New Mexico
16 State University's Center for Public Utilities, and
11 Introduction Co Rate Design and Cost of Service Concepts
1B and Techniques, presented by El-ectric Utilities
19 Consultants, Inc.
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0. Please describe your work experience.
A. f began my employment with Idaho Power as a
22 Regulatory Analyst I in January 2009. As a Regulatory
23 Analyst l, I provided support for the Company's regulatory
24 activities .i-ncluding compliance reporti.ng, financial
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2l LARKIN, DI 1
Idaho Power Company
anaLysis, and the development of revenue forecasts for
regulatory filings.
fn January 2012, T was promoted to Regulatory
Analyst II. As a Regulatory Analyst II, my
responsibilities have expanded to include the development
of complex cost-related studies and the analysis of various
strategj-c regulatory issues.
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A.
metering service currently offered through Schedule 84,
"Customer Energy Production Net Meteringr" ("Schedule 84")
and Schedule 72, "Interconnections to Non-Utility
13 Generation" ("Schedule 12") . The Company is also
Vihat is the Company requesting in this filing?
The Company is requesting to modify its net
6,
and
84 to
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requesting to implement two new tarj-ffs, Schedule
"Resi-dential Net Metering Service, " ("Schedule 6")
Schedule B, "SmaII General Net Metering Service, "
("Schedule B") and to modify the title of Schedule
read "Large Customer Net Metering Servi-ce."
o.What are the primary objectives of the
Company's request?
A.The primary objectives of the Company's
request are to: (1) expand net metering service beyond the
current 2.9 megawatt ("MW") cap, (2) implement a modified
rate structure for Resi-dential Servi-ce and Sma1l General
Service customers taking net metering service through the
LARKIN, DI 2
fdaho Power Company
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1 implementation of the proposed Schedule 6 and Schedule 8,
2 and (3) propose several modifications to Schedule 12 and
3 Schedule 84 that are necessary to allow the Company to
4 safely and effectively expand its net metering service
5 offering.
a.Why is the Company proposing to modify its net
7 metering service at this time?
A.The Company's current Schedule B4 conEains a
9 provision that Iimits the cumulative nameplat.e generation
10 capacity of interconnected net metering systems Lo 2.9 MW.
11 On page
72 04, the
t3 stated:
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the Commission's directive issued in that case. As of
November L, 2012, 't-he installed capaciLy of nel- metering
systems totaled 2.246 MW, with applications pending for an
7 of Order No. 29094 issued in Case No. IPC-E-02-
Idaho PubIic Utilities Commission ("Commission")
We accept for now the Company's
proposed cap to Schedul-e 84, i . €. , the
2.9 MW cumulative nameplate capacity
l imit .we apprise Idaho Power.
however, that when the cap is reached,
the Company is to immedi-ateJ-y notify
the Commission in writing that the
Company is in the position of having
to refuse further applications. At
that point, this Commission will- Iook
at the cap again and determine whether
it continues to be reasonable or if
there is a better measure of what's
appropriate or if there is a need for
a cap at all.
The Company is makinq this filing in accordance with
LARKIN, DI 3
Idaho Power Company
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additional .219 MW, for a grand total of 2.525 MW. Given
recent growth trends and the current level of instal-Ied net
metering generation, the Company expects that the 2.9 MW
cap will be reached within the next six months. While the
Commission' s directive states that the Company is to
provide notlfi-cation when the cap is reached, the Company
wishes to file earller to avoid a situation in which the
tariff requires the Company to refuse new applications for
9 net metering service.
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O.
A.
Pl-ease provide an outline of your testimony.
The first section of my testimony will detail
the history of the Company's net metering service from its
inception to the implementation of Schedule 84 currently in
effect. The second section of my testimony will address
the capacity 1imit of 2.9 MW that is currently in pIace,
and describe the Company's request to expand this cap. The
third section of my testi-mony wiIl address the Company's
proposed pricing modifications for net metering service
through the implementation of the proposed Schedule 6 and
Schedule B. The fourth sectj-on of my testimony will
address the treatment of net metering energy generation in
excess of consumptj-on. My testimony will conclude with a
discussion of proposed administrative modifications to
Schedul-e 12 and Schedule 84.
LARKIN, DI 4
fdaho Power Company
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I. HISTORY
O. Please provide a general- description of net
installed ptiot.ovoltaic system.
o.Please describe how the Company's net metering
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3 metering service.
A.Net metering service is offered by the Company
5 to provide for transfer of electricity to the Company
6 through customer-owned generation facilities with the
intent of offsetting a1l or a portion of a customer's
B energy usage.
O. How long has Idaho Power offered net metering
10 service?
11 A.On October 20, 1983, the Company first
LZ established its net meterj-ng service offered to customers
13 through Schedule 86, "Cogenerat-ion and Smal-l- Power
L4 Production Non-Firm Energy" ("Schedul-e 86"), under Option C
15 per Commissr-on Order No. 1.8358. At that time, Schedule 86
16 was modified to accommodate a single customer wit.h an
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L9 service was structured at the time of its initial offering.
20 A.The net metering service established in 1983
2L was designed to provide customers the ability to offset aI1
22 or a portion of their usage with their own generation.
23 Idaho Power charged customers the fuII retail rate for net
24 energy consumed and credited the fuIl retail rate for net
25 generation delivered to t.he Company
LARKIN, DT 5
Idaho Power Company
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0.Did the Company propose any modifications to
its net metering service after it was established in 1983?
A.Yes. In October of 1995, the Company filed an
application in Case No. IPC-E-95-15 requesting to modify
the terms of Schedule 86. As part of this case, a formula-
based rate was implemented to aIlow the Company to recover
certain non-generation costs from net metering customers.
When the formul-a rate was created, the Company's net
metering service stilI consisted of a single customer with
an installed photovoltaic system,' therefore, the Company's
formu1a rate proposal was specifically designed for
photovoltaic systems. It was anticipated that when other
types of generation were introduced, new formula rates
would be created for those specific generation types.
O. Was net metering service further modlfied
following the conclusion of Case No. IPC-E-95-15?
A. Yes. On February 13, 2002, the Commission
j-ssued Order No. 28951 in Case No. TPC-E-01-39 creating
Schedule B4 and removing net metering service from Schedule
86. As part of that Order, pricing associated with the
Company's net metering service was modified to remove the
previously-described formufa rate.
o.What were the driving factors for creating
Schedul-e 84 and removing net metering service from Schedul-e
B6?
LARKIN, Dr 6
Idaho Power Company
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A.At the time Schedule 84 was created, there
were three customers taking service under the net metering
provision of Schedule 86. The practicality of this
provision, however, was Iimited as the Schedule B6 formula
rate required a mar)uaI biIJ-ing process that was determined
to be overLy complex and time intensive, and was only
designed to accommodate photovoLtaic installations.
Through the creation of Schedule 84, pricing was simplified
for net metering customers by eliminating the formula rate
component of customers' biIls and applying the full retail
rate to net usage or generation. This allowed the Company
to use it-s existing billing system and a single meter, and
provided the ability to charge or cr.edit customers at rates
consistent with their respective rate classes. It al-so
allowed the Company to expand its neL metering service to a
76 broader ranqe of generation resources.
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0.
LB concerns with
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Did the Commission Staff ("Staff")
t.he Company's proposal in regard to
generation at the full retail- rate?
Yes. On page 5 of Order No. 2895L,
ral_se any
credit ing
the
2l Commission summarized Staff's concern:
Staf f contends that t.he Company'sproposal to credj.t- customer generators
at full retail- rates wiII pay
customers mor:e than the actual vafue
of the generation.Consider, for
example, it states, En instance in
whicir a resj-derrLiaI net meLering
cusEomer completely offsets his entire
LARKIN, DI 1
Idaho Power Company
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usage during the month. The customer
woul-d pay only a basic customer charge($2.51). Idaho Power would collect norevenue from the sale of kilowatt
hours.With only revenue from thecustomer charge, Idaho Power cannotrecover its fulI cost of service. Toprovide service, Idaho Power muststilI have distribution plant in place(poIes, wires, transformers, etc. ),they must still read meters and sendbilIs,and they still haveadministrative costs
o.
regarding the
rate ?
Did the Company share Staff's concerns
crediting of customers at the full retail
A.Yes. In response to a Staff production
request in Case No, IPC-E-01-39 the Company stated, *It is
possible that the retail rate may be higher [than the value
of generationl . "1
o Why did the Company propose to credit net
metering customers at the ful-l retail rate at that time?
A.In the same response described above, the
Company stated:
The Company believes, dt this time,
that' the benefits galned in reducing
administrative costs offset anypotenti-aI dif f erence Iin value] . By
employing retail rates, the Company
will e-l-iminate a cumbersome, involved
proces s requi red to ca Icul-ate theadditional monthly charge currently
defined under Schedule 86 Option B.By providing a simple mechanism to
credit customer generation at retail
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' Case No.
Production Request
rPC-E-01-39,
No. 6.
Idaho Power's
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Response to Staff's
LARKIN, DI 8
Idaho Power Company
rates,the Company wilI reduceadministrative costs and customerswiII have a methodology that will beeasier to understand and t.rack theiraccount. "
o.Was the issue of crediting cusLomers at the
ful1 retail rate addressed by the Commission?
A. Yes. The issue was addressed through the
limits placed on individual projects as well as the total
previously.
stated the
11 installed capacity Iimit of 2.9 MW described
12 On page 6 of Order No. 2895L, the Commission
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following:
a.
Despite Staff's concerns that. some of
the costs to serve net metering
customers will- be subsidiz.ed by other
cust-omers, the overal-I dol Ia r impacts
of net met-ering, Sta f f contends, wi I I
be sma11. i.f part icipat i.r>n leveJs are
rest ricted. (Emphasis added. )
Were further modifications made
?-3 Company's net- meteri-ng se::vice folJ owing the
24 Case No. IPC-E-01-39?
25 A.Yes. Through Order
to the
concl.usion of
No. 28951- issued in Case
rect.ed Idaho Power to
components of its net.
of the issuance of its
Power filed an application
26 No. IPC-E-01-39, the Commission di
21 file a proposal modifying several-
28 metering service within six weeks
29 Order.2 on March 29, 2002, Idaho
30 in Case No. TPC-E-02-04 in compliance with the Commission's
31 directive.
28951., p. 1.
29 LARKIN, DI 9
Idaho Power Company
2 Case No. IPC-n-01-39, O.r:cler No.
1
2
3
4
5
6
1
B
9
10
11
12
13
t4
15
16
o.
A.
What was the result of Case No. IPC-E-02-04?
The Commission issued Order No. 29094 on
August 27, 2002, approving a number of modifications to the
Company's net metering service and reaffirming its view
that the cumulative nameplate generation capacity ]imit of
2.9 MW was appropri-ate at that. time.3
How many customers currently take net metering
service under Schedule B4?
A.As of November l, 2012, fdaho Power currently
has 353 net metering customers. Table 1 details the
composition of current net metering customers, grouped by
major rate class and resource type. These figures reflect
customers currently taking net metering service as well as
customers who have submitted applications for net metering
service.
Tab1e 1
o.
71
1B
19
20
29094,
30
1.
LARKIN, DI 10
Idaho Power Company
CIass Photovoltaic Wind Hydro,/Other TotaI
Residential-20\65 6 2'12
Commercial 69 7 3 19
Industrial 1 0 0 1
I rr iqat 1on 1 0 0 1
Total 212 12 9 353
:rCase No. IPC-E-02-04, Order No.Y.
1
2
3
4
5
IT. CAPACITY LIMIT
A. What is the currenL capacity limit for
customer-owned generation facilities taking service under
Schedule 84?
A.As set forth in Order No. 28951, and
6 reaffirmed in Order No. 29094, the current capacity limit
7 under Schedule 84 for net metering installations is 2.9 MW.
O.How has the installed generation capacity of
9 net met.ering systems changed since the issuance of Order
10 Nos. 28951 and 29094 in 2OO2?
11 A.Figure l- shows how the installed capacity of
12 net metering systems has grown since 2OO2. The solid
13 horizontal line across the top of the chart represents the
L4 capacity limit of 2.9 MW currently in place, while the
15 vertical bars along the bottom of the chart represent
16 cumulative installed capacity over: time-
1.1 Figure I-
Cumulative lnstalled Net Metering Capacity
3.000
2,500
2.OOO
1,500
1,ooo
500
LARKIN, DI 11
Idaho Power Company
I
I
I
I
I
lrw
I
!
:
;
I
I
1B
31
1 Q. Please describe the growth trends ill-ustrated
2 in Figure 1.
3 A. At the time Schedule 84 was created in 2002,
4 installed net metering capacity connected to the Company's
5 system totaled 39 kilowatts ("kW"). Following the
6 implementation of Schedule 84, the installed capacity of
7 net metering systems steadily increased from 39 kW to just
B under 1,000 kW between 2002 and 2010. Since 2010, growth
9 increased sharply, rising by nearly 1,500 kW over
10 approximately two years.
1l- When viewed in relation to the capacity limit, the
LZ Company experienced steady growth throughout the first nine
13 years of the existence of Schedule 84, reaching
74 approxi-mately one-third of its overall capacity l-imit by
15 2010. In less than two years since that time, installed
16 capacity has nearly tripled and the Company is now on the
l7 verge of reaching the 2.9 MW capacity }imit.
18 O. When does the Company expect to reach the
19 current capacity limit of 2.9 MW?
20 A. Taking lnto account pending applications and
21 the level of growth the Company has experienced over the
22 last two years, the Company expects to reach the 2.9 MW
23 capacity limit within the next six months.
24 O. Does the Company propose to increase the
25 current net metering capacity limit of 2.9 MW?
LARKIN, DI 12
Idaho Power Company
32
1 A. Yes. The Company proposes to double the
2 current capacity ]imit from 2.9 MW t.o 5.8 MW.
3 Q. Why is a net metering capacity limit still
4 needed?
5 A. As shown earlier in Figure L, the Company has
6 experienced a steep increase in net metering installations
7 since 20L0. Even with this growth, however, this service
B is still rel.atively smal1, representing just over 350 of
9 the Company's approximate 500,000 customers. If current
L0 growth trends continue or increase, it is important to
tI maintain a capacity limit to allow the Company and other
L2 stakeholclers to evaluate this service as it expands. This
13 provides the Company wit.h Ehe abj."lity to identify any
14 future modiflcations that may be necessary to accomrnodate
15 more widespread expansion of its net metering service. By
16 increasing the current capacity limit to 5. B MW, the
71 Company is facilitating the expansion of its net metering
1B service while maintaining the opportunity to appropriately
19 evaluate and request to modify this service as necessary.
20 O. What js the Company's proposal in the event
27 thal- the Company receives new net metering applications
22 after the cap is met but before the Commission has made a
23 final determination as to the appropriate level of the cap?
24 A. The Company is requesting a temporary waiver
25 of the 2.9 MW cap if it is reached prior to the
LARKIN, DT 13
Idaho Power Company
33
1
2
3
4
5
6
1
Commission's final determination regardi-ng the appropriate
capacity Iimit. The purpose of the waiver is to prevent
customers from being turned away if they request net
metering service while the Commission is considering the
Company's request. Under the proposed waiver, customers
that begin taking net metering service after the 2.9 MW cap
is met will be subject to the Lerms of Schedule 72 and
B Schedule 84 currently in place until- the Commissj-on issues
9 a final order in this case.
10
11
o.How will exj-sting net metering customers or
new net metering customers acquired during the proposed
A.The Company recommends that all current and
new net metering customers be subject to the terms of any
revj-sj-ons made to net metering service that are ultimately
16 approved by the Commission.
L2 waiver period be treated under the Company's proposal?
13
L4
15
11
1B
III. PRICING
O. What is the primary objective of the Company's
19 pricing proposal?
20 A.The primary objective of the Company's pricing
2l proposal is to facilltate further growth in its net
22 meterlng service whil-e Iimiting the potential negative
23 impact on standard service customers. The Company believes
24 its pricing proposal balances the interests of net metering
25 customers and standard service customers, limiting the
LARKIN, DI L4
Idaho Power Company
34
L potential for inequity by applying charges to net metering
2 customers that accurately reflect the cost to serve them.
3 Q. Why is the Company proposlng to modify net
4 metering rates at this time?
5 A. Under current nef metering service, customers
6 receive the fuII retail- rate for the generation provided by
7 net metering systems; however, the ful1 ::etaiI rate
B includes cosL recovery associated with all components of
9 the Company's electrical system, including transmission,
10 distribution, and customer-reLated costs. As a result, the
11 Company is fj-nancially compensating these customers for
L2 services they are not providing to the detriment of
13 customers taking service without net metering
14 instaJ.Iations. As previously described in my testimony, in
15 Case No. IPC-E-o1-39 the Company and Staff shared the view
16 that it. is inappropr:iaLe l-o.:ppIy full ret.ail energy rates
11 to net energy usage for customers with net metering
18 installations. At that time, howeve.r, it was ultimately
19 determined that administrative ease and the relatively
20 smal1 number of customers under net metering service
2l outweighed the potential risk of inequity. This risk was
22 further mitigat.ed by the i.mplementation of the 2.9 MW cap.
23 Ten years after the conclusion of Case No. IPC-E-OI-
24 39, the Company's ne[ metering service has grown sharply as
25 shown in f iqu::e l, wa rrant-:i ng pr:i cing modi f j cat-ions to
LARKIN, DI 15
Idaho Power Company
35
l- address these previously identified concerns. As
2 summarized in Order No. 2895L, Staff noted in Case No. IPC-
3 E-01-39 that'if and when there is 2.9 MW of net metering
4 on Idaho Power's system, a more accurate cost based rate
5 should be established."4 The Company concurs with Staff's
6 view, and believes that the pricing should be modified to
7 more accurately reflect the cost of serving these
8 customers -
9 Further, since the concl-usion of Case No. IPC-E-01-
10 39, the Company has installed Advanced Metering
11 Infrastructure (*AMf") throughout its service area for
12 nearly aIl Residential and SmaII General Service customers.
13 This al1ows the Company to implement demand-related rates
14 for these customers that previously would have required the
15 replacement of standard mechanical meters with more
16 expensive demand meters. With AMI in p1ace, the Company 1s
Ll now able to implement demand-related rates for Residential-
18 and Sma11 General Servi-ce customers without incurring any
19 incremental cost associated with meter replacement, and
20 biII according to demand-related biltinq components that
2L are automatically captured by the Company's billing system.
22 This allows the Company to modify its rate design to more
23 accurately refl-ect the cost of serving these customers
a Case No. IPC-E-O1-39, Order No. 28951, p. 6-36
LARKIN, DI 76
Idaho Power Company
while avoiding many of the incremental costs that would
have existed prior to the installation of AMI.
O. Please explain why the Company feel-s the
current pricing structure for net metering service is
inappropriate and unsustainabl-e going forward.
A. For ScheduLe !, "Residential Service, "
("ScheduIe L") and Schedul-e 1, "SmaIl- General Service, "
("Schedule J") customers are billed according to two types
of charges: (1) a flat monthly service charge of 55.00 and
(2) per kilowatt-hour (*klrJh") energy charges that vary by
season and total monthly consumption. Due to the limited
billing components associaLed with these rate classes, the
majority of the Company's revenue requirement associated
with Residential Service and SmaII General Service is
collected through volumetric energy rates. This includes
costs associated with all components of the electrical
sysLem, from investment in generation resources to the
meters installed on cusLomers' premises. Consequently,
energy rates for Schedule 1 and Schedule 7 reflect not only
the energy-re1at.ed components of revenue requirement, but
fixed costs associated with generation, transmission, and
distribution as weIl
Under the current rate structure for Residential and
Small General Service net met-ering customers, totaL energy
charges are calculated by appJ-ying the Company's st.andard
[,ARKrN, Dr l'7
Idaho Power Company
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2
3
4
5
6
1
B
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1_0
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13
l4
15
16
l7
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19
20
2t
22
23
24
25
1 Schedule 1 or Schedule 7 rates to total- net energy usage
2 throughout each bilJ-ing period. The effective result of
3 this pricing methodology is the crediting of net metering
4 customers at the full retail energy rate for each kwh
5 produced. By applying the standard Schedul-e I or Schedul-e
6 1 rates, net metering customers are credited according to a
7 rate that reflects cost recovery associated with all
8 components of the Company's electric system, which is
9 greater than the amount of generation-related revenue
10 requirement embedded in rates. This creates a potential
11 inequity between net metering customers and standard
L2 service customers, as net metering customers are.provided
13 the opportunity to unduly reduce collection of revenue
1,4 requj-rement by receiving credit for generat.ion at the fulI
15 retail- rate while standard service customers are l-eft to
L6 compensate for the revenue shortfall.
l7 O. How does the Company propose to address this
1B issue?
19 A. For Residential and Small General Service
20 customers, the Company is proposing to mitigate this
2L potential inequity through the implementation of Schedule 6
22 and Schedule B. These proposed service schedules modify
23 the charges through which the Company collect.s revenue
24 requirement from Resident.ial Service and SmalI General
25 Service net meteri-ng customers, respectively. Utilizing
LARKIN, DI 18
Idaho Power Company
3B
1 the results of the Company's most current class cosL-of-
2 service study that was reviewed in Case No. IPC-E-I1-08,
3 Schedr:le 6 and Schedule B reflect three primary
4 modifications to the col.lection of revenue requirement from
5 Residential and SmaIl- General Service net metering
6 customers: (1) an increase to the monthly service charge
1 for Residential- Servj-ce from $5-00 to 520.92, and for Smal-l-
B General Service from 95.00 to $22.49, to reflect collection
9 of 100 percent of customer-rel-ated revenue requirement, (2')
10 the implementation of a basic load capacity ("BLC") charge
11 of $1.48 per kW for Residential Servj-ce, and S1.37 for
12 Sma].L GeneraI Service, to reflect collection of demand-
13 related revenue requirement associated with ttre
L4 distri.bution system, and (3) a uniform reduction to the
L5 energy charges for Residential. and Small General Service t-o
t6 target the same fevel of total revenue recovery that would
l1 exist under t,he sl-andard service rate design.
18 O. I-lave you prepared an exhibit detai-Iing the
19 Company's pricing proposal?
20 A. Yes. Exhlbit No. 1 provides a side-by-side
2I comparison of current Schedule 1 and Schedu-le 7 rates and
22 the Company's proposed Schedule 6 and Schedule B rates.
23 O. Is the Company requesting a change to its
24 IeveI of revenue col-lection through the implementation of
?-5 Schedule 6 and Schedule 8?
LARKIN, DI 19
Idaho Power Company
39
1
2
3
4
5
6
1
B
9
A.No. Schedule 6 and Schedule 8 were designed
according to the results of the Company's most recently
completed rate case, and were modified to refl-ect approved
changes in revenue requi-rement since the conclusion of that
case. The proposed schedules simply modify the charges
through which the Company collects its currently authorized
revenue requirement without modifying the leveI of revenue
colLection.
O.How does the Company's proposal
10 objective of l-imiting the potentlal inequity
11 metering and standard service for Residential
accomplish the
between net
and Small
13
14
15
16
71
1B
19
20
2L
22
23
24
25
L2 General Service customers?
A.The two components of revenue requi-rement that
are removed from the proposed energy charge refl-ect fixed
costs associated with the Company's distribution system
that are utilized by atl Residential and Smal.l- General
Service customers, regardless of whether or not they
provide supplemental generation through net metering
installations. Generally speaking, customer-rel-ated costs
are those that are incurred simply due to the need to
provide service to customers. Examples of these costs
include meters, service drops, customer service expenses,
and other related operations and maintenance expenses
(*O&M"). Demand-related costs associated with the
distribution system are costs that are driven by the
LARKIN, DI 20
Idaho Power Company
40
1 Company's requirement to meet the capacity needs of
2 customers at the distribution leveL. Examples of these
3 costs j-nclude substations, distrj-bution lines,
4 transformers, and associated OcM.
5 AIl Residential and Small General Service customers
6 utilize the Company's distribution system regardless of
7 whet.her or not they take standard or net metering service.
B By crediting net metering customers at the full retail
9 energy rate, the opportunity exists for these customers to
10 unduly reduce collection of these costs for which they are
11 partly responsible. Removing these components of revenue
12 requirement from the energy charge ensures that net
13 metering customers wil] pay an equitable share of costs
L4 associated with the distribution system based on their
15 contribution to these costs, thus reducing the potential
16 for inequitable recovery of revenue reguiremenL between net
1,7 metering customers and standard servj"ce customers.
18 A. What is the Ievel of potential inequity that
19 is corrected by the implement.ation of ScheduLe 6 and
20 Schedule B?
2l A. Accordi.ng to the Company's class cost-of-
22 service study in Case No. IPC-E-11-08, distributj-on-related
23 revenue requirement collected through energy rates totaled
24 $L21,154,505 for Residential Service customers and
25 57,186,21 B for SmalI General Servj-ce customers. Converted
LARKIN, DI 2T
Idaho Power Company
4L
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2
3
4
E.
6
7
B
9
10
11
12
13
L4
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20
2t
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23
24
25
to a cents-per-kWh figure, this means that $0.025413 of the
average Schedule 1 energy rate is comprised of
distribution-related charges, while $0.048247 of the
average Schedule 7 energy rate is comprised of
distribution-related charges. These rates reflect the
potential for inequity between net metering customers and
standard servj-ce customers absent the implementation of the
Company's proposed Schedule 6 and Schedule B.
O. Why is the Company not proposing to remove aII
non-energy-related costs from the energy rates contained in
Schedule 6 and Schedul-e 8?
A.The Company's pricing proposal is intended to
mitigate the potential inequity between net metering
customers and standard service customers while sti11
providj-ng net metering customers the opportunity to offset
all or a portion of their energy consumption. By leaving
the collection of demand-related generation and
transmission costs in the volumetric energy rate, the
Company's proposal recognizes that these systems
potentially provide benefits at the generati-on and
transmission level by reducing loads on these components of
the Company's system at certain times.
0.Why does the Company's proposal for Schedule
for netand Schedu]e B exclude time-differentiated rates
metering usage and generatlon?
LARKIN, DI
Idaho Power
22
Company
42
1 A. While the Company believes that time-
2 differentiated rates may be appropriate for net metering
3 service, the calculations to implement these rates would be
4 complex f rom a billing perspective. 'Ihe Company is
5 currently in the process of implemenEing a new customer
6 information and billing system and has yet to gain the
7 knowledge and understanding needed to determine the
B feasibility of time-differentiated rates for net metering
9 usage and generation. While the Company wiII continue to
10 evaluate this potential enhancemenL in the future, it is
11 not administratively feasible at this time.
72 O. Did the Company consider offering a two-meter
13 option for ScheduLe 6 ar-rd Schedul-e 8 customers that would
L4 provide compensation for generation according to a
15 generation-specific rate?
16 A. Yes. However, compensating customers for net
11 metering generation at a generation-specific rate would
18 require two separate meters; one meter would record usage
79 at the customer's site to be billed at retail rates while a
20 second meter would record generation from the net metering
2L system to be credited at generation-specific rates. The
22 Company determined that this option is not feasible for net
23 metering customers, as the need for a second meter can be
24 problematic j-n appJ. j-cation and would increase the cost
25 associated with net met-er:ing service. In addit.ion to the
LARK]N, DI 23
Idaho Power Company
43
cost of the meter itself, the installation of a second
meter can be complicated due to a number of factors,
including the location of the generation resource,
facilities that can only be accessed via neighboring
customer property, and the presence of underground service.
These potential factors, coupled with the incremental cost
of the equipment, could create a potential financial-
barrier for net metering customers 1f the Company were to
pursue a two-meter option for this service - As described
later in my testimony, customers who wish to assume the
incremental cost associated with selling whol-esale energy
at generation-specific rates are provided the opportunity
(*FCA") under the Company's proposal?
A.No. Because the proposed rate design is
intended to collect a portion of the same costs that are
addressed by the FCA, these customers should not be subject
to FCA rates contained in Schedule 54. Tdaho Power
recommends that Schedule 54 continue to apply only to
customers receiving service under Schedul-es l, 3, 4, 5, and
1.
LARKIN, DI 24
Idaho Power Company
1
2
3
4
5
6
1
B
9
10
11
L2
1"3 to do so under the Company's Schedule 86.
14 0. Wil-l- customers taking service under Schedule 6
15 or Schedule B be subject to the Fixed Cost Adjustment
16
77
18
19
20
2l
22
23
24
25
44
0.Is the Company proposing modify pricing for
Residential ornet metering customers not categorized
Small General?
A.No. The Company is proposing to maintain the
current pricing sLructure for alI other customer classes.
These customers will stiIl be subject. to Schedule 84, which
the Company is proposing to tailor specifically to net
metering customers not taking servi-ce under Schedule 6 or
Schedule B.
o.Why is
1
2
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B
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13
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24
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EO
AS
current net metering
customers other than
or Schedule 8?
o.
A.
"the positive
the Company proposing to maintain the
pricing structure for net metering
those taking service under Schedule 6
A. The current pricing st-ructure for Schedules 9,
19, and 24 aLready collects a portion of fixed costs
through a BLC charge, billing demand charge, and customer
charge. Because the majority of fixed cost recovery is
excluded from the energy rates applied to these rate
classes, the inequity concerns associated with the current
Schedule 1 and Schedule 7 rate designs are much Iess
applicable.
IV. EXCESS NET ENERGY
PIease define the term "Excess Net Energy."
Schedule B4 defines "Excess Net Energy" as
dif ference betwee:n the kwh generat.ed by a
45 LARKIN, DI 25
Idaho Power Company
1 tCustomerl and the kVrlh suppJ-ied by the Company over the
2 applicable Billing Period."
3 Q. What is. the Company's current biJ-Iing practice
4 for Excess Net Energy under Schedule 84?
5 A. The Company's currently-approved Schedule 84
6 provides financial credits to customers based on the amount
1 of Excess Net Energy measured in kWh per billinq period.
I Eor Residentlal and SmalI General Service customers,
9 financial credits are calculated by applying the fu1I
10 retaj-l energy rate to total Excess Net Energy; for all
1-1 other net metering customers, financial credits are
12 calculated by applying a market-based rate to total Excess
13 Net Energy. Customers receiving financial credits can
L4 either apply these amounts against future bi11s or request
15 payment from the Company.
16 O. What are the Company's concerns in regard to
71 the current treatment of Excess Net Energy?
18 A. As stated in Schedule 84, the intent of net
19 metering service is to allow customers "to generate
20 electricity to reduce all or part of their monthly energy
27 usage." In other words, net metering is intended to offset
22 usage, not to provide customers with an avenue to sell
23 power generation to the Company outside of Schedule 86. In
24 the case of Residential and Smal-1 General Service
25 customers, the Company is in effect purchasing power from
LARKIN, DI 26
Idaho Power Company
46
1 net meLerj.ng installat-ions at the fuIl retail rate, which,
2 as described above, is higher than the generation-relat.ed
3 revenue requirement embedded j-n rates.
4 Further, since the Commission last reviewed Idaho
5 Power's net metering service, decisions issued by the
5 Eederal Energy Regulatory Commission (*FERC") indicate that
7 providing financial payments to net metering customers for
B Excess Net Energy may be considered wholesale transactions
9 subject to FERC jurisdiction under 16 U.S.C S 824(a)-(b).
10 To ensure that its net metering service can be fully
11 implemented at the sLate 1evel in a manner that complies
72 wit.h federal law, Idaho Power believes that it must cease
13 its current practice of providing financial payments to
14 customers in the context of net metering.
15 a. How does the Company propose to address the
16 concerns associated with its current practice for billing
11 Excess Net Energy?
18 A. To address these concerns the Company proposes
19 to eliminate the practice of providing financial payments
20 to customers who generate Excess Net Energy. In place of
2l financial paymenrs, the Company proposes to provide
22 customers with a kVllh credit in the amount of Excess Net
23 Energy accrued during a billing period that can be carried
24 forward and appliecl against usage in subseguent billing
25 periods. These credits wil-1 expire annuaI.Iy at the
LARKIN, DI 21
Idaho Power Company
41
1 conclusion of a customer's December billing period. It is
2 my understanding that this methodology is also applied by
3 Avista Corporatj-on in its Idaho service area.
4 Q. WiIl this result in a windfall financial
5 benefit to the Company through a reduction in purchased
6 power expenses?
1 A. No. Payments currentl-y made to net metering
B customers are recorded to FERC Account 555.101, Purchased
9 Power, which is tracked through the Company's Power Cost
10 Adjustment mechanism. Deviations in this accounL are
11 passed through to customers at 100 percent; therefore, any
72 reduction in this account will be entirely passed through
13 to customers, providing no financial benefit to the
74 Company.
15 0. Does the Company offer an avenue for small
L6 power producers to sell output to the Company in exchange
L1 for financial payment?
18 A. Yes. Customers wishing to sell generation to
19 the Company for financial payment can continue to do so by
20 procuring a sales agreement through Schedule 86.
2I O. Why is j-t more appropriate for a small power
22 producer to sell power to the Company under Schedule 86 as
23 opposed to net metering service?
24 A. As described above, net metering is intended
25 to al-low customers to offset all or a portion of their
4B
LARKIN, DI 28
Idaho Power Company
energy usage, not to provide an avenue for small power
producers to sell whol.esale power at retail rates, dS is
the case for Residential and SmaII General Service
customers, or at market-based rates, ds is the case for all
other net metering customers. By eliminating the abilit
of wholesale power producers to sell- generation to the
Company under the terms of Schedule 84, all non-utility
power producers wiII be subject t.o the terms, conditions,
and rates of Schedule 86. This will create consistency in
the treatment of all non-utility generation projects,
prevent gaming between tariff schedules, and prevent
projects from selling power at full retail energy rates or
market-based rates at the expense of the general body of
customers- Further, the elimination of financial payments
mitigates the risk of executing poh/er transactions in a
manner that may be subject to federal- wholesale regulation.
V. ADMTNISTRJATI\IE TARIFF MODIFICATIONS
1
2
3
4
5
6
1
B
9
10
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v
o.In addition to the pricing and billing
described above, is the Company proposing any
to its tariff schedules?
LARKIN, DI 29
Idaho Power Company
1,9 modi f icat ions
20 other changes
23
24
2I A. Yes. As net metering service has continued t-o
22 expand from a single customer to over 350, the Company has
identified a number of components of the related tariff
schedul-es that should be modified to improve clarity,
25 cusLomer understanding, and t.he Company's ability to
49
1 provide net metering service in an efficient, safe, and
2 reliable manner
3 Q. Please describe these proposed changes.
4 A. The Company is proposing to make three primary
5 modifications to its tariff schedules associated with net
6 metering. These changes include: (1) reorganizing
7 Schedule 72 to clarify sections applicable to net metering,
B (2) adding a detailed application process for net metering
9 customers to Schedule 72, and (3) adding a sectj-on to
10 Schedule 12 that sets forth the treatment of unauthorized
11 net metering instalLations.
12 0. Please describe the proposed reorganl-zation of
13 Schedule 72 -
14 A. The Company's current Schedule 12 is comprised
15 of 29 pages that detail the requirements associated with
16 interconnections of non-utility generati-on to the Company's
11 system. This tariff applies to all types of non-utility
18 generation, including net metering installations and
19 qualifyi-ng facilities (*QF") as defined by the Public
20 Utility Regulatory Pol-icies Act of 1978 ("PURPA"). Under
27 the current structure of Schedule J2, requirements for net
22 metering customers are comingled with requirements specific
23 to QF projects, thus requiring net metering customers to
24 read through the entirety of the 29-page tariff to
25 determine which sections apply to net metering projects.
LARKIN, DI 30
Idaho Power Company
50
1 To enhance clarity, the Company is proposing to reorganize
2 Schedule 12 into three sections: (1) requirements
3 applicable to al-l generator interconnections, (21
4 requirement.s applicable to net metering interconnectJ-ons,
5 and (3) requirements appticable to non-net metering
6 interconnections. Through this reorganization, net
7 metering requirements are limited to the first ten pages of
B Schedule 12. The Company believes this modification will
9 clarify the requirements for prospective net metering
10 customers as weLl as prospective QF projects.
t1 O- Please describe t.he application process t.he
72 Company proposes to add to Schedule 12.
O13 A. The Company is proposing to add language to
14 Schedule 72 that details the application process specific
15 Lo net metering customers. This section provides a step-
76 by-step course of action for both the Company and customers
11 for inLerconnecting net met.ering installations to the
1B Company's system.
I9 O. Why is the Company proposing to add this
20 application process to Schedule l2?
27 A. Neither Schedule 12 nor Schedul-e 84 currently
22 contain a detailed application process specific to net
23 metering systems. By adding the proposed section, the
24 application process wiII be clearly documented in a manner
25
51 LARKIN, DI 31
Idaho Power Company
O 25 to Schedule 12 is to provide clarity to customers and
O 1 that wilr aid both the company and customers throughout
2 installation and interconnection.
O. Please describe the Company's proposed
4 addition to Schedul-e 12 regarding unauthorized net metering
5 instal-lations.
A. The Company is proposing to incl-ude a section
7 in Schedule 72 that outlines the Company's course of action
I in regard to unauthorized net metering install-ations. In
9 the context of net metering, unauthorized installations are
10 defined as newly installed systems or expansions to current
11 systems that have been interconnected to the Company's
12 system without prior Company approval. These installations
13 potentially pose a safety risk to Company personnel and
l4 customers, and coul-d damage Company equipment if not
15 properly accounted for in the planning process. The
L6 proposed addition to Schedule 12 provides the Company with
11 a process for handling these installations in a manner that
18 protects the safety of both Company personnel and
19 customers, enhancing the Company's ability to provide net
20 metering service in a safe and reliable manner.
21 O. Will the Company's proposed modifications to
22 Schedule 12 impact the requirements associated with QF
23 projects?
24 A. No. The intent of the Company's modifications
52
LARKIN, DI 32
Idaho Power Company
1 enhance the Company's ability to provi.de net meterj-ng
2 service in a safe and reliable manner. None of the
3 Company's proposed changes will impact the language
4 applicable to QF projects.
5 Q. Is the Company proposing any other tariff
6 modifications at this time?
7 A. Yes. The Company is proposing a number of
B miscellaneous modifications to implement the changes
9 described above. These changes include removing the term
10 "Sell-er" from Schedule 84 and replacing it with the term
11 "Customer, " changing the title of Schedul-e 84 to read
12 "Large Customer Net Metering Service, " adding geothermal to
1-3 the list of qualifying resources, and including other
L4 clarifying Ianguage and modifications that reflect the
15 primary changes discussed in my testimony.
16 O. When is the Company requesting a Commission
11 determj-nation regarcling its proposal in this filing?
18 A. The Company is requesting that the Commission
19 issue an order in regard to its proposal by JuIy !,201,3.
20 0. Has the Company filed tariffs reflecting the
2I Company's proposal?
22 A. Yes. However, the Company is requesting an
23 effective date for tire proposed tariffs of October l, 2013.
24 Because the requested ef fect-ive dat-e j.s ten months from the
25 dat.e of this filing and exceeds the t.ypical seven-month
LARKIN, DI 33
Idaho Power Company
53
1 procedural schedule for cases regarding tariff
modifj-cations, the Company has chosen to submit tariffs in
draft form as Exhibit Nos. 2 through 5 accompanying my
testimony. The Company anticipates that it wiII file final
tariff schedules with an effective date of October 1, 201,3,
in compli-ance with the Commissi-on's f inal order issued in
this case. As noted in the draft forms of Schedul-e 6,
Schedul-e 8, Schedule f 2, and Schedule 84, the Company is
proposj-ng that all changes become effective October 7,
201-3, wlth the exception of the proposed modifj-cation to
the billing of Excess Net Energy. As stated in the draft
tarj-ffs, the Company is requesting that this modification
become effective at the beginning of each customer's
14 January 2074 billing period.
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o.
A.
Does this conclude your testimony?
Yes.
LARKIN, DI 34
Idaho Power Company
54
1 Q. P1ease state your name.
2 A. My name is Matthew T. Larkin.
3 Q. Are you the same Matthew T. Larkin that
4 previously presented direct testimony?
5 A- Yes.
6 Q. Have you had the opportunity to review the
7 pre-filed direct testimony of the City of Boise's wj-tnesses
B Ms. Gassner, Mr. Woods, and Mr. GiIliam; the Idaho Clean
9 Energy Association, Inc.'s ('fCEA") witnesses Mr. Dunay,
10 Mr. Elgethun, and Ms. White; the Idaho Conservation
lL League's (*fCL") witness Mr. Beach,' Pioneer Power, LLC's
12 witness Ms. Cardwell,' and the Idaho Public Utilities
13 Commission ("Commission") Staff's ("Staff") witness Mr.
L4 Elam?
15 A. Yes, I have.
16 O. Vilhat is the scope of your rebuttal testimony?
1,7 A. My rebuttaL testimony will begin with a
1B discussion of Lechnical issues raised by each party related
19 to the various components of Idaho Power Company's ("Idaho
20 Power" or "Company") proposed rate design and the use of
2l the class cost-of-service study in developing these rates.
22 I will then discuss the parties' proposals related to the
23 treatment of excess net energy, and describe the Company's
24 proposed modifications to the kilowatt-hour (*kWh") credit
25 system detailed in its initial filing. My testimony wj.]I
LARKIN, REB 1
Idaho Power Company
55
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close with a description of proposed interconnection tariff
Ianguage resulting from settl-ement discussions between the
Company, Staff, and ICEA, and address the disputes raised
by the City of Boise's witness Mr. Gil1iam.
I. RJATE DESIGN AT{D COST-OF-SERVICE
Comnission Staff
a. Does Staff support the Company's proposed rate
design?
A.No. On page 4 Staff states five reasons why
it does not support the Company's rate design proposal:
(1) it singles out one smal1 group of customers withln
broader rate cl-asses with similar customers, (2) it
includes a Basic Load Capacity (*BLC") charge which is new
for Residential and SmaII GeneraL Service customers, (3) it
incents high usage standard service customers to install
smal1 generation facilities to qualify for more favorable
net metering rates, (4) it is based on a class cost-of-
service study that was never intended to be used for
changing base rates, and (5) the current overall- dollar
impact of net metering is small.
0.Do you beli-eve the Company's rate design
within aunfairly singles out a small group of customers
broader rate class?
A.No. As discussed in the rebuttal testimony of
indicates that different
56 LARKIN, REB 2
Idaho Power Company
25 Mr. Gregory W. Said, state law
1 rates may be justified by factors such as cost of service
2 and the nature and pattern of electrical use. As Mr. Said
3 discusses in detail, the Company believes that net metering
4 customers should be considered a separate and distinct rate
5 class from standard Residential and Sma11 General Service
6 customers, and should therefore be subject to different
7 rat.es.
B Q. Do you believe it is inappropriate for the
9 Commission to make a determination on the proposed BLC
10 charge because such a charge has never been implement,ed for
11 Residential or SmaII General Service customers?
L2 A. No. The BLC charge has been a billing
13 component for other rate classes for many years, and does
L4 not presenL a new concept to the Commission. Prior to the
15 implementation of Advanced Metering Infrastructure ("AMI"),
16 more costly demand meters would have been required for
L] Residential and Smal 1 General Service customers to
18 implement demand-related charges. With the implementation
19 of AMf complete, the Company now has the ability to
20 implement these charges at, minimal incremental cost. A1so,
27 as r will discuss later in my testimony, the Company has
22 provided the Commission with the fuI1 class cost-of-service
23 study that details the fixed costs proposed for recovery
24 through the new BLC charges. With the necessary
25 infrastructure in place and the proposed costs clearly
LARKTN, REB 3
Idaho Power Company
51
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delj-neated, the Company believes the Commi-ssion has been
presented with a1l necessary information to make an
informed decision regarding the proposed BLC charge.
0.Several parties in addition to the Staff
discuss the potential- for large energy users to take
advantage of the proposed lower energy charges for net
metering service through the installation of a minimal
generation resource. Please describe these concerns as you
9 understand them.
A.Under the proposed rates, costs associated
with the distribution system and customer services are
removed from volumetric energy rates and placed into the
Service Charge and BLC charge. Because the Company's
proposal is lntended to be revenue neutral, energy rates
are l-owered to reflect the shifting of costs to the new
proposed billing components. Because there is no minimum
system size associated with net metering servj-ce, several
parties have raised the concern that large energy users
could take advantage of the lower net meterlng energy rates
by install-ing a minimal renewabl-e generation system and
movj-ng to the proposed Schedul-e 6 or Schedule B
0.Did the Company identify this as potential
concern prior to filing?
a
Yes. However, the Company decided it was
ively monitor new instal-lations for such
LARKIN, REB
Idaho Power
4
Company
25 better to act
s8
L activity if the Company's proposed rates are approved
2 rather than propose a new restriction on the types of
3 systems allowed under net metering service. As many
4 parties have stated in this case, t.he Company is not
5 prohibited from making a filing if it feel-s its tariffs are
6 in need of adjustment. In the event that an unintended
7 transfer between rate schedules is identified, the Company
8 could file t.o address any necessary changes at that time.
9 The Company believes this ability, coupled with the
1O proposed cap of 5.8 megawatts, provides adequate protection
11 from the situation described by the parties.
12 ALso, while the Company acknowledges that its
13 proposal does not cllrl:entIy contain a minimum system size,
14 lowering b111s through the installation of distributed
15 generation and shif t,ing Lcl a rat.e schedule that more
L5 accurately reflects the cost, of service is not neeessarily
11 inappropriate.
lB O. f s the Company open t,o implementing tarif f
19 language that would address the parties' concern regarding
20 Iarge users?
21, A. Yes. In light of the parties' concern the
22 Company would not be opposed to the addition of new
23 language that woulcl require systems to be of a minimum size
24 in order to be eligible for Schedule 5 or Schedule B rates.
25 Net metering customers with generation units that do not
LARKIN, REB 5
Idaho Power Company
59
1 meet this threshold would be required to remain on Schedule
2 84.
3 Q. Does the Company beLieve the parties' concern
4 related to large energy users is reason to reject its
5 comprehensive pricing proposal?
6 A. No. As described above, the unintended
7 transfer between standard service rates and net metering
B service rates could be addressed through the addition of
9 language to Schedules 6 and B, and does not lndicate a
10 systemic flaw in the comprehensj-ve pricing proposal that
11 warrants rejection in its entirety.
12 0. Do you agree with Staff that the cl-ass cost-
13 of-service study utilized in this case is inappropriate for
1,4 use in developing rates specific to net meterlng customers?
15 A. No. For Residential and Small General net
16 metering customers, the Company is proposing to shift
11 recovery of fixed costs assocj-ated with the distribution
1B system and customer services from volumetric energy rates
19 to the proposed BLC and Service Charge. Because the
20 Company is not suggesting that net metering customers
21 currently impose more costs related to these components of
22 revenue requirement than standard service customers, the
23 corresponding fixed costs associated with net metering
24 service are appropriately reflected in the Residential and
25
LARKIN, REB 6
Idaho Power Company
60
SmaII General Service classes within the Company's most
2 recently reviewed class cost-of-service study
Further, as Mr. Elam states on page 18 of his
testimony, the Commission determined in Case No. IPC-E-11-
08 that the cl-ass cost.-of-service study reviewed in that
case was appropriate to set fixed cost rates for over
400,000 Residential and Small General Service customers
through the Company's Fixed Cost Adjustment (*FCA")
mechanism. While the Company acknowledges that the parties
did not explicitly state that this study was appropriate
for broad rate design applications, the Company believes
its current proposal pertains to the same portion of the
study that was deemed frt for use in developlng rates for
over 400,000 nesiclential and SmalL General Service
custorners. If the study was sufficient for such widespread
application, the Company believes it is sufficient to set
rates in this case utilizing the sarne approved fixed costs.
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o.Do you agree with the parties' contention that
the potential for inequity resulting from current net
metering customers is smal1, therefore no pricing changes
should be made at this time?
A.No. Several parties
because the Company's net metering
smalI, the issues identified by the
have suggested that
service is currently
Company should not be
addressed at this time. As Mr. Said discusses more fully
LARKIN, REB 1
Idaho Power Company
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in his rebuttal testimony, the Company believes that
current net metering provisions are not scalabl-e or
sustainable, and the delay of necessary changes would
likely create larger scale problems for all partS-es in the
future.
o.fn addition to the five reasons discussed
above, Staff states on page 13 of its testimony that it
does not support the Company's rate design proposal because
it is being addressed outside of a general rate case. Do
you agree that the Company's proposed changes should only
be considered within the context of a general rate case?
A.No. As stated above, the Commission
determined that the class cost-of-servj-ce study utilized by
the Company in this filing was appropriate for determining
fixed costs for all Residential and SmaLl Genera] Service
customers in the most recent general rate case. Because
the Company's proposed pricing changes are specific to
fixed costs at the distribution and customer Ievel, and
because these costs are not materially different between
standard service and net metering customers, a general rate
case would provide the Commission wlth no additional cost
information that would contribute to a more informed
decision regarding the proposed rate design.
Additionally, due to the breadth of issues addressed
in a general rate case, the Company believes the current
LARK]N, REB 8
Idaho Power Company
62
I case enhances the parties' and the Commission's ability to
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thoroughly examine the various aspects of the Company's net
metering service without the distraction of a broad gamut
of issues unrelated to net metering. To illustrate, since
the initial filing of Case No. IPC-E-L2-21 at the close of
November 2012, six parties have intervened aside from Staff
and the Company, hundreds of public comments have been
filed, and nine sets of testimony have been submitted not
counting the Company's initial filing or rebuttal. The
Company is concerned that the evaluation of its net
metering service within the context of a broad general rate
case will not realistically allow for a full vetting of all
related lssues despite staff's belief to the eontrary.
0.Mr. EIam stat,es on page 20, Line 4t that "the
proposal does not impact standard service customers, and
eonsequently cloes nothing to address the potential inequity
between net meterj ng customers and standard serviee
customers." Do you agree with this statement?
A.No. While Mr. Elam is correct in stating that
20 standard service rates will not change as a result of this
21, case, his contention that the Company's proposed rates do
22 nothing to address the potential- for inequity is incorrect.
23
24
0.
A.
P1ease explain.
As the Company discussed at the ApriL 25
l for inequity exj-sts under
LARKIN, REB
fdaho Power
9
Company
25 public workshop, the potentia
63
the current net metering rate structure as it allows net
metering customers to avoid certain fixed costs through the
offset of biIled energy at the fuLl retail rate, resulting
in the eventual shifting of these costs to standard service
customers. The Company's proposed pricing structure limits
the ability of net metering customers to offset
distribution-related and customer-related flxed costs, thus
reducing the leve1 of potential cost shifting to standard
service customers.
Mr. Elam's logic incorrectly assumes that because
standard service rates are not impacted immediately, the
Company's pricing proposal does nothing to address the
potential for inequity. This logic fails to recognize that
by eliminating the ability of net metering customers to
avoid certain costs, those costs will not be shlfted to
standard service customers in the future. The Company's
proposal addresses the potential impact of net metering
service on standard service customers before it becomes
large enough to impact rates. If the Commission chooses to
adopt the Company's proposal in the current proceeding, the
potential for cost shifting to standard service customers
will be addressed immediately, negating the need to correct
rates in the future. The .l-ack of an immediate impact to
standard service rates does not suggest that the inequity
is not addressed, it simply means the inequity is not
LARKIN, REB 10
Idaho Power Company
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I currently of a magnitude that impacts standard service
2 rates.
3 Idaho CJ'ean Energry Association
4 Q. On page 9, line 20, of Ms. White's testi.mony
5 she states, "The inequity claimed by the Company is driven
6 by a few customers with excess generation; there is no need
1 for a new rate structure for net meterj-nq." Do you have
B any concerns with Ms. White's statement, or the analysis
9 she performed to arrive at thj-s conclusion?
10 A. Yes. I believe Ms. White mischaracterizes
11 data provided by the Company to speculate that this filing
72 is motivatecl by payments to customers who generate excess
13 net enerqy. Thj.s data is presenred by Ms. White in Exhibit
14 Nos. 701 and 703.
15 a. Please describe Ms. White's Exhibit No. 701.
16 A. Ms. White's Exhi.biE No. ?01. contains an
77 analysis provided by the Company in response to Staff's
18 RequesL No. 9. In this analysis, the Company utiLized
19 actua] billing data from 201.2 to estimate the overall bill
20 impacts to each current net. metering customer if all
27 proposed changes had been implemented throughout 2012,
22 According to Exhibit No. 101, if applied throughout the
23 20L2 calendar year, the Company's proposed changes wouLd
24 have resulted in an aggregate bill increase to net metering
25 customers of approximately $74,000. Ms. White identifies
LARKIN, REB 11
Idaho Power Company
65
1 this figure as the inequity the Company's filing is
2 intended to address.l
3 Q. Please describe Ms. White's Exhibit No. 703.
4 A. Utilizing the data presented in Exhibit No.
5 701, Exhibit No. 703 presents two charts that Ms. White
6 characterizes as representing "the degree to which the
7 issues raised by the Company were rel-ated to (1) customers
8 who use net metering only to offset their power biIls,
9 reLative to (2) issues raised by the Company related to
1O excess generation."2
11 0. What conclusions does Ms. White draw from the
12 information presented in Exhibit Nos. 701 and 703?
13 A. On page 12, lines 4 through 6, Ms. White
1,4 states, in bold, "The facts are, regardless of whether one
15 agrees or disagrees with the Company's concerns, those
L6 concerns are driven by the treatment of annual excess
11 generation." Wh11e not explicltly stated, I believe Ms.
1B White arrlved at this conclusion by comparing the
L9 approximate $6,000 she attributes to customers who only use
20 the system to offset usage to the remainder of the $74,000
21" she identifies as the total potential for lnequity. Based
22 on my reading of Ms. White's testimony, because the dollar
1 Case No. IPC-E-12-21,
10, I1. 9-19.
Direct Testimony of Ms, Courtney R. White, p.
2 Case No. IPC-E-72-21, Direct Testimony of
11, 11. 16-18.
66
Ms. Courtney R. White, p.
LARKIN, REB 12
Idaho Power Company
1 amount she attributes to customers with excess net energy
2 is larger than that attributed to other net metering
3 customers, she believes the Company's concerns are driven
4 by customers responsible for the larger dollar figure.
5 Q. Do you bel ieve Ms . tllhite' s conclusions
6 accurately reflect the Company's concerns?
7 A. No. Ms. White first mischaracterizes the root
8 cause of the potential for inequity, citing excess net
9 energy rather than the pricing issues discussed in my
10 direct testimony. Then, based on this mischaracterization,
1"1 Ms. White inaccurately identifies the $74,000 figure as
12 being representative of the inequity the Company's filing
13 is intended to correct.
14 a. Please explain.
15 A. As stated in my direct testimony, the
16 potentiaL for lnequity is due to the application of
I7 stanclard retaj I rates to each kwh produced by a net
18 meterj.ng system, which is nol- direct-Iy related to the
19 amount of excess net energy a customer may produce. While
20 the treatment of excess net energy can exacerbate this
2L problem by allowing customers to receive additional
22 compensation at the full retaif rate if they generate more
23 than they consume, prj-cing is the root cause.
24 Ms. White's failure to recognize the root cause of
25 this inequity results in an incorrecE characterization of
LARKIN, REB 13
Idaho Power Company
67
L the dol1ar figures presented in Exhibit No. 101, as these
2 figures reflect not only the proposed pricing changes
3 intended to correct the potential- for inequity, but also
4 the replacement of financi-al excess net energy credits with
5 klrlh credits, the December expiration of unused kWh credits,
6 and the application of weather-normalized rates to actuaf
7 billing data from a single year. Because the potential for
8 inequity is driven by pricing, and because the values
9 contained in Exhibit No. 701 do not effectively isolate the
10 impact of the Company's pri-cing proposal, I do not beLieve
11 the $74,000 figure represents the potential for inequity as
12 Ms. White contends.
13 Even if Ms. white had correctly quantifled the
14 potential inequity, however, the resulting dollar figure
15 woul-d provide litt1e insight into the motivation behind the
16 Company's proposal. Attached as Exhiblt No. 6 is a slide
1,7 from the Company's presentation given at the public
18 workshop on April 25. This slide discusses the rationale
19 for the Company's pricing proposal as follows, "the company
20 does not be.l-ieve the current o350 net metering customers
2L are impacting rates. The company's proposal is intended to
22 put in place pricing that can facil-itate widespread
23 expansion." More specificalJ-y, the Company acknowledges
24 that pricing issues associated with net metering service
25 are not materially impacting standard service customers
LARKIN, REB 14
Idaho Power Company
6B
based on current participation. As stated in the Company's
initial filing and the above-referenced presentation, the
Company's pricing proposal j-s designed to accommodate the
growth of net metering service and address the shifting of
costs from net metering customers to standard service
customers before it grows to the point at which corrections
or rate inequities i-mpact larger numbers of customers. The
Company maintains that its primary objectives, ES stated in
its initial filing, are intended to accommodate growth, and
cannot be evafuated according to the aggregate impact of
the proposed filing on current net metering customers.
City of Boise
a.In regard t6 the proposed charges conLained in
ScheduLes 6 and B, Mr. Gilliam states, "fn addltion to not
knowing which costs (by F-ERC account or othert^rise) are
being proposed for recovery by these new charges, no
analyses have been provicied to support the assignment of
these costs to new coLlection parameters."3 Do you agree
with this statement ?
A. No. I believe the Company has clearly
delineated which costs are proposed to be recovered through
the charges listed in Schedules 6 and B.
0. Please explain
3 case No
11. 1-3.
IPC-E-12-2-1 , Direct'IesIimony of Mr. Rick Gilliam, p. 24,
LARKIN, REB 15
Idaho Power Company
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A.In my direct testimony I described the use of
the Company's most recently reviewed class cost-of-servlce
study from Case No. IPC-E-11-08 as the basis for the
proposed rates in Schedules 6 and 8. This study is
publicly availabl-e on the Commission's website and was
reviewed by a number of parties in Case No. IPC-E-11-08.
More importantly, in response to Staff's Request No. \, the
Company provided to aII parties the ful-I class cost-of-
service model in e]ectronic Excel format, with links and
formul-as intactr ds well as an additional working
spreadsheet detaj-l-ing how the study results were used to
calcuJ-ate the proposed rates in Schedul-es 6 and 8. This
response also included a written description of the
functions served by each Excel file in the cost allocation
and rate design process. These models listed each and
every component of the Company's Idaho revenue requirement
by Federa.L Energy Regulatory Commission ('FERC") account,
and stepped through the class allocation and rate design
process in its entirety. I have again provided the class
cost-of-service study from Case No. IPC-E-11-08 as Exhibit
No. 7 to my rebuttal testimony, with al-I workpapers
provided j-n response to Staff Request No. 1.
II. EXCESS NET ENERGY
O. Have you read the parties' proposals in regard
to the treatment of excess net energy?
LARKIN, REB 16
Idaho Power Company
10
A. Yes.
O. Please summarize these proposals as you
understand them.
Pioneer Power LLC: Ms. Cardwell disagrees
with the Company's proposal to expire unused kv'lh credits at
the end of December, citing t-he impact it would have on
irrigation customers who consume relatively less energy
beyond the month of September. Under such a scenario, Ms.
Cardwell contends, irrigation customers with accrued
credits in September and beyond would be very limited in
their ability to offset future bills prior to expiration.
Ms. Cardwell also describes an al-ternative approach in
which excess energy creclits would be earried forward
indefinitely. When a customer moves or sells the
generation facility, the cusLomer would have the ability to
enter into a one-time contract to seII excess credits to
Idaho Power at the then-prevailing avoided cost rate.
Citv of Boise: Mr. Gillianr proposes to carry
forward energy credits for net excess generation in lieu of
financial payments, with an annual- true-up date of March
31 - At the annual true-up date, customers would be
financially compensated for net. excess generation at an
avoided cost rate. Mr. GiIliam al-so proposes the
continuous rolfover of excess generation credits at the
customer' s discretion.
LARKIN, REB 11
Idaho Power Company
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ICEA: Mr. Elgethun proposes that a financial value
be applied to excess net energy on a monthl-y basis
according to the highest rate tier for the month in which
the excess energy is generated. Mr. Elgethun al-so believes
the financial credit should include all rate specifi-c
adjustments applied in each month. Mr. Elgethun proposes
an indefinite carryover of financial credits, or a minimum
of three years shouLd the Commission determine that a time
Iimit is appropriate. If such a limit is established, Mr.
Elgethun believes that unused excess generation credits
should be sold to Idaho Power at the current avoided cost
rate. Mr. Elgethun also believes customers shoul-d be able
to sell their power to the Company at any time at the
current avoided cost rate.
Commission Staff: Mr. EIam believes the Company
should continue crediting customers on a financial basis
utilizing the fuI1 retail rate. He believes financial-
credits should carry forward lndefinitely, but Idaho Power
should never reconclle the excess net energy balance with
financial payments. Staff also bel-ieves there are
reasonable approaches to establishing a Iimited timeframe
over which credits can accumulate, but does not detail- a
specific proposal.
0. Please provide your thoughts on the proposed
indefinite carryover of credits.
LARKIN, REB 18
fdaho Power Company
12
1 A. As Mr. Said describes more fully in his
2 rebuttal testimony, the i.ntent of net metering service is
3 to allow customers the abj.lity to offset alL or a portion
4 of their usage through self-owned generation. The
5 indefinite carryover of credits, however, does not align
6 with this intent. As Staff wit,ness Mr. Elam acknowledges
7 on page 28, line 19, of his testimony:
8 Because the purpose of net metering is9 to allow customers to offset their
10 usage, neL metering cust,omers should11 theoretically not. accrue substantiaL72 credits over the long term. Customers13 who do accumulate substantial credits14 should arguably not be on the netL5 metering tariff but should instead be16 on Schedule 86
l118 The Company agrees with this statement and believes
19 the current net metering tariff lacks any provision that
20 preserves the intent of this service as an avenue t,o offset
21 consunrption. The Company believes that any proposal that
22 al-lows substantial generation to accrue in excess of
23 consumption misaligns the provisions of net metering
24 service with its intent, and is therefore inappropriate.
25 O. Has Idaho Power reconsidered its proposed
26 December cutoff date for unused excess net energy credits?
21 A. Yes. While the Company's initial proposal was
28 modeled after currentJ-y-approved billing practices applied
29 within the state of Idaho, it believes the concerns voiced
30 by customers anci intervening parties warrant a modification
LARKTN, REB 19
Idaho Power Company
13
1 to address this issue. Rather than a December expiration
2 of credits, the Company proposes to allow customers to
3 self-select their annual anniversary date for credit
4 expiration to coincide with the monthly billing cycle of
5 their choice. This would allow customers to choose an
5 annual accumulation cycle that would provide for maximum
7 util-ization of excess net energy credits, while preserving
B the intent of net metering service as an avenue to offset
9 consumption. The Company has discussed this revised
10 proposal with its Customer Service department and bel-ieves
11 its new billing system will be able to adequately bill in
12 this manner.
13 O. Does Idaho Power support the proposal to
74 convert excess net energy credits to payments at avoided
15 cost rates?
16 A. No. The Company does not believe it is
71 appropriate to pay customers at avoided cost rates for
18 excess net energy for two primary reasons. First, the
L9 Company believes that legalIy it cannot financially
20 compensate net metering customers without subjecting both
2t parties to federal regulation. These legaI concerns are
22 addressed in more detail in Mr. Said's rebuttal testimony.
23 Second, the ability to exchange excess generation for
24 payments at avoided cost rates misaligns compensation under
25 net metering service with its intent, blurring the line
LARKIN, REB 20
Idaho Power Company
14
between retail customers who wish to offset usage and
wholesale seflers seeking compensation at avoided cost
rates. Owners of smalI renewable generation can gain
access to avoided cost rates, but net metering is not the
appropriate avenue. Allowing customers to access avoided
cost rates through net metering would circumvent the
Commission's established regulations for wholesal-e
projects, and allow customers to take advanLage of rates
that were not intended for application to net metering
10 service.
11 o.Does the proposal
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to maintain a financial
Company's concerns in regard
customers are able to
I Iow
reduce
lowing them
utilize.
A No. In effect, flnancial credits a
16 customers who generate more than they consume to
zerol, thus al
services they
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t.heir biLIs to zera (or Iess t-han
t-o avoid paying for equi.pment and
19 Alternatively, a klrlh credit system only allows net metering
20 customers to offset the portion of their bi11s associated
2L with per-kWh energy charges.
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Even if the Commission approves the Company's
proposed pricing, under a financial crediting system
customers woufd still be able to offset the proposed
Service Charge and BLC charge that are designed to ensure
LARKIN, REB 27
Idaho Power Company15
1 that net metering customers pay a share of the costs
2 associated with equi-pment and services they utilize.
3 Further, the Company's Energy Efficiency Rider, which is
4 utilized to fund energy efficiency programs, and franchise
5 fees, which are fees imposed by various municipalities, are
6 both col-Iected as a percentage of base revenue.
7 Consequently, customers who reduce their base charges to
B zero through financial- credits can avoid contributing to
9 energy efficiency programs and municipal fees, in addition
10 to avoiding the costs of distribution infrastructure and
11 customer services. For these reasons, the Company believes
12 that a kWh credit system shouLd be implemented to ensure
13 that customers are only able to offset the portion of their
1,4 bilIs associated with per-kV'lh energy charges.
15 O. PLease summarize the Company's revised
16 proposal in tight of the counter proposals made by the
17 intervening parties and comments from the public.
18 A. The Company proposes to revise the excess net
1,9 energy credit system described in its initial application
20 to allow customers to self-select the annual expiration
2l date of unused kV{h credits. However, for reasons stated
22 above, the Company maintains that a kWh credit system
23 shou1d be implemented in lieu of the existing financial
24 credit system, and that only per-kWh energy charges shoul-d
25 be eligible for offset.
LARKIN, REB 22
Idaho Power Company
16
1
2
III. INTERCONITECTION
0.What was the intent of the Company's proposed
3 modifications to the interconnection components of its net,
4 metering tariff schedules?
A.As stated on pages 29 and 30 of my direct
5 testimony, the proposed administrative tariff changes were
7 intended to, "improve clarity, customer understanding, and
B the Company's ability to provide net metering service in an
9 efficient, safe, and reliabLe manner."
0.Did any parties voice concern over the10
11. Company's proposed interconnection modifieations prior to
12 the filing of direct testimony on May 10, 2Ol3?
13 A.Yes. At. the public workstrop on April 25, a
74 member of the ICEA voiced concerns regarding the Company's
15 proposed modifications. It is my recollection that his
16 concerns were related to i.ncreased complexity and
17 administrative burdens for installers and customers, among
18 other issues.
19 a.Were these issues discussed among parties
20 following the public workshop?
27 A.Yes. On Monday, April 29, 2013, a settlement
22 conference was held among all parties to this case.
23 Although a comprehensive settlement was not reached, the
24 parties agreed to discuss interconnection concerns at a
25 separate conference in order to work toward agreement on
LARK]N, REB 23
Idaho Power Company
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these issues prior to the May 10 deadline for Staff and
intervener testimony.
o.
conference?
Who chose to participate in this informa.l-
A.Representatives from Staff,ICEA, and Idaho
Power participated in this discussion.
O. What was the outcome of this discussion?
A.As stated on page 11 of Mr. Elgethun's
testimony, parties were able to reach a number of
resolutions on the technical details of interconnection and
the proposed language for Schedule 72, as outlined in
Exhibit No. B. Idaho Power concurs with ICEA's
recommendation t.hat the Commission approve the proposed
modified interconnection provisions negotiated with input
from ICEA as detailed in this exhibit.
0.
A.
Please describe Exhibit No. 8.
Exhibit No. B contains a document distributed
to Staff and ICEA on May B, 2013, detailing the outcome of
the settlement conference regarding the Company's proposed
interconnection provisions. This document describes the
issues addressed by participating parties at this
conference, and details specific resolutions that were
reached for many of these issues. For some issues,
resol-utions were reached in principle while the specific
details were not finalized by the testimony deadline, while
LARKIN, REB 24
Idaho Power Company
1B
for other issues it was det,ermined that no further
modifications are necessary. To provide the Commission
with the complete context of the proposed resolutions, the
Company has provided the document distributed between
parties in its entirety. Should the Commission choose to
approve the Company's proposed interconnection language and
incorporate the resoLut.ions presented in Exhibit No. B as
the Company and ICEA suggest, the Company will work with
interested parti-es Lo finalize the details of these
resolutions and file conforming tariff language.
0.Did any parties raise j-nterconnectj-on issues
in testimony f i.Ied May 10?
A.Yes. SurprisingJ-y, Mr. Gilliam ralsed a
number of concerns with the Cornpany's proposed
interconnection issues, and recomrnends that the Commisslon
rejecE the Company's proposal and open a new docket to
further discuss the int,erconnect-j-on process.
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Why is this surprising?
The City of Boj-se and Mr. cilliam participated
in both the public workshop on April 25 and the settlement
conference on ApriI 29. They did not, however, choose to
participate in the discussion specifically intended Lo
address parties' concerns with the proposed interconnection
language. It is surprising that ICEA, Idaho Power, and
Staff, were able to come to agreement on these issues,
LARKIN, REB 25
Idaho Power Company
19
1 whil-e the City of Boise opted to recommend comprehensive
rejection of this component of the Company's filing through
3 written testimony.
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0.What is Mr. Gil-liam's concern regarding the
feasibility study required of net metering installations?
A.Mr. Gilliam's concern references page 12,
paragraph 2, of the proposed Schedule 72, which describes
the applicability of FERC-approved Large Generator
Interconnection Procedures and SmalI Generator
Interconnection Procedures. In this di.scussion of
12, Mr. Gilliam addresses the lack of a fast track
screenj-ng process, statJ-ng, t'Schedule 12 has
screening process and subjects all interconnecting
no matter how small-, to a feasibility study, genera
15 costing thousands of dollars."a
Schedule
no
systems,
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A.
A.
Do you share Mr. Gi}liam' s concern?
No. The paragraph referenced by Mr. GiIliam
has no applicability to net metering systems
Please explain.
As stated above, one of the objectives of the
Company's proposed interconnectlon modifications was to
improve clarity and understanding. As the Company was
revi-sing Schedule f2, one of the concerns that was
identified was confusion regarding which portions of
a Case No. IPC-E-12-2'7, Direct Testi.mony of Mr. Rick GiLl-iam, p. 29,11. 8-10.
BO LARKIN, REB 26
Idaho Power Company
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Schedule 72 were applicable to net metering systems and
which port.ions were not. Within the currently-approved
Schedule 72, requirements of net metering systems are
interspersed throughout the entire 29-page t.ariff, and are
comingled with requirements that are only applicable to
non-net metering systems. To enhance clarity and simplify
the tariff for customers, Staff, installers, and Company
personnel, the Company's proposed Schedule 72 was divided
into three sections: (1) General fnterconnection
Requirements; (2) Interconnection of Net Metering
Generat.ion Facilities; and (3) Interconnection of
Metering Generation Faciliti.es. Through this
reorganization, all requirements applicable to net
Non-Net
metering
the
loeated
on page 12 of the proposed tariff, within Section 3,
Interconnection of Non-Net. Metering Generation Facilities
This section is outside the realm of provisions governing
L9 net metering and the scope of this case.
systems were consolidated to the first ten pages of
tariff. The paragraph referenced by Mr. Gilliam is
0. Are net metering customers subject to "a
feasibility analysis, generally costing thousands of
22 doLlars"?5
23 A. No. Mr. Gilliam is correct in stating that
24 all net metering customers are subject to a Net Metering
5 case No
29, r1. 9-10.
IPC-E-12-27, Di.rect Testi"mony of Mr. Rick GilIiam, p.
LARKTN, REB 2'l
Idaho Power Company
81
1 Feasibility Review, which must be performed "to ensure that
2 the Company's system is sufficj-ently equipped to
3 incorporate proposed Net Metering Systems in a manner that
4 conforms with good utility practices and the National
5 Electric Safety Code."6 This review, however, does not
6 generally cost thousands of do1Lars, and is separate and
7 distinct from the requirements of non-net metering systems.
B Although i-t is unclear if Mr. Gilliam believes that net
9 metering customers may potentially be charged thousands of
10 dollars for a feasibility review, customers are currently
11 charged a flat fee of $100 for the net metering application
12 process, which includes the Net Metering Feasibility
13 Review.
!4 O. Does Mr. Gilliam raise a number of concerns
15 that were addressed by ICEA, Staff, and fdaho Power in the
16 agreement outlined in Exhibit No. B?
11 A. Yes. Mr. Gi1l1am expresses concern regarding
LB time requirements for various components of the application
19 process, the requirement for visual conductor separation,
20 circumstances in which a customer may be disconnected, and
2l the $100 fee for system modifications. AII of these issues
22 were discussed between ICEA, Staff, and Idaho Power, and
23 were resolved to the participating parties' satisfaction,
24 resultj-ng in the agreement provided in Exhibit No. 8.
6 Case No. IPC-E-L2-21, Larkin Exhibit 4,
B2
p. 12-2.
LARKIN, REB 28
fdaho Power Company
1 Q. Does the Company believe the Commission should
2 reject the Company's proposed changes to Schedule 72 based
3 on Mr. GiIIiam's recommendation?
4 A. No. Idaho Power believes Mr. Gilliam's
5 concerns were either not applicable or addressed through
6 productive discussions with Staff and ICEA, resulting in an
7 agreement that is satisfactory to parties representing the
8 Company, the public, and comrnercial irrstallers of net
9 metering systems. Mr. GilIiam's and the City of Boise's
10 decision to not participate in these discussions shoul-d not
11 be cause to reject this agreement.
L2 0. Do you believe the Commission should open a
13 new docket to address issues associated with
14 interconnection?
L5 A. No. The Company believes its discussions with
16 ICEA and Staff were noticed to the parties and productive
11 in forming a mutually agreeable sol-ution to identified
1B areas of concern associated with interconnect.ion. While
19 the parties to this case may disagree in principle
20 regarding a number of other issues surrounding net metering
21 service, the Company believes that issues associated with
22 interconnection are best acidressed through informal
23 discussions and cofLaboration. The Company believes that
24 aII parties share the common goal of implementing an
25 interconnection process that is streamlined, customer-
LARKIN, REB 29
Idaho Power Company
83
friendly, and efficient for all parties involved, in a
manner that does not compromise safety or reliability.
Given these shared goals, the Company believes informal
collaboration is the proper arena in which to address these
issues. The Company is always open to discussion with ICEA
and other interested parties if concerns arise surrounding
its interconnection procedures.
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O. Does this conclude your rebuttal testimony?
A. Yes, it does.
LARKIN, REB 30
Idaho Power Company
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HEDRTCK COURTP. O. BOX 578,
REPORTING
BOISE, ID
LARKIN (X)
Idaho Power
(The fol-l-owing proceedings were had in
open hearing. )
(Idaho Power Company Exhj-bit Nos. 1-8,
havi-ng been premarked for identification, were admitted into
evidence. )
MS. NORDSTROM: Thank you.
COMMISSIONER SMITH: Mr. Hammond.
CROSS-EXAMINATION
BY MR. HAMMOND:
O. Okay. I guess the first question f have is do
you think that solar energy has a place in fdaho Power
Company's portfolio, its current generatj-on portfol-io or
portfolio for providing service to customers?
A. I think any questions about Idaho Powerrs greater
resource portfol-i-o shoul-d be addressed to Mr. Said. He can
speak to the Company's policy.
O. Idaho Powerr ds I think everybody is aware here,
has maybe the current l-owest retail rates in the country or
close thereto. Why do you think that people here are
j-nstalling solar on their homes and businesses in a net
metering capacity?
A. f donrt reaI1y want to speculate as to why
customers are instal-l-j-ng net metering systems on our system. I
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HEDRICK COURT REPORTING
P. O. BOX 5'7I , BOTSE, f D
LARKTN (x)
fdaho Power
don't want to put words in customers' mouths.
O. Certainly. But you are the witness here today
that's testifying about the program and how those folks come
online under this tariff. Do you have an opinion yourself,
working for the Company, from your side of the
A. WeJ-I, I think based off of what Irve seen in
customer comments filed within this case, I think there have
been two reasons: One has been environmental concerns
associated with installing renewable generatJ-on,' and another
has frequent theme that has come up is the ability to to
break even on the i-nvestment, so I guess a financial-
consideration as weII.
O. Do you think that people that are instal-l-ing net
metering generation want to have control over their ability to
generate their ability to maintain or provide for their own
power needs rather than relying on the Company for every
kilowatt hour I guess?
A. I think that customers want options to
interconnect renewable generation to the system, and I believe
the Company provides that.
O. In general, the Company has proposed a number of
changes to obviously to its net metering service in this
case. Do you understand maybe what impacts those things could
have on net metering generation of those customers? Do you
understand whether that could lmpair or encourage net metering
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HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
LARKIN (X)
Idaho Power
generation in the state of Idaho?
A. WeII, I think the various components of the
proposal affect different customers differently, and so I can't
realIy make a general statement as to what the impacts of those
changes woul-d be.
O. So in your opinion, you're not certain whether
the increased customer charge could impact any particular
customer in a net metering schedule currently?
A. Wel-l-, sure. I mean, the increased customer
charge w1l-l- impact customers. As to provide a characterization
of how that wil-l- impact different customers, I can't make a
general statement to a1l- net metering customers.
O. How about the new demand charge, the BLC charge:
Woul-d it be fair to say that that will have an impact on
customers as wel-l-?
A. Sure.
0. The reduced energy charge as wel-l-?
A. Yes.
O. As far as the overal-l Application and I
bel-ieve fdaho Power answered in its Discovery Response, f
think -- I believe it's number nine in response to Staff's
questioning, laid out what the impacts of those these
proposed charges, new charges on its list of current l-ist of
net meteri-ng customers woul-d be versus the current rates. Are
you familiar with that Response?
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HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
LARKIN (X)
Idaho Power
A.
o.
A.
O.
Yes.
Did you prepare that Response?
r did.
In that Response, can you give me an idea a
general idea of how many customers wou1d see an increase j-n
their rates thej-r overall rates and charges for net metering
service versus the current status of rates?
We1I, f think I need to make a cl-arification
between or of what that or, that Data Request Response
showed. The dollar impacts listed in that Discovery Request
reflected the entirety of the Company's proposed changes. So
you use the term "rates" quite frequently, and rates are not
the only impacts that are refl-ected in those those doll-ar
changes. So itrs realIy the enti-rety of the Company's filing,
the treatment of excess net generation, the Company's initial-
proposal of the January through December accrual period with a
December cutof f . And so al-l- of those pieces went into those
dollar amounts that you have described.
But on that Response, there j-s a difference
between what the customers would be -- what their bil-l-s wou.l-d
be under the current propose the current rates versus the
proposed rates. So, are customersr rates are the majority
of customers' rates under the proposed rates the BLC charge,
the increased customer charge, and the reduced energy charge;
l-et's just think about those three things are the majority
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HEDRICK COURT REPORTTNG
P. O. BOX 578, BOTSE, rD
LARKTN (X)
Idaho Power
of customers on the net metering tariff going to experience an
increase in their bil-l-s or a decrease in their bil1s?
A. Well-, Lf you're talking about rates specificalJ-y,
the pricing structure, you can't gather that information from
that Data Request Response becauser ds I said, it doesn't
isolate the rate changes specifically.
O. My understanding though, from that Discovery
Response, was that it was an estj-mate or an approxi-mation of
what the customers' bi1ls would be under the proposed new rates
that Idaho Power was writing 1ts Application. So from that
Discovery Response, can't you determine based on your own
calculations that there will be an increase or a decrease in a
customer's bill, comparing it from the current rates to
proposed rates?
the wording.
Sure. And I think we're just getting hung up on
So, you can determine the difference in bi1ls,
but to attribute I think where I'm getting hung up is you
can't attribute that to the rate change 100 percent. That's
part of it, but that Request reaIIy reflects the change in
overall bil-ls.
O.f be1ieve in your test j-mony -- I think it's at
page L4 of your direct testimony -- you state that the primary
objective for pricing proposals, which would be the increased
demand charge, the BLC charge or basic l-oad capacity charge,
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HEDRICK COURT
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REPORTTNG
BOISE, ID
LARKIN (X)
Idaho Power
and the reduction or the modification of that volumetric
charge, is to facil-itate further growth while limiting
potential negatJ-ve impact.
Can you explain to me how the pricing proposals,
those in particular, those three, will facil-itate further
growth in this case?
A. Sure. I think in the Company's opinion, that the
new rates are scalab]e and sustai-nab]e. And under the current
proposal, the Company doesn't bel-ieve that the current rates
are sca]ab1e and so it doesn't f eel- that rates that are
scalable do promote growth or can sustain growth.
O. Is that from the Company's perspective?
A. Yes.
O. Can you explain to me what "scalable" is?
A. I think in this context, we're talking about
rates that can be applied to a broader group of customers
without running into, in this specific case, the inequity in
cost shifting concerns that the Company has identified.
O. So in this case, then I guess what I'm hearJ-ng is
it's not necessarily the Company is concerned about facil- j-tate
growth, but this is more these pricing proposals are more to
address what the Company percej-ves as the negative impacts of
the current rate structure are. That's fair to say?
A. No, I don't think so. I think, as I said before,
the Company doesn't feel that rates that are not scalable
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HEDRICK COURT
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REPORT]NG
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LARKIN (X)
Idaho Power
facilj-tate growth, and so it feels that
scal-abl-e and they facil-itate growth.
O. And that is in the Company
its new rates are
's position. Correct?
Yes.
O. Has that position been substantj-ated by any of
the customer groups or any of the testimony that you've seen in
this case?
A. No.
O. In your view, the proceeding is sort of about
in part is about the potential inequity due to the ability of
this cIass, I think is what Idaho Power calls it cl-ass or
subset of net metering residential and smal-l- general service
customers, and maybe their ability to reduce consumption of the
grid supply electricity, and that they I think that fdaho
Power is saying that they therefore avoid paying for certain
specific costs. Is that correct?
A. Yes, there is a potential to avoid paying for
O. In your and f be]ieve, is this correct, is
Idaho Power does use a historic test year in its rate cases.
fs that correct?
A.No, recently it's been more of a forecast test
year.
O. In your rate cases, does fdaho Power make any
pro forma adjustments to refl-ect for future conditions?
A. Within the let me preface this by saying f'm
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not the Company's witness or expert in test year development
within a rate case, but it's my understanding that the
adjustments are made to refl-ect known and measurabl-e changes
within the test period, so to that extent, yes.
O. In general, after new rates go into effect, is
consumption by each customer identical to what that test year
was or the forecast you used was?
A.No.
Do actuafs reflect the forecast test year? No,
unless the forecast is perfect, which
O. So some customers may use more or less when
compared to that historic test year. Is that correct?
A. Yes.
O. In aggregate, if customers were to use less than
that forecast, the Company would essentially fall- short of its
current costs of service or its current need to recover its
cost. Is that correct?
A. In some areas, yes.
O. Can you define I bel-ieve in on page 18 of your
testimony, you used the term "unduly reduce. " Can you define
that in the context of your testimony, what that term means?
A. Sure. Unduly reduce is, within the context of
the testimony, is in reference to the ability of net metering
customers to avoid paying for costs that they impose associated
with the distribution system and with customer-related costs.
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Idaho Power
O.
analysi-s the
reduce is in
A.
conceptual.
O.
I guess is there some sort of quantifJ-cation or
Company has undergone to determi-ne what unduly
the context of this case?
I think the defini-tion of that term is
I'm not qulte sure I fol-l-ow your question.
In your opinion, could sol-ar energy from
distributed resources provide equal or more val-ue to ratepayers
than the current kilowatt hour or the vol-umetric base portion
of a retail rate?
Could you repeat that?
Certainly. Could sol-ar energy from di-stributed
generation sources l-ike those in this case net metering
customers, for example, a residential- customer that provides
kil-owatt hours back to Idaho Power, places it back onto the
distrj-bution system, travels to whatever customer coul-d that
generation source provide equal or more value to ratepayers or
fdaho Power's customers and the Company itsel-f than the current
kilowatt hour based volumetric charge that's placed in retail-
rates currently for residential customers?
A.We11, I guess, first of a1l, I'd l-ike to start
out by pointing out that net metering is not specific to solar.
It encompasses a number of different generation resources.
fn regard to your question of whether or not
and Irm restating your question to make sure f'm answering it
correctly. If you're asking if the value that a sol-ar system
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coul-d provide coul-d be greater than the retail- rate
Was that your question?
a. Yes.
A. Wel-I, in this case, the Company's position is
that it feel-s that the intent of net meteri-ng is to offset
usage through the offset of rates. It did not attempt to value
the generation from either a solar instal-lation or any other
type of eligible resource under its net metering servj-ce. The
Company feel-s that the Commission has already establ-ished a
methodol-ogy to val-ue that generati-on to provide compensation to
customers whose intent is to selI to the Company rather than to
offset their usage. And so rea11y the Company did not attempt
to value the generation associated with a net metering
instal-l-ation in this case.
O. So let me just restate that, telI me if I'm
correct. So the Company rea1ly hasn't investigated whether
there is any value for any net meteri-ng facility, whether that
be sofar, biomass, wind; the Company hasn't investj-gated what
value that energy that's being provj-ded to the Company and its
customers is?
A. The Company hasn't attempted to quantify that
value because it feel-s the Commission al-ready has a methodology
in place to do that.
0. In this case though, I bel-ieve the Company is
stating that this is a sma11 subset and unique cl-ass of
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HEDRICK COURT REPORTING
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customers. If that is the case, why hasn't the Company
developed some sort of analysis to identify what the cost of
service is for this unique subset of customers and what value
they may provide? If they are so different from the rest of
the residential- cl-ass, why 1s the current cost of service
methodology appropriate then for that analysis?
A. Well-r ds I said before, the intent of net
metering is to offset usage, whJ-ch is typically done at the
retail rate. The Company's proposal in this case is not to
change cost al-location. The Company's proposal is to take its
cost of service methodol-ogy that is approved, the methodology
that's been approved, and to take the revenue requi-rement that
is currently in place for residential- and to change the way
that that currently-approved revenue requirement is collected
from net metering customers. So, the valuation piece, if a
customer wants to interconnect and recej-ve compensation at a
value-based rate, the Company bel-ieves there are options to do
that, it's just not net metering. So within the context of net
metering, the compensation that a net metering customer, that a
small- renewabl-e generation owner gets, is the offset that is
embedded in retaii- rates.
O. The cost of service study that has been put forth
in this case or at l-east the cost of service model that you
provided, I assume it's designed to at l-east from the
Company's standpoint to collect 100 percent of the class
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LARKIN (X)
Idaho Power
revenue for that class, which in this case woul-d be residential-
and small general service customers. Is that correct?
A. What do you mean by 100 percent?
O. How about 100 percent of your revenue
requirement ?
A. The cost of servj-ce study that was used in this
case refl-ects that total revenue requirement, reflects the
fina1 approved revenue requirement resulting from the
Stipulation in Case No. IPC-E-1-1-08 . So in this case, j-t's the
final approved revenue requirement.
O. So I guess my confusion is why then woul-d the
Company not be seeking, if that applies, similarly cost of
service to residential- customers that aren't net metering
customers and those that are? If 1t's the same for al-I of the
them, why isn't the Company here or in some fashion attempting
to seek to modify the rates and charges of the entire class
rather than a smal-l subset?
A. WeI1, I think this case is specific to net
metering, and rea11y the Company's proposal j-s about cost
recovery from net metering customers. It's not, as I said
before, about changing cost allocation to the customer classes.
O. Has the Company, through this case and I guess
before this case, researched what other states are doing with
regard to net metering?
A. Yes.
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Idaho Power
O. Have you been in contact or anybody I guess on
your team -- if that's what f can call it, sorry -- been in
contact with any other uti-l-ities in the West or anywhere
regarding net metering and what strategj-es the utilitj-es could
use to develop and work with these programs?
A. Yes.
A. And can you identify those for me?
A. The specif ic util-ities?
O. Yes. That would be he1pfu1.
A. Well-
O. In your knowledge.
A. just off the top of my head I don't have
the l-ist memori-zed -- we've been in contact with a number of
util-ities in what we cal-l- the it's kind of a Western group
of utilities. It includes California utilities Pacific Gas and
Electric, Southern Cal Edison. We've also been in contact with
Portland General-, Arizona Public Service, PacifiCorp. I
believe that Avi-sta was j-nvolved in that group. Those are just
the ones I can come up with off the top of my head. I don't
have the l-ist in f ront of me.
O. So there might be others that you can't
remember
A. Sure.
O. -- but you gave a pretty good list there. Thank
you, I appreciate that.
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HEDRICK COURT REPORTING
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Idaho Power
Moving to sort of how this net metering operates
to some degree, do you have an idea of what happens when
electricity from a net metering customer comes back onto the
system from the customer, how that works?
A. You mean from an engJ-neering
O. Wel-I, that' s f air. That ' s f air. Do you have a
general knowledge from your experience, just a layperson
experJ-ence, how that operates?
A. Just based off of my general knowJ-edge of
utilities operations, but f don't make any claims as to being
an engj-neer in that regard.
a. I understand. When that excess generation may
come back on the grid, are you aware of anything that Idaho
Power has to do to facilitate fl-ow from the customer back onto
the grid?
A. Based off of my discussion with -- with the
Company's distribution designers, there are cases where
whil-e it is rare, there are cases when additional-
distribution-related equipment is requJ-red if they, for
example, there is more than one if there are multiple
generation systems connected to the same the same area.
Eor fdaho Power's system specifically at the
current penetration l-evel-s from a system level-, it's been
indicated to me that there are no current operational concerns
with the system incorporating the current leveI of net metering
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generation.
O. So other than distribution lines, what additional
equipment would be, from your experience and what you've been
tol-d I guess, what additional- equlpment would be implicated in
such an excess generati-on situation?
A. Aside from the distribution system?
O. Yeah.
A. The current penetration levels, there isn't any.
MS. NORDSTROM: I believe this witness has
answered this question to the extent of his knowledge.
O. BY MR. HAMMOND: As far as
MR. HAMMOND: Is that an objectlon or is that
an
MS. NORDSTROM: That's just a statement that he
is not this is not the area in which he is employed by the
Company and does not have a familiarity of the speclfic
equipment that you are requesting.
MR. HAMMOND: But he is the Companyrs wj-tness on
this issue, isn't he?
MS. NORDSTROM: He is the Company's witness on
its priclng and net metering proposal, and is the technical
witness with regards to the ratemaking proposal. He is not
employed in the operations arm of the Company.
MR. HAMMOND: And cut me off if this question is
inappropriate.
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HEDRICK COURT REPORTING
P. O. BOX 5'78, BOTSE, rD
LARKTN (X)
Idaho Power
COMMISSIONER SMITH: I will-.
MR. HAMMOND: Thank you.
O. BY MR. HAMMOND: Based on your knowledge, when
generatj-on comes back onlj-ne, is it consumed by -- where is
that energy consumed by, do you have any idea?
COMMISSIONER SMITH: Mr. Hammond, I do think that
you are beyond the scope of this witness's testimony and
expertise.
MR. HAMMOND: Okay. I wil-l- move on.
COMMISSIONER SMITH: Thank you.
O. BY MR. HAMMOND: Prior to filing this Application
in this case, did fdaho Power provide any notice to its
existing net metering customers that it would be proposing to
change the rates and terms and conditions of service for net
metering?
A. When the Company filed its case on November 30th,
it sent a notification to al-l- of 1ts current net metering
customers. It al-so sent out its notification to basically any
lnstal1ers that it was aware of in the area, and it al-so sent
out notifications to any customers who had contacted the
Company, showing interest in the Company's net metering
service, to the best of its knowledge. So it made its best
efforts at the time of filing to contact the partj-es that would
be impacted.
O. So that was after the filing. Correct?
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A. It was yes, it was
O. Or contemporaneous?
A. coincidenta1 with the fillngr y€s.
O. But the question was did you make any
notification prior to the case being fil-ed?
A. No.
O. Did you discuss the contents of this Application
with any of the Intervenors j-n this case prior to the filing?
A. [Ve11, I think prior to filing the Intervenors had
not been identified, so we didn't know who they were going to
be, sor flo, we didn't, but we didn't know who they were.
O. Did you discuss the contents of this case with
any party outside of Idaho Power Company?
A. Prior to filing?
O. Yes.
A. No.
O. In the as you stated, you filed a customer
notice and press release that was sent out?
A. Actua11y, I misspoke: We did discuss our
intentions to fil-e with Staff prior to immediately preceding
the filing.
O. And did Staff have any reactions to the filing
ot, to that potential filing?
A. That discussion was purely informational- to
just to make them aware that the Company was making its filing.
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O. And when was that? When did that happen?
A. I do not know.
O. Do you know who informed the Staff of the filing?
It wasn't you, obviously, but was it somebody -- can you
identify who that might be?
A. We1I, I was present at the meeting. I just don't
remember the specifj-c date.
O. Okay. In the content of those notices and the
press release that was sent out, there wasn't a numerical
example of the potential impacts that this rate these rate
changes and these modiflcations of service coul-d that coul-d
happen, there wasn't an example. Am I correct in saying
that ?
A. Yes. I don't think that woul-d have fit into the
actual communication based off of the differently-sltuated
customers.
O. Do you think it would have been helpful for
customers of net metering or customers to understand possibly
numerically what those impacts might be?
A. Yeah, I abso1uteIy think it would have been
helpful for them to understand, which is why the Company
provided its contact j-nformation and we had our net metering
service specialists on the phone, with a calculator in front of
them, to al-low them to calcul-ate the financj-aI impacts specific
to each customer as they call-ed in.
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Idaho Power
O. The Company's proposed in this case a 5.8
megawatt cap to be spread across al-l- the net metering
customers, fet's sdy, incl-uding net meter small- general service
and residential- service. Is that correct?
A. Yes.
O. Is there any analysis or any study that the
Company has done to justify setting the cap at the 5.8 megawatt
level?
A. That cap was reached through discussj-ons with
senior management from customer relations, fj-nance, and
regulatory affairs. I think I mean, it's 5.8. It's a
doubling of the cap. So I think that indicates that it wasn't
arrived at by any sort of mathematical formu1a. But it was a
result of discussing the different components of net metering
service and its impacts with senior management.
O. And correct me if f 'm wrong, but I bel-i-eve in the
public workshop you had stated there werenrt any operational
concerns that Idaho Power had with the 5.8 megawatt cap. Is
that correct?
A. From a system perspective, that is what our
plannj-ng fol-ks have communj-cated to me.
O. To your knowledge, would there be any operational
concern with a 10 megawatt cap?
A. I don't know.
O. In this case, I think in your I believe it's
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Idaho Power
in your rebuttal testimony, you stated that the Company can
come in at any time before the Commission and seek to alter or
adjust or modify or ask for those modifications of its net
meterJ-ng service from the Commission. Is that correct?
A. Yes.
O. Does the Company actively monitor this program
particularly when new applications are comj-ng online to sort of
determine the impacts it may have on Idaho Power and its
customers on a weekly, yearly, monthly basis as customers come
onl-ine?
A. I think it reviews the service just according to
the same standards it reviews its other services.
O. What would that be? Can you briefly explain
that ?
A. You know, I think it's realIy just the daily
operations of the Utility is examining its the way it
provides the services in making sure that they're adequate. So
I don't know that there's a specific process in place to
identify each each service, but it's something that the
Company is continuously doing.
O. So if the Company actively monitors this case
er t actively monj-tors this program to some degree and can file
a case essentially anytime it chooses to modify the service,
why is the 5.8 megawatt cap necessary?
A. As I state on page 13 of my testimony --
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P. O. BOX 518, BOTSE, rD
LARKIN (X)
Idaho Power
COMMISSIONER SMITH: Are we in your direct or
rebuttal-?
THE WITNESS: Direct, sorry.
I state: This provides the Company with the
abi-Iity to identify any future modificatj-ons that may be
necessary to accommodate more widespread expansion of its net
metering servj-ce.
I think what that cap does is it puts into place
a reasonable check-in point in order to reevaluate its net
meterj-ng service. But as you mention, the Company is not
precluded from filing to make changes if it feel-s they are
necessary.
O. BY MR. HAMMOND: Would a reasonabl-e checkpoint be
10 megawatts?
A. According to our senior managers, that reasonabfe
checkpoi-nt is 5.8 megawatts.
O. But there's no study or analysis that you're
aware of that would justify that level-?
A. An operational study, no.
O. Have you revlewed 1et's say Mr. Gill-iam's
testimony in this case or Ms. White's testimony in this case?
A. Yes.
a. Okay. And in that testimony, I believe each has
stated that an estimate from here to ox r I shoul-d say from
this date forward, that it's possible that a 5.8 megawatt cap
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Idaho Power
could be reached in three to five years or three to six years.
Is that somethj-ng you're familiar with or j-n your review?
A. Generally, I remember the mention of it.
O. Has the Company done any analysj-s to determine
when, based on its current trend in growth that it's seeing in
net metering service, when we might hit that 5.8 megawatt cap?
A. No.
O. Is three to five years a relatively short period
of time in the utility business?
A. I don't have an opinion on that.
O. Would it be fair to say that well, Iet me
So for fol-ks that are making investments in net
metering service, I think you stated earl-ier that part of their
concern is to recover the cost of their their investment.
Is that correct?
A. That was some concerns stated by certain
customers, yeah.
O. If the cap is reached in three to five years,
wouldn't you think that that would be a barrier to the
development of new resources, an investment in net metering
technology, which in order to generate electrj-city?
A. Well, I don't think that that cap would create a
barrier, gi-ven the Company's ability to file at any time to
change the provj-sions of its net metering servicer so I don't
think that it wou1d.
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HEDRICK COURT REPORTING
P. O. BOX 5'7I , BOTSE, f D
LARKTN (X)
Idaho Power
O. So if the Company was concerned about the level
of net metering comj-ng online, it certainly could fil-e and
check that growth. Is that fair to say?
A. Yeah.
O. Without the need for a 5.8 megawatt cap?
A. Yes. I think the 5.8 megawatt cap provides a
reasonable checkpoint, but as I think we agree, the Company can
fil-e at any time to propose modiflcations to its net metering
service.
O. As for moving sort of to the customer class
argument I think that the Company is making in trying to set up
this these net metering customers as a new cLass of
customers with a new rate structure. Is that fair is that a
fair characteri-zati-on?
A. We're looking to change the way we recover costs
from net metering customers.
O. But my understanding from your testimony is that
net metering customers don't necessarily cause or impose more
costs than any resJ-dential customer without net meterJ-ng. Is
that correct?
A. The Company is not suggesting that the costs of
serving are different in this case. It's suggesting that
standard rates are not appropriate to recover costs from net
meterlng customers.
0. And you can you explain to me why a net
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Idaho Power
metering customer is different than a customer such as someone
that has a vacation home?
A. I think Mr. Said addresses the sort of those
lines of differentiation between rate classes or groups of
customers that should have different rates applied to them, so
I think he can speak to that more than I can.
O. That's fair. In this case, I think you stated
there's 376 current customers -- net metering customers, and
that would include applicants?
A. 386.
O. 386. I'm sorry.
A. Currently, yes.
O. And you had discussed that the provisions the
current net metering provisions are not scal-able or
sustainabl-e. Can you has the Company done any study to sort
of detect when it potentially coul-d foresee a problem in the
sj-ze of the program?
A. In terms of when rates woul-d be impacted?
0. Yes.
A.. No.
O. I believe in your testimony, you've al-so
discussed the potential for inequity in this case. Has Idaho
Power engaged in any analysis or study of what that potential
inequity might quantify to?
A. Yes, I believe I state that in my direct
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Idaho Power
testimony. Beginning on page 2I, line 21, I pose the question
that it' s answeri-ng is: What is the l-eve1 of potenti-al
inequity that is corrected by the implementation of Schedul-es 6
and 8?
Startj-ng on l-ine 21, the response to that is:
According to the Companyrs class cost of service study in Case
No. IPC-E-11-08, distribution-related revenue requj-rement
col-Iected through energy rates total-ed $121 ,154r505 for
residential- service customers, and $'7,1,86,218 for smal-l general
service customers.
I don't know if you want me to read the rest of
the response.
0. I think it's already in the record.
COMMISSIONER SMITH: Yeah, it is.
O. BY MR. HAMMOND: And isn't necessary.
You're not suggesting though that that's the
i-mpact that cou1d occur if the current net metering program
stays in place?
A. Of the current 350 or 386 customers?
o. Yes.
A. No. If partlcipation is limited.
O. Moving to the annual- net I'm sorry, annuaf net
excess generation, j-t's my understanding the Company opposes a
carryforward of the actual credit. Is that correct?
A. Yes.
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Idaho Power
0. Is there a reason for that, can you --
A. Yes, I bel-ieve I answer that question in my
rebuttal test j-mony.
O. I bel-ieve that's in the record as wel-l-, if you
just identify.
A. The reason. It is, essentially, the intent of
net metering 1s to offset usage. The Company doesn't feel that
an j-ndefinite carryover aligns with that intent.
O. So how is not offsetting usage or a credit from
one year to the next still not consistent with the program? If
I accumulate a credit in one year but use it in the second year
to offset my energy usage, how does that not align wj-th the net
metering tariff that currently exists?
A. We1l, I thlnk you have to l-imit j-t to a specific
time frame, just within a reasonable time frame. And I believe
Mr. Said also addresses some legal concerns with doj-ng that
that he can speak to more than I can.
O. But if there is not a payment of that credit to
the customer, is there an j-ssue if it's just a credit rather
than a payment, as I believe Idaho Power has raised concern
with?
A. A legal issue?
O. WeII, I don't want to ask you that. Obviously,
you're not an attorney in this case.
A. I think Mr. Said addresses his j-nterpretation of
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HEDRICK COURT REPORTING
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Idaho Power
the legaI issues associated with that.
MR. HAMMOND: I don't have any further questj-ons.
Thank you.
COMMISSIONER SMITH: Thank you, Mr. Hammond.
Mr. Mi]Ier.
MR. D. MILLER: Thank you, Madam Chaj-rman.
Matt is right in my line of vj-sion.
MR. KLEIN: Yourre in his l-ine of vision.
MR. D. MILLER: Matt, do you want to sl-ide over
slightly.
CROSS-EXAMINATION
BY MR. D. MILLER:
O. Good morning, Mr. Larkin.
A. Good morning.
O. I understand you have testifj-ed previously in
matters before the Commission.
A. In wrlting, yes.
O. Excuse me?
A. In writing, yes.
O. WelI, this is your first oral testimony?
A. It is.
O. Wel-l-, you can just sit back and rel-ax. This
shouldn't be any worse than your standard root cana1.
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HEDRICK COURT REPORTING
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Idaho Power
A. That's fair.
O. Just so we have this information in one place:
Your testj.mony this morning I think is that there are currently
385 net meter customers?
A. That's the current count. That includes active
and pending.
O. And how many of those are active and how many are
pending?
A. 368 active and 18 pending.
0. As of the end of December 2072, is it correct
that approximately 400,000 customers took service under Idaho
Power's residential Schedule L?
A. Approximately, yes.
O. Just round numbers?
A. Yeah.
O. Is it correct that at the end of 2012, the
revenue from Schedule 1 customers was in the vicinity of
$415 mil-l-ion?
A. Subject to check.
O. Roughly?
A. Sure. It's subject to check.
0. Is it correct that at the end of 20L2, there were
approximately 250,000 customers who took servj-ce under Idaho
Power's Schedul-e '7, small- commercial service?
A. 250,000?
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HEDR]CK COURT
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LARKIN (X)
Idaho Power
O. Yes.
A. I don't believe so. Subject to check. I don't
know our customer counts off the top of my head.
O. Well-, just for talking purposes, w€ could use
that this morning?
A. 250,000?
o. 25,000.
A. Oh, okay. That sounds more reasonable, yes.
But, yeah, subject to check.
O. I apologize for that error.
And is it correct that the revenue from
Schedul-e 7 small general service customers was roughly
$15 million?
A. Subject to check.
O. In answer to your questions from Mr. Hammond with
respect to the cap issue, you characterized the cap as a
trigger for a reasonable checkpoint, I think is how you
characterized it.
A. Yes.
O. Is the expense the Company incurs for executive
compensation subject to a reasonabl-e checkpoint?
MS. NORDSTROM: I'm going to object to this
question as being argumentative and beyond the scope.
COMMISSIONER SMITH: Mr. Mil-l-er.
MR. D. MILLER: Well- I'm leading toward a point
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HEDRICK COURT REPORTING
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Idaho Power
that wil-l- take about two more questions to ask.
COMMISSIONER SMITH: Was it a teensy blt
argumentative?
MR. D. MILLER: The uftimate point is not
argumentat j-ve
COMMISSIONER SMITH: Wel-l- then l-et's just go to
the uJ-tlmate point and not take this excursion.
MR. D. MILLER: Okay. I think I can get there
quite qui-ckIy.
O. BY MR. D. MILLER: fs the amount of generation
that Idaho Power rel-ies upon from coal- facil-ities subject to a
cap and reasonable checkpoint?
A. I think questi-ons regarding regulatory review and
overal-l- strategy can be addressed to Mr. Said.
O. A11 right, I'11 save the rest of these for
Mr. Said and avoid the argumentative problem.
Were you kind enough to have with you the
exhibits to Ms. White's testimony?
A. Yes.
MR. D. MILLER: If the Commission wou1dn't mi-nd,
I'm going to direct the witness to Exhibit 701 that's attached
to Ms . Whi-te' s testimony.
O. BY MR. D. MILLER: You, in response to questions
from Mr. Hammond, visited the Company in response to a Staff
Production Request No. 9, provided an annual bill comparison to
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LARKIN (X)
Idaho Power
show that the on the customer -- per-customer basis, the
bill-s under current rates and bil1s under proposed rates for
net meter customers. Is that correct?
A. Yeah, I think the same point of clarificatj-on
applies: It's not just rates that are reflected in
Exhibit 701-. It's rates plus the treatment of excess net
energy.
O. Right. So this is a bil-l J-mpact that takes i-nto
account all of the Company's proposed changes. Correct?
A. Yes, that is correct.
O. A11 right, 9ot it. fs Exhlbit 701" a reformatting
of your Answer to Production Reguest No. 9 that sorts the
customers from the highest difference or, between current
and proposed rates to the lowest? Is that the way you
understand it's organized?
A. Yeah, that's my understanding.
O. And this eliminates confidential- customer
identification numbers that were in the your Response.
Correct?
A. Yes.
O. I thought we might just take a minute or two to
try and understand a little bit about what j-s actually shown
here. ff we look at the first page, under current ratesr w€
see some numbers that are red and in parentheses. Correct?
A. Yes.
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HEDR]CK COURT REPORTING
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LARKIN (X)
Idaho Power
O. And are those numbers associated with customers
who, on an annuaf basis, produced more energy than they
consumed?
A. Yes, they were to be.
a. So to get a size of magnitude of customers who
actually produce more than they consume, those would be the
customers shown in red numbers under current rates?
A. Yes, I believe a negative va1ue indicates that
they recelved financial payment.
O. Right. Then if we look at the col-umn difference,
if that number is black, does that indicate an increase in
proposed rates or increase in bi1ls under proposed rates over
current rates?
A. Yes, it indicates an increase in bil-l-s resulting
from the entirety of the Company's proposed changes.
O. So, for example, if we look at Customer No. 4,
which is the fifth customer down, that customer, under current
rates, had a credit of $2,291,, and under proposed rates woul-d
have a bill of $218, for a change of $2,569?
A. Yes.
O. Then let's just pick a customer somewhere over on
the next page, and to make it easy, let's pick the top one,
number L76.
A. Okay.
O. That customer, under current rates, had a bill of
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HEDRICK COURT REPORTING
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LARKIN (X)
Idaho Power
$33.77, and would have, under proposed rates, a bj-l-l- of $371.
So that customer's bill between years could go up $337?
A. Not between years, but between current structure
and proposed structure, yes.
O. Right. Then 1f we go through pages 3 and 4, we
can see bi11s increasing for al-1 of the customers represented
on those pages. Correct?
A. Yes.
O. Then if we get to page 5 of seven, we start to
see some red numbers in the last col-umn. Correct?
A. Yes.
O. And does that indicate customers who will- recei-ve
a lower bill under proposed rates than current rates?
A. Yes.
O. If you'I1 accept this subject to check, I've
counted up the number of these red numbers, and I counted 70 of
them. So under the Company's proposal, 70 customers see a
l-ower biII, and all other customers see a higher bill?
A. Subject to check on the numbers, based off of one
year of actual data, that is what this -- what these numbers
show.
A. And the other if itrs not obvious so far, the
customers who see higher bills are generally higher users or
larger users than the customers who see hlgher bills who are
l-ower volume users?
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HEDRICK COURT REPORT]NG
P. O. BOX 5'7 B , BOTSE, f D
LARKTN (X)
Idaho Power
A. I don't know that you can determine that from
these dol1ar figures.
O. Though woul-dn't you just generally think that if
a customer has a current bill of $2,400, it's what you could
roughly term a high vol-ume user?
A. I don't rea11y want to apply or categorize
customers as high/Iow vo]ume
a. A11 right.
A. and make assumptions based off of dollar
amounts.
O. AII right. Then maybe what we can do j-s turn to
the last page of Exhibit 701. And here Ms. White has gj-ven us
two graphs that graphically ill-ustrate what you and I have sort
of labored through for the last few minutes. Have you reviewed
these graphs and do they seem to accurately portray conclusions
that can be drawn from the tabular columns?
A. I believe so.
O. Thank you. Now, one of the other criticj-sms that
Ms. White had of the Company's proposal is that customers --
oxr customers who we can roughly characterj-ze as large
residential customers coul-d instal-1 a relatively sma11 net
metering system and gain access to the lower energy rate
contained in the proposed net metering tariffed rates.
Correct ?
A. Yes, I bel-ieve that's how she characterized it.
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HEDRICK COURT REPORTING
P. O. BOX 518, BOTSE, rD
LARKIN (X)
Idaho Power
O. On page 4 of your testimony, you respond by
saying that the Company proposes to monitor new systems and
make a -- make a filing if it feels that tariffs are in need of
adj ustment .
A. Is this page 4 of rebuttal?
O. Pardon?
A. Of rebuttal?
O. Of your rebuttal-.
A. Rebutta].
O. And my questj-on simply is could the Company
monj-tor the growth of net metering systems and make the filing
if there were indications of negative system or rate impacts?
A. Could you describe what you mean by "negative
system or rate impacts"?
0. WeIl, rather than do that, could the Company
monj-tor the growth of the net metering program and make a
filing if it had any concerns?
A. Yeah, I think as Mr. Hammond and I dj-scussed, the
Company is not precluded from making a filing if it feels
changes are necessary.
O. With respect to the basic l-oad charge, this
question of recovering fixed costs in variab.l-e rates is not
really new, j-s it? I mean, it's a question that's been around
in ratemaking for a long time?
A. f think it's been addressed in previous j-ssues
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HEDRTCK COURT REPORT]NG
P. O. BOX 578, BOTSE, rD
LARKIN (X)
Idaho Power
before the Commission.
O. And would you agree that one of the reasons that
it's kind of a difficult issue is that there are sensible
arguments on each side of the question?
A. We11, I think my position realIy is a cost of
service witness. I think your question rea11y touches on
policy, and I think Mr. Said can speak to those policy
questions.
O. Al-1 right, f ' 11 save this f or Mr . Said.
One part of the Company's proposal is to change
the excess generation credit or the generation credit from a
dol-Iar or financial credit to a kilowatt hour credit?
A. Yes.
O. Is one of the rationales for doing that is that a
financlal credit would give a customer the opportunity to
reduce or ellminate its basic l-oad charge?
A. Yes, I think that's part of it.
O. If the Commission disapproves a basic load
charge, would much of the rational-e for shifting from a
financial credit to a kil-owatt hour credit evaporate?
A. I don't think so. If the Commission were to
to keep in place rates in place today, you'd stil1 have a $S
service charge and two base charges are applied the energy
efficiency rider as wel-l- as franchj-se fees and the Company
doesn't feel that those should be offset through net metering.
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HEDRICK COURT REPORTING
P. O. BOX 518, BOTSE, rD
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Idaho Power
And the Company also feels that realIy the intent of net
meteri-ng service is to offset usage. Itrs not to sell power to
the Company for sort of a financial credit. And so there's
still- reasons in place for having the kilowatt hour credit
replace the financi-al credit system.
O. A11 right. Did you read Ms. Whj-te's testimony
before filing your rebuttal testimony?
A. Yes.
O. And without belaboring the point, at page 23
pardon me, page L9 through 23, she lays out four additional
four reasons, four other reasons, for objecting to the kilowatt
hour credit versus the financi-al- credit?
A. I don't have her testimony in front of me, so I
can't
O. Wi-lI you accept that, subject to check?
A. I reaIIy havenrt sure, subject to check. I
don't know what those reasons are though , off the top of my
head.
O. And without going through them in detail, as I
read your rebuttal- testimony, you did not attempt to refute
anything that Ms. White said between pages 19 and 23. fs that
correct ?
A. Without checking Ms. White's testimony, f can't
speak to a piece of testimony that I don't have in front of
me.
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P. O. BOX 518,
REPORT]NG
BOTSE, fD
LARKIN (X)
Idaho Power
MR. D. MILLER: f think that's all I have for
this witness.
COMMISSIONER SMITH: Thank you, Mr. Mil-l-er.
MR. D. MILLER: Thank you, Mr. Larkin.
COMMISSIONER SMITH: Mr. Richardson, how long do
you think you will be?
MR. RICHARDSON: I've got a couple questions,
Madam Chair.
COMMISSIONER SMITH: "A couple"?
MR. RICHARDSON: I've got about four pages of
questions.
COMMISSIONER SMITH: We'11- take a break,
ten-minute break, but l-et's be back at ten minutes of 11.
(Recess. )
COMMISSIONER SMITH: Let's call the hearing to
order. If you need to have a conversatlon, please take it
outslde the room.
When we went on break, w€ were ready for
questions from Mr. Richardson.
MR. RfCHARDSON: Thank you, Madam Chair.
CROSS-EXAMINATION
BY MR. RTCHARDSON:
O. Good morning, Mr. Larkin. How are you?
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HEDRICK COURT REPORTING
P. O. BOX 5'7 B , BOTSE, rD
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Idaho Power
A. Good. How are you?
O. Fine, thank you. Fj-rst of all, I want to thank
the Company for agreeing to allow net metering customers to
identify the year in which they can calculate the excess
credj-ts. We reaI1y appreciate that. That has major j-mpact on
my client.
Let's start with the cap, which you've been asked
about several times. You stated that senior management set the
cap?
A. Yes, it was through discussions with several-
departments.
O. Were you invol-ved in those discussions?
A. Yes, I was present.
O. And so what was the rational-e for the cap?
A. You know, I think the ratj-onale of senior
management should better be addressed by Mr. Said.
0. But you were involved in those discussions?
A. Yes.
O. And they didn't discuss the rationale whj-Ie you
were involved in those di-scussi-ons?
A. They did, but I think Mr. Said is the appropriate
witness to address that question.
O. But Irm asking you what you know about the
rationale.
A. I thlnk my rational-e is clearly stated.
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HEDRTCK COURT REPORT]NG
P. O. BOX 518, BOTSE, rD
LARKIN (X)
Idaho Power
O. Not your rationale;
rational-e in the discussi-ons that
A. I bel-i-eve that that
testimony. Anything beyond that I
Mr. Said.
automatic checkpoint
precluded from making
changes are needed.
the senior management
you were privy to.
rationale is stated in my
believe can be addressed by
think, ds I stated before, it provides an
for the servj-ce, but the Company is not
a filing if it feel-s that necessary
O. So exactly what is the nexus between a cap and
Idaho Power's ability to eva1uate the service as it expands?
A. Could you possibly restate that?
O. Yeah. On page 13 of your direct testimony, you
state, quote: If current growth trends continue or increase,
it is important to maintain a capacity l-imit to al-l-ow the
Company and other stakeholders to evaluate this service as it
expands.
So I'm asking you what is the nexus between a cap
and the Company's ability to evaluate the service as it
expands.
A We11, I
O. So you would agree that nothing is preventing the
Company from eval-uating the servj-ce as it expands without a cap
versus with a cap. Correct?
A. Nothing prevents the Company from making a filing
if it feel-s changes are necessary.
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HEDR]CK COURT REPORTTNG
P. O. BOX 5'7 B , BOTSE, rD
LARKTN (X)
Idaho Power
O. Mr. Hammond asked you, essentially, if the
Company was serious when you testify on page L4 that the
primary objective that's the primary objective of the
Company's pricing proposal j-s to facilitate future growth, and
you responded that the current net metering program j-s not
scal-abl-e or sustainable. So I want to re-ask you the question:
Do you reaIIy think that your pricing proposal wil-l- faci1itate
growth in net meteri-ng?
A. I think the answer to your question is the same
as the answer to Mr. Hammond's question. If you read the fuIl
context of that sentence, it says the primary objective of the
Company's pricing proposal is to facilitate further growth in
its net metering service while limiting the potential- negative
impact on standard service customers.
O. Right. But I'm focused on your primary goa1,
which is to facilitate growth. And the question is do you
really think that your pricing proposal will facilitate growth
in net metering?
A. The primary goa1, ds stated in the testimony, is
to facil-j-tate further growth while limiting the potential-
impact on standard service customers.
Right. And f 'l-l- re-ask the question, because f 'm
asking you the primary objective of the Company's pricing
proposal is to facilitate growth, that's your testimony; and
f 'm asking you if you real-1y believe that your pricj-ng proposal
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HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
LARKIN (X)
Idaho Power
is going to facil-itate growth in net metering on Idaho Power's
system.
MS. NORDSTROM: I object. This questj-on has been
asked and answered, and the witness has explained the full-
context of the statement as made in his testimony.
MR. RICHARDSON: Madam Chair, the question has
been asked several times, but I don't think itrs been answered
yet.
COMMISSIONER SMITH: Mr. Richardson, I think he
answered it very clearly. I think you're trying to get him to
say something his testimony does not say.
a. BY MR. RICHARDSON: Mr. Larkin, j-sn't it true,
based on the unanimous fntervenor testimony in this case, that
most of the industry does not agree with your proposed -- that
your proposed pricing and cap schemes will- facilitate future
growth in the Company's net metering service?
A. The fntervenors to this case have stated that
they don't they are opposed to the pricing and that they
don't feel it wil-l- facil-itate growth.
O. A11 of the Intervenors?
A. I -- I don't know that Staff makes that
statement.
O. Staff's not an Intervenor, is it?
A. I think that's a lega1 question. From my
experj-ence, I don't know the answer to that, what is
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technically an Intervenor, so I suppose f was answering it in
terms of parties to the case. But based off the four
Intervening parties, then, yes, I woul-d say that that
O. You were asked about other utilities Idaho
Power's contacted. Do you recal-l- that line of questioning?
A. Yes.
O. Were you personally involved in those
conversations ?
A. Yes.
O. Why did you contact other utilj-ties to create
your case in this docket?
A. WeII, I donrt think we -- we discussed net
metering with them, and it was reaIIy just to galn an
understanding of or to I suppose broaden our knowledge of net
metering service and the issues that are preval-ent throughout
the country.
O. Did I mishear you? You said you didn't or you
did discuss net metering with al-l- of these other utilities?
A. We did.
O. You did?
A. Yes.
O. And were you attempting to coordinate your
approach to net metering with these other utilities?
A. I wouldn't say we were attempting to coordinate
our approach. ft was rea11y just research.
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O. You state at the bottom of page 1,4 over to the
top of page 15 that the pricing proposal limits the potential-
for inequity by applying charges to net meterJ-ng customers that
accurately refl-ect the cost to serve them. Do you see that?
A. Yes.
O. And by thisr fldy f assume that you mean that the
current residential and smal-l- commercial- rate structures are
not designed to accurately reflect the cost to serve these two
subsets of the residential and small commercial classes?
A. They do not currently reflect 100 percent of cost
of service rates.
O. So do you think that rates shoul-d be designed to
accurately reflect the cost to serve a particular class of
customers ?
A. As a cost of service witness, y€s; however, there
are policy issues associated with that that can be addressed by
Mr. Said.
O. Yet you are not recommending that non-net
metering residential and smal1 commercial- customers experj-ence
an increase j-n their fixed charges to accurately reflect the
cost to serve them, are you?
A. Not in thls case, DO.
O. On page L4, you state that, quote: The Company
has instal-l-ed advanced metering infrastructure throughout its
service area for nearly a1I residential- and smal-l- general
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service customers.
And you go on to say that this al-l-ows the Company
to implement demand-related rates for these customers that
previously would have required the replacement of standard
mechani-ca1 meters with more expensive demand rates.
fsn't it true that one of the reasons Idaho Power
has install-ed AMIr ds itfs caI1ed, was to integrate renewable
energy into your resource portfolio?
A. I think that question is outside the scope of my
testimony and my area of expertise.
O. On page 16, you state that with AMf in p1ace, the
Company is now abl-e to J-mplement demand-related rates for
residentlal and smal-1 general service customers without
incurring any incremental- costs associated with meter
replacement, and bj-11- according to demand-related components
that are automatically captured by the Company's billing
system.
But you're not proposing to i-mplement
demand-rei-ated rates to residential and smal1 customers, are
you?
A. For Schedul-e 1 and Schedule 1?
O. Correct.
A. No, we are not.
O. And al-so on page 16, you state that AMI al-l-ows
the Company to modify its rate design to more accurately
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reflect the cost of serving these customers whil-e avoiding many
of the incremental- costs that would have exj-sted prior to the
instal-lation of AMI. Correct?
A. Yes.
O. And you stated earlier that you believed that
resi-dential and smal-l- commercial customers' rate design is not
accurate. Correct?
A. I stated that it does not reflect 100 percent of
the cost of service.
O. And based on that belief, you're proposing to
accurately set rate design for just the net metering
residential- and small- commercial- customers. Correct?
A. I believe that the Company's pricj-ng proposal
reflects cost of service for the dlstribution-related and
customer-rel-ated revenue requirement.
O. And that's just for the net meterlng residentiaL
and smal-1 commercial customers, not for aIl- residential- and
small commercial- customers. Correct?
A. The proposal is specific to net metering
customers.
O. So doesn't it strike you as unfair to deny the
rest of the residential- and smal-l commercial cl-asses the
benefit of accurate blll-s?
A. Wel-l, ds I stated, ds a cost of service witness,
I think your question is more rel-ated to policy that can be
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addressed by Mr. Said.
O. You're the cost of servj-ce witness?
A. Yes.
O. So I'l-1 repeat the question:
Doesn't it strike you as unfair to deny the rest
of the residential- and smal-l- commercial- cl-asses the benefit of
accurate billing?
A. I think the term "unfair" j-s addressed by
Mr. Said. I think that touches on policy, as I mentioned
before.
O. So you can't discuss the policy of class cost of
service as the Company's cl-ass cost of service witness?
A. I think you are mixing the concepts of policy and
cost of servicer so I'm not sure that f understand your
question.
O. Okay, that's fine.
On page 5 of your rebuttal- testimony, you discuss
the concerns of several parties that your pricing proposal may
have the unintended consequence of i-ncenting reaI1y large users
to put 1n a token net metering facllity 1n order to get lower
energy rates, thereby lowering their overal-1 energy costs. Do
you recall that discussion in your testimony?
A. Yes, I reca11 the discussj-on of the parties
concerned in that regard.
O. And you testify that, quote: Lowering bills
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through the instal-l-ation of distributed generation and shifting
to a rate schedule that more accurately reflects the cost of
service is not necessarily inappropri-ate.
A. Erom a strict cost of service perspective, no.
O. And that "not necessarily inappropriate," that's
a policy call-, isn't it?
A. I'm speaking strictly from a cost of service
perspective.
0. And what you mean by not necessarily
inappropriate, isn't it, in fact, the goal of the Company to
put that incentj-ve out there?
A. What incentive are you referrJ-ng to?
O. The lncentive for large consumers of electricity
to move to a token net metering system in order to take
advantage of l-ower energy rates and to lower the overall bilt.
Is that the goal of the Company?
A. No.
O. But you say it's not necessarily inappropriate.
Using a double negative kind of confused me there. Do you mean
it is appropriate, meaning it is a goal of the Company?
A. No. What f mean is that moving from a cost of
service perspective, strictly speaking from a cost of servj-ce
perspective, moving to a rate design that better refl-ects cost
of service is not appropriate orr is not inappropriate,
excuse me. So that's the only point that I'm trying to make
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with that statement.
O. And that j-s because you believe rates should be
based on cost of service. Correct?
A. As a cost of service witness, I'm saying that it
is appropriate from a cost of service perspective.
O. So the answer is, y€s, you believe rates should
be based on cost of service. Correct?
A. Once again, rates donrt always reflect cost of
servi-ce, and to the extent that they do not refl-ect cost of
service, that's a policy consideration, not a cost of service
consideration.
O. f'm asking you your opinion.
A. I don't have an opinion in regard to policy
r_ssues.
O. On cost of service.
A. Once again, you're mixing cost of service and
poJ-icy.
MS. NORDSTROM: I object. This l-ine of
questioning I think has run its course. This witness has
answered the questions.
MR. RICHARDSON: I ' l-I move ofl, Madam Chair.
COMMISSIONER SMITH: Thank you.
0. BY MR. RICHARDSON: If this Commi-ssion set al-I
residential rates based on cost of service, wouldn't Idaho
Power be less biased against conservati-on and net metering?
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A. I just don't T don't have an opinion on that
question.
A. Well, wouldnrt the Company be l-ess concerned
about l-ost kilowatt hour sal-es if those ki]owatt hours were
priced at cost rather than at above cost?
A. We1l, I think what the Company's proposal
indicates is that i-s that the potential for inequj-ty that is
addressed by the Company is addressed by moving to these
proposed rates that more accurately reflect the cost of
service.
O. And the question was wouldn't Idaho Power Company
be l-ess concerned about lost kllowatt hour sal-es if those
kilowatt hours were prlced at cost rather than above cost?
A. We11, I think the concern is cost shifting. It's
not necessarlly lost kil-owatt hour sales.
O. The Company is not concerned about lost revenues?
A. The Company's pricing proposal j-s revenue
neutral-.
O. In your oplnion as a class cost of servj-ce
witness, isn't it inequitable to single out these two cl-asses
of net metering customers from the other residential and small
commerclal customers and impose cost-based rates on them and
not the others?
A. Once again, that's a policy question that should
be addressed by Mr. Said.
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O. So you dontt have an opinion on equity on that?
A. I think equity in regard to a rate class that
does not reflect a hundred percent cost of service, that is a
policy call- that can be addressed by Mr. Saj-d.
O. And woul-d you characterize that as an equitable
poli-cy call-?
A. f have no opinion on the term "inequitabl-e." I
believe Mr. Said addresses that in his testimony.
O. On page 2L of your rebuttal testimony, you
testify, quote: Al-lowing customers to access avoided cost
rates through net metering woul-d circumvent the Commission's
established regulations for whol-esal-e projects and allow
customers to take advantage of rates that were not j-ntended for
application to net metering servlce.
What regulations are you referring to?
A. Referrlng to Schedule 86, the ability of
customers to procure a contract under Schedule 86.
O. And what is Schedule 86?
A. Generally speaking, Schedule 86 is an avenue that
a1l-ows nonfirm generation to interconnect with the Company's
system. In return, they are paid a market base rate for their
generation.
O. Market based rates?
A. Yes.
0. And how does the net metering customer selling
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through Schedul-e 86 circumvent Schedule 86?
A. Could you restate that question?
O. Certainly. You stated that allowing customers to
access avoided cost rates through net metering circumvents
establ-lshed regulations of the Commission, and you testified
that the established regulation being circumvented is
Schedule 86. And f'm asking you how a net metering customer
who signs a Schedul-e 86 contract to sell- its excess power to
Idaho Power is circumventing Schedu1e 86.
A. We1l, a net metering customer would take servj-ce
under Schedul-e 84, not Schedule 86, so I'm not I don't agree
with the premise of your question.
O. So you don't think a net metering customer can
sign a Schedule 86 contract to sel-l- its output to Idaho
Power its excess output to Idaho Power?
A. So are you suggesting that they could
simultaneously take service under Schedul-e B4 and have a
contract under Schedule B6?
O. Irm not testifying. Irm asking you how -- if
that woul-d violate the Commission's established regulati-ons.
A. Wel-lr ds the situation I described, the question
that you're asking I donrt understand your question, I
guess.
a. A11 right, that's fine.
MR. RICHARDSON: That's all- f have, Madam Chair.
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COMMISSIONER SMITH: Thank you, Mr. Richardson.
Mr. Otto, do you have questions?
MR. OTTO: I just have a few, actuall-y.
CROSS-EXAMINATION
BY MR. OTTO:
O. So, Mr. Larkin, you helped develop the cost of
service studies. Is that correct?
A. Yes.
O. And as part of a purported part of the cost of
service studies is creating a demand allocator for each class.
Is that correct?
A. Yes.
O. And you stated several times that the primary
purpose of net energy or net metering is for customers to
reduce their own l-oads, their own demands. Is that correct?
A. No. Itrs to reduce thelr consumption.
O. Okay, their consumption.
A. So I think, yeah, there is just a differentiation
between demand and energy.
O. So fair enough. But you can fair enough.
But by changing their assumption or r their
consumption, those net meterj-ng customers have a different
demand on the system than a regular residential customer?
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A. Are you speaking to a coincident peak demand, or
I suppose what type of demand are you referring to?
a. Either a coincident or a noncoi-ncident peak
demand.
Just the questi-on is in your opinion, does a net
metering customer exert a different demand on fdaho Power's
system than a standard resi-dential- customer?
A. Yeah, I think the installation of a net metering
system coul-d definitely alter the load of a customer.
O. So why then does the cost of service study not
have different demand al-l-ocators for the net metering and the
residential- cl-ass ?
A. WeIl, what the Company i-s proposing in this case,
as I said before, is to not change the cost allocation to the
residential- or smal-I general service customers. Itrs just
proposing to change the way that the currently-approved revenue
requi-rement is col-Iected from net metering customers,
recognizing that they have that ability to offset the kilowatt
hour charges. And so itrs rea11y -- it's not cost recovery,
not cost assigned.
O. But shouldn't al-I cost recovery begin by
determj-ning the cost assigned to that class?
A. We11, I think what the Company's proposal does is
it l-ooks at the revenue requirement associated with serving a
resldential- customer or a standard general customer or small
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general customer, and it allows net metering customers to
offset 100 percent of the cost associ-ated with generation and
transmission and providing those services to a standard servj-ce
customer, recognrzing that they're providing a portion of their
own generation. It then points out that the the
dj-stribution-related expenses and the customer-related
expenses, those aren't avoided. Those are used by a1I
customers. And so the Company's pricing proposal is rea11y
Iimited to changing how distribution-rel-ated revenue
requirement and customer-rel-ated revenue requirement i-s
coll-ected from net metering customers at the residential- and
small- general IeveI.
O. So are you saying that a c.l-ass of customers, the
net metering customers who you have identified as using the
system very differently, actually has no difference?
A. Itm not sure I understand your question.
O. Faj-r enough. That was a confusing question.
So let's ;ust think for a moment about let's
picture a net metering customer who
And wou1d you agree that the vast majority of
current net metering customers use solar?
A. f can give you exact number. I don't know if I'd
call it the "vast majori-ty," but Ird say the majority use
so1ar, y€s.
O. And they would produce power during peak sunshine
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times ?
A. Ttrs my understanding that the load shape or I
guess the generation shape of a sol-ar installation is highly
dependent on its orientation, so it's possJ-b1e, but depending
on the orientation, that it's my understanding that the actuaL
generation shape can vary between various solar instal-lations.
O. And j-sn't a fundamental principle of cost of
service is understanding the cost caused by a class of
customers, the cost causation principle?
A. Sure.
0. And so if a class of customers has a different
contribution to peak than a two classes of customers have a
different contributlon to peak, doesn't that cause different
costs ?
A. Within the Company's cost of service study at the
generation and transmission level-, it cou1d, because that's the
al-location basi-s for those components of the system.
Kind of stepping back to what the Company's
proposal is saying, we're not proposing a change in cost
allocatlon. We're really lookj-ng at the cost to serve a
residential- or smal1 general service customer at the generatlon
and transmission 1eve1, and we're aIJ-owing net metering
customers to offset al-l- of that cost by provi-ding thej-r own
generation.
O. So, again, there's not a consideration of the
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cost caused by a net metering customer?
A. At the generatJ-on and transmission level-, they
don't have a specific unique al-l-ocation factor. We didn't
real-locate costs under our proposal-.
O. Okay. Moving oDr you have stated that net
metering is reaIly focused on a customer offsetting thej-r own
consumpt- j-on?
A. Yes.
O. And there 1s a method approved by the Commission
and Idaho Power uses freguently to value to determine the
val-ue, to determine whether it's a good idea for customers
to or, sorry cost effective for customers to reduce their
own consumption. fs that correct?
A. Could you be more specific in terms of the
analysis that the Company does? Irm not sure that I know
exactly what you're talklng about.
O. Eair. So what f'm asking is are you aware that
the Company and the Commission has approved a method for
valuing a customer's reduced consumption?
A. I'm not familiar wlth I don't know exactly
what you're talking about, so
O. WeIl, with the demand-side management programs,
which are about customers reducing their consumption, does part
of that area of the Company inc1ude a way to val-ue that reduced
consumption?
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A. I thlnk Mr. Said discusses the differences
between energy efficiency and net metering, so I will-
acknowledge that there is a methodology in place thatrs applied
to energy efficiency. So I do know what you're tal-king about
now, so, yes, Irm aware of that.
O. And mister orr Mr. El-am testifies that roughly
about 14 percent of customers have an annual excess, and then
Mr. Miller explored with you Courtney Whi-ters Exhibit 701 that
shows that most customers don't have an annual excess. So is
it fair to say that net metering, as it currently stands, is
reaIly just about customers offsetting their own 1oad, not
selling excess generation?
A. I don't think that f can agree with that
statement.
O. Why not?
A. Well-, because, as you mentioned, there are
customers that do generate more than they consume. So to
charactertze aIl of net metering as being just about customers
offsetting usage, I don't know that I can agree with that
statement.
O. Sure. Characterizing them all wouldn't be fair,
but based on the record in this case, the majority of net
metering customers are only offsetting their own consumption?
A. Over the course of a year?
f] Vac\2.
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A. I believe that the response to Schedul-e 9 does
show that there are more customers that did not have a negative
financial credit at the end of the year than there were
customers that had negative financial- credit.
O. So in other words, they're just offsetting their
own foads?
A. Over the course of the year, yes.
a. Thank you.
MR. OTTO: That' s al-I I have.
COMMISSIONER SMITH: Thank you.
Mr. Klein.
MR. KLEIN: Thank you.
CROSS-EXAMINATION
BY MR. KLEIN:
O. Mr. Larkln, do you agree that most of the fixed
costs assocj-ated with serving residential- customers are
recovered throughout the energy rate?
A. Yes.
O. And if those customers don't use enough energy,
they won't provide enough revenue to the Company to recover the
fixed cost to serve them. Correct?
A. That is correct.
0. And that's true whether or not they net meter or
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not ?
A. Yes.
O. So with respect to the perceived fixed cost
subsidy problem, that problem isn't confined to just net
metering customers. Correct?
A. I wou1d agree that not all- standard resldential-
customers pay exactly their fixed cost of service.
O. So the perceived subsldy problem extends to the
residential cl-ass in general. Correct?
A. We11, I think that the subsidy that the Company
identj-fies in this filing has to do with the ability of net
metering customers to l-ower their consumption through
generation, so in that regard, flor I don't bel-ieve that applies
to standard resi-dential- customers or sma11 general.
O. You believe the subsidy problem is much larger
among the non-net metered residential cl-ass though. Correct?
A. I think we're talking about two different
subsidies. I think that's where we perhaps disagree.
The subsidy that the Company is filing is
intended to correct, has to do with the ability of a net
metering customer to lower their consumption using supplemental-
generation. I think the subsidy that you're discussing is in
regard to not all residential standard residential customers
or small general- customers all have the same average kil-owatt
hour consumption.
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HEDR]CK COURT REPORTING
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Idaho Power
O. Does the Company bel-ieve that if the Commj-ssion
adopts the Company's proposal to reso1ve the subsi-dy problem in
this case for this smal-l- group of net metering customers, that
the Commission should l-ater implement a proposed rate for al-l
residential customers?
A f think Mr. Said can address questions on
long-term ratemaking policy or strategy.
O. The Company recommends significant increases in
residential customer charges as part of rate cases in the past,
hasn't it?
A.
n
To my knowledge, yes.
And the CommJ-ssion, to your knowledge, has chosen
to maintain the current minimal customer charge?
A.WeIl, I be1ieve and this is subject to
check in the last rate case, the service charge was
i-ncreased. That's just based on my recollection from that
CASC.
O. Do you think there' s a reasonabl-e rat j-onale f or
the Commission to maintain the mini-mal- current rates even
though a perceived subsidy for the net metering cl-ass exists?
A. I thi-nk from a cost of service perspectj-ve that
really the cost of service justifies a larger monthly -- flat
monthJ-y service charge. Whether or not that should be in place
I thlnk is a policy questi-on that Mr. Said can respond to.
O. Now, the Company's rate design -- proposed rate
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HEDRICK COURT REPORTING
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LARKIN (X)
Idaho Power
desj-gn separates net metering customers from residentiaL
customers. Right?
A. Yes.
O. And the Company believes separating net metering
customer:s from residential- customers is appropriate because net
meteri-ng customers have dj-fferent usage characteristj-cs from
standard resldential customers in general. Correct?
WeIl, f think Mr. Said speaks to the distj-nction
between net metering customers and standard service customers.
Generally speaking, it's the Company's view that net metering
customers use the Company's system dj-fferently than standard
servi-ce customers.
A.
u.
has prepared
requirement
A
speci fically
O.
And we may have gone over this, but the Company
a cost of service study to determine the revenue
for the proposed net meterlng classes, hasn't it?
The Company has not reallocated costs
to net metering customers.
And the Company hasn't identified demand or I
think you saj-d t-his: The Company hasn't identified demand or
energy allocators for the net metered cl-ass separate from the
residential and commercial- cl-asses as a whol-e. Correct?
Could you restate that?
The Company hasn't identlfied demand or energy
allocators for the net metered class separate from the
residential and commercia] cl-asses as a whole. Correct?
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HEDRICK COURT REPORT]NG
P. O. BOX 518, BOTSE, rD
LARKTN (X)
Idaho Power
A. The Company has not identified energy all-ocators
or coincident peak allocators, which are typically used to
al-l-ocate generation and transmission j-nvestment, so -- but, you
know, as I said before, the Company is not proposing to change
the al-l-ocation of the generation and transmj-ssion system.
n So isn't it true that the Company rea11y doesn't
know what it cost-s to serve net metering customers?
I thlnk it is possible at the generati-on and
transmission level for the cost of servj-ce study to be
different if you narrow it to a specific group of customers
within res j-dentiaf or smal-l- general. At the distribution and
the customer l-evel, tf you consider what those costs are, as f
state in my testimony, customer-rel-ated costs are real1y just
the costs due to the nature of having customers. And within
the Company's class cost of servj-ce study, those are typically
al-l-ocated according to customer accounts. And so the Company
feels that the customer accounts are appropriate or r that
customer-related costs are appropriate and they're
appropriately reflected 1n its service charge.
fn regard to demand-rel-ated components of the
distribution system, based off of wel-l-, typically within the
cost of service study, those are all-ocated according to what we
cal-l- a noncoincident peak or a class's individual peak. Based
off of discussions that Irve had with our distribution
designers, they have stated that the equipment to serve a net
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LARKTN (X)
Idaho Power
metering customer at the distribution l-evel- is typically the
same. There are cases where it can be higher, but it typically
is the same. So really for the two components that we're
requesting to change recovery of, we feel that those rates
accurately reflect those costs.
O. But you haven't done any studj-es to identj-fy
those different components, have you?
A. Which different components?
O. That you were just speaking about. You haven't
done any cost of service studies to identify the revenue
requirement and cost to serve the proposed net metered class?
A. A comprehensive real-l-ocation of costs to the net
meterj-ng cl-asses. Is that what your question j-s referring to?
a. Sure.
A. No, we haven't done a ful-l- cost of service study
from generation to transmj-ssion.
O. Have you done a partial cost of service study?
A. No. We have used our current
currently-approved revenue reguirement for the resj-dential- and
the smal-I general cIass, and we're proposing to change how
those costs are recovered from net metering customers.
O. In your rebuttal- testimony, you indicated that
net metering customers impose no more customer service or
distribution cost than standard residential customers. Is that
correct ?
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HEDRICK COURT REPORTING
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LARKIN (X)
Idaho Power
A. Coul-d you point me to the page?
O. Page 6, l-ine 12, to page 7.
A. What was the excuse me. What was the line
number on page 6?
O. Twelve.
A. I'm not are you referrj-ng to the sentence that
starts on Iine L9?
O. Correct.
A. Okay. Now that I'm there, could you restate your
quest j-on?
O. You've indicated that net metering customers
impose no more customer service or dlstribution costs than
standard residential customers. Is that correct?
A. Yeah, I think what we're saying is we're not
suggesting that they're imposing more costs on those components
of the system.
O. And if that's true, then doesn't that fact make
it reasonabl,e to use the most recent class cost of service
study?
A. Yes. I be]ieve that's what we've done in this
case.
O. If cost of servj-ce is the same for net metering
customers and standard residential- customers, isnrt it
inappropriate to use different rate designs for those groups?
A. I think that's rea1Iy a policy questJ-on that
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Idaho Power
Mr. Said can respond to.
O. Woul-d you agree that the subsidy problem is
actually between smal-l- and large residentj-a1 energy users and
not between net metered and non-net metered residential
customers ?
A. As we've touched on before, I don't think that
the subsidy addressed in this case has to do with large and
small users within the standard residential ox r the standard
resident-iaI or smal-l- general classes.
O. In your rebuttal testi-mony and Irm looking at
page 5, lines 12 through 17 you indicate that the Company
bel-ieves it's not necessarily inappropriate for large customers
to 1nsta11 net metering facillties to pay a lower rate
reflecting J-ower cost of servj-ce. Correct? And I think you've
discussed this j-n earlier testimony?
A. Yes, but I would say that it more accurately --
they're moving to rates that more accurately reflect the cost
of servi-ce, not that it's a lower cost of service but that the
rate itself refl-ects the cost of service better.
O. If large customers swltch to net metering and are
paid a lower rate, that switch woul-dn't be revenue neutra1 for
the Company. Right?
A. WeIl, f think under the Company's proposal we
proposed to exclude Schedule 6 and I from the fixed cost
adjustment, so f believe that woul-d be reflected in the fixed
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LARKIN (X)
Idaho Power
cost ad ;r.rst-ment.
O. So are you testifying that the switch woul-d be
revenue neutral-?
A. I believe so.
O. Well, in fact, tf large customers migrated to the
new rate class, the Company would generate less revenue than it
otherwise would in the residential- class, wou1dn't it?
n. I don't be-l-ieve so, because I be1ieve that
movement- woul-d impact the average use per customer, whlch I
believe would be reflected in a fixed cost adjustment.
a. Why do you believe energy wou1d be reduced for
those customers that migrate?
A. f think what I was saying was that if, under your
examples, if an above-average user is moved from the fixed cost
adjustment, it's going to change the customers that remain in
the fixed cost adjustment and will change those averages that
are used to calculate the fixed cost adjustment.
And I'd like to polnt out, however, I am not the
Company's expert witness on the fixed cost adjustment and i-ts
internal workings. That's my understandi-ng of the mechanism.
O. Would you agree that residential- rates have
historically been designed in a way to send a prj-ce signal to
conserv(: energy?
A. I think that's really a ratemaking policy i-ssue
that Mr. Said can address.
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O. If the Commission were to adopt a rate design in
this case that enabled high-usage customers to lower their
bilts by installing a minlmal- amount of generation and to
qualify for the lower net metering rate, would that send a
price signal to conserve energy?
A. Once again, I think that touches on poI1cy that
Mr. Sai-d can address.
MR. KLEfN: Thank you. That's all.
COMMISSIONER SMITH: Okay. President
Kj el1ander.
COMMISSIONER KJELLANDER: Thank you.
EXAMTNATTON
BY COMMTSSIONER KJELLANDER:
O. Mr. Larkin, you had referenced that 2.76
megawatts is what the current taI1y is that you're seei-ng for
net metering customers; you gave us that update today. Then on
page 10 of your direct testimony, you show how that breaks down
as far as the number of customers across cl-asses: Residential,
commercial, industrial, and irrigation.
Of that 276 megawatts (sic) that you reference,
is there any breakdown that you have that shows how that breaks
down per customer cl-ass?
A. f don't have that current information on me,
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HEDRICK COURT REPORTING
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LARKIN (Com)
Idaho Power83701
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Idaho Power
no.
A. Do you have a general sense? Is it is the
majority of that generation coming from residential, is it
coming f'rom commercial, industrial-?
And if you don't have that right now, maybe if
you can f-ind that and get that to us before we finish the
hearing?
A. Sure.
a. Thank you. You were referenced to Exhibit 701,
and I know it's not your exhibit that you've presented, but
you're f amiliar with it. I was wondering if you cou.l-d just
l-ook at t-he first page and the red numbers. Irm trying to get
a sense.
We're seeing if I'm reading thj-s correctly --
in red Customer No. 15, which is at the top, I believe receives
a credjt- payment of $17,855 at the end of the year. Is that
correct ?
A. Yeah, I actually I think for this customer,
they got- monthly payments. But, yeah, over the course of the
year, t-iratrs what it total-ed to.
O.
of peop-J e who
the year, are
custome::s ?
What Irm trying to get a sense of is
recelve payments for those credits at
those residenti-al- customers, are they
the ma j ori-ty
the end of
commercial-
n If you l-ook at the second column on that
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HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
LARKIN (Com)
Idaho Power
a. That's what that 'rcrt refers to there?
A. Yeah. So those are just our internal- rate codes.
0. So without me counting, do you know, is the
majorit-y of those payments as far as dol-Lar amount going out to
commercj al or 1s it going out to residential?
A. Wel-I, the two largest, the 17,000 and the 13r 000,
one is r:esidential-, one is commercial.
0. Okay.
A. And then I donrt really have a sense of it, but
just based on looking at it, it seems l-ike a mi-xed bag. But I
guess based off of my knowledge, this is really the informati-on
that I have.
O. Okay, thanks.
COMMISSIONER KJELLANDER: That's all I have.
COMMISSIONER SMITH: Commissioner Redford.
EXAMINATION
BY COMMl SS]ONER REDEORD:
O. If you're able to come into the Commission at any
time th;rt you find an j-nequity, why have the cap at all?
A. We1I, I think that the cap is realIy just it's
a reasonable checkpoint. ft's a checkpoint thatrs in place
where everybody can stop and take a l-ook at the service.
But, you know, I agree that without the cdp, the
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BOISE, ID
LARKIN (Com)
Idaho Power
Company still- has the ability to come in and make a filing at
any time.
a. So there is no real rationale for having a cap?
A. We1I, I think the cap provides sort of a stop
point to where if, sdy, somethlng changes unexpectedly and
there is an onsJ-aught of net metering systems before the
Company is ready for the meter operatJ-ona1ly or in terms of the
provisions of the service, that that provides protection from
some sort- of unexpected change in the nature of net metering
service.
O. If you accept energy from net metering customers,
doesn't t-hat- energy, after their costs are dropped out, isn't
that t-he re value to that energy?
n. Could you repeat that?
O. Okay. After you reach at the end of the year,
for insl-ance, and there i-s energy that goes to ldaho Power,
doesn't Lhat energy have a value?
n. Yeah, I wouldnrt say that the energy does not
have a value. I think the Company's position is that under net
meterinc;, the j.ntenti-on woufd be to offset usage. If a
custome.r wants to receive payment for generation in excess of
consumpt-ion, to be compensated for that val-ue, they can do
thati they just- net metering is not the appropriate avenue.
a. What is the appropriate avenue?
A- Schedul-e 85.
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HEDRICK COURT
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LARKIN (Com)
Idaho Power
COMMISSIONER REDFORD: I have no further
quest j-ons.
EXAMINATION
BY COMM]SSIONER SMTTH:
O. Mr. Larkin, do you thj-nk that cost allocation is
a science, you know, l-ike math, where there's a generally a
correct answer?
A. No.
O. It's more l-ike an art?
A. Yes.
O. So I guess I was trained early on that the word
"subsidy" should not be used here, because people's usage
changes, costs are always moving. So really it's a
cross-subsidy, because the it's always goj-ng, it's always j-n
motion between somebody could be a big user one month and a
smal-I user the next month. Correct? So just humor me and say
"cross-subsidies. "
A. Cross. Okay.
O. A11 right. So when you were answering questions
from Mr. Otto, I guess I just want to reconfirm why we're here.
It seeme<l, to me, your answer was that we're here because this
is about revenue recovery, and if a customer reduces their
usage through net metering, the Company still wants the same
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LARKIN (Com)
Idaho Power
amount of revenue because that's what's built into their
revenue requirement. So this is more about making up lost
revenue. Is that a correct lmpressj-on of your testimony?
A. You mean, lost revenue to the Company?
O. Yeah. Is this rea1ly about recovering lost
revenue or is it about something else?
A. I don't think it's about lost revenue. f think
that real1y the Company's fillng I guess to characterLze the
Company's filing broadly, I think what you're speaking to are
the pricing changes. And there are other components to the
Company's filing: The increases to the cdp, the changes to the
tariff in the administrative rul-es, the change to the treatment
of net excess energy.
O. But is the .real purpose here because you feel-
l-ike you're short some money, so this is about lost revenue?
A. No.
O. Wel-l-, then what's the real purpose?
A. The purpose welI, I guess the purpose of the
various components is a lj-ttle bit is specific to each
component-. The purpose of the pricing is to eliminate the
potentia-l for inequity between standard service customers and
net metering customers.
O. Cross-subsidies?
A. Yeah, sorry, the cross-subsidies. So I think
that it's not a revenue issue to the Company. It's a matter of
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HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
LARKIN (Com)
Idaho Power
cost shifting between standard service and net metering
cus tomers .
COMMISSIONER SMITH: Ms. Nordstrom, do you have
any redir:ect ?
MS. NORDSTROM: No.
COMMISSIONER SMITH: Thank you for your help,
Mr. Larkin.
(The witness Ieft the stand. )
MS. NORDSTROM: Mr. Larkin is the only witness
that has direct testimony, and so we will present Mr. Saidrs
rebuttal testimony after the conclusion of the dj-rect testimony
from the other parties.
COMMISSIONER SMITH: Excel-Ient.
Wel-l-, let's see. Are there any witnesses who
have time constraints and would wish to be finished earlier?
Mr. Hammond, did I see your hand move?
MR. HAMMOND: Oh, I'm sorry. f was pointing
towards ICL.
COMMISSIONER SMfTH: f think Mr. Otto can speak
for himself.
MR. HAMMOND: Sorry.
COMMISSIONER SMITH: Mr. Otto.
MR. OTTO: Go ahead. Thanks for the help though.
COMMISSIONER SMITH: And we'd be happy to go to
your witness.
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MR. OTTO: My wj-tness, Mr. Beach, is from out of
town and leaving first th-ing in the morning, so
COMMISSIONtrR SMITH: Okay. If you would like to
present Mr. Beach, then you may.
MR. OTTO: Sorry. Misunderstood that.
The Conserv;rt-ion League wou1d l-ike to call-
Mr. R. Thomas Beach t-o the stand.
R. THOMAS BEACH,
produced ;rs a witness at Lhe instance of the Idaho Conservation
League, being first duly sworn, was examined and testj-fied as
fol-lows:
DIRECT EXAMINATION
BY MR. OTTO:
A. Mr. Beach, could you state and spell your name
for the record, and also identify by whom you're employed?
A. Yes. My name i-s first initial R. Thomas Beach,
B-E-A-C-H, and I'm the principal of the consulting firm
Crossborder Energy.
O. And are yoLr the same Mr. Beach that ICL retained
to provj-de some expert testj-mony in this matter?
A. Yes, I am.
O. And that-'s reflected 1n the direct testimony you
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BEACH (DT)
ICL83701
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HEDRICK COURT REPORTING
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BEACH (Di)
ICL
filed
A. Yes.
a. on the 10th?
Do you have any changes to that direct
testimony?
A. Not at this time.
O. And if l" asked you those same questions today,
would your answers be the same?
A. Yes, they would.
MR. OTTO: And, with that, f'd move to spread
Mr. Beach's testlmony upon the record.
COMMISSIONER SMITH: If there is no objection, we
will spread Mr. Beach's testimony upon the record as if read.
(The fol-lowing prefiled direct testimony
of Mr. Beach j-s spread upon the record. )
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83701
I Q: Please state your name, address, and business affiliation.
2 Az My name is Il. Thornas Beach. I am principal consultant of the consulting firm
3 Crossborder E,nerg,v. MIy busine.ss adclress is 2560 Ninth Street, Suite 213A, Berkeley, Califbrnia
4 94710.
5
6 Q: Please describe your experience and qualifications.
7 A: I have over 30 years o[experience in utility analysis including advising three California
8 Public Utilities Commissioners and serving as an expert witness in a wide range of utility
9 proceedings. Prior to this experience I earned degrees in English and Physics fiom Dartmouth
l0 College and a Masters in Mechanical Engineering from the University of California, Berkeley,
I 1 My curriculum vita is attached to thi.s testimony as Exhibit 201.
)z
l3 Q: On whose behalf are you testirying in this proceeding?
l4 A: I am appearing on behalf of the Idaho Conservation League (lcl,). ICI- intervened in this
I 5 case because they are cotlcerned that Idaho Power's propo..ed Schedules 6 and 8 are an
l6 unjustified change to the net metering program, Scheclule 84.
17
l8 Q: Have you previously testified or appeared as a witness before the ldaho Public Utility
l9 Commission?
20 A: No, I have not. However, I have testified on numerous occasions before state regulatory
2l commissions in California, Coloratlo, Nevada, New Mexico, Oregon, and Virginia. Exhibit 201
22 includes a current list of the testimony that I have sponsored in state regulatory proceedings
23 concerning electric and gas utilities. With respect to the net nretering issue.s under consideration
?4 in this case, I have testified on issues concerning net energy metering (NEM) and solar economics
I
BEACH. Direct
Iclaho Clonservat ion l-eague
tPC-E-t2-27 161
I in California, Colorado, New Mexico, and Virginia. I recently co-authored a major cost-benefit
2 analysis of NEM in California, which is the largest solar market in the U.S.l
J
4 Q: Do you have any exhibits?
5 A: Yes. Exhibit 201 is my curriculum vita. Exhibit 202 is a report produced for the Vermont
6 Public Service Department analyzingthe costs and benefits of net metering for Vermont,
7 including a literature survey of other similar cost/benefit studies. Exhibit 203 is a confidential
8 exhibit containing my calculation of the costs and benefits of a hypothetical net metered solar
9 system. Exhibit 204 is Idaho Power's response to ICL's production request number l. Exhibit
l0 205 is a portion of a presentation by Idaho Power showing the preliminary change in avoided
1 I costs between the 2011 IRP and the 2013 IRP.
t2
O 13 Q: Please summarize your testimony.
14 A: Electric consumers have the right to install their own, privately-financed, on-site
l5 renewable distributed generation (DG) and to interconnect that generation with the grid, thus
l6 giving the DG customer the freedom to meet some or all of their energy needs.2 Net energy
17 metering (NEM) is a foundational policy that enables this freedom. NEM allows the DG
l8 customer to receive a retail rate credit when the DG output exceeds the customer's on-site use,
19 essentially "running the meter backward." NEM is, at its essence, a billing arrangement which
20 provides a simple way to calculate the bill for a DG customer, considering that the customer at
2l times imports electricity from the grid and at other times exports power to the grid.
' Beach, R. Thomas, and McGuire, Patrick G., Evaluating the Benefits and Costs of Net Energlr
Metering in Califurnia (lanuary 2013), (hereafter "Crossborder NEM Study") Available at
http://votesolar.orglwp-content/uploads/2013/01/Crossborder-Energy-CA-Net-Metering-Cost-
Benefit-lan-20 I 3-fi nal.pdf
'This right is provided under, the Public Utilities Regulatory Policies Act of 1978 (PURPA). See
18 cFR 5292.303.
IPC-E-12-27 2
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I My testimony responds to the ldaho Commission's request, when they initially approved the
2 Schedurle 84 net metering tariff, t-crr a report comparing retail rate.s to the value of the net-metered
3 generation. In 2002. Idaho Power proposed and the Idaho Commission approved Schedule 84
4 - Customer Energv Production - Net Metering. Since its inception, Schedule 84:
J o charges customers the rate consistent with their class cost of service while the meter is6 running forward;
7
$ r pays customers the retail rate consistent with their class of service while the meter is9 running backward; and
l0
I I ' does not impose any monthly charges other than those provided on the customer's12 standard service schedule.l
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l4 When reviewing Schedule 84, the ldaho PUC Staff argued that crediting net nretering
I 5 generation at the full retail rate may "pay customers more than the actual value of the
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generation," causing non-participating ratepayers to subsidize the net metering participants.o In
Iight of this alleged subsidy the Idaho Commission approved a cap on the overall program to
lirnit any pote'ntial impacts. Critically, the Conrmission directed Idaho Power, when the cap was
reached, to produce "a report regarding the required level of subsidization by non-participants"
and the "differential between the net metering price it pays at retail rates and the wholesale cost
of alternative power .supplies."5
Responding to the Commis.sion's directive, nry testirnony compares the retail rate credits
paid to solar net metered customers (the primary costs of net metering) to the costs which tdaho
Power avoids by not having to procure and deliver alternative power supplies to net metered
customers (the benefits of net metering). Table I sumnrarizes the costs and benefits that I have
calculated. My analysis concludes that, for ldaho Power's ratepayers today, the benefits of rret
' See Order No. 28951at 2, IPC-E-01-39.
u ldat4.
5 Id ar 12.
tPc-E-t2-27 3
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ldaho Conservation League
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metering significantly exceed the costs, by a factor of t.6 to 1.9. In other words, my analysis
shows that crediting NEM generation at the retail rate actually undervalues this new generation
source.
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Table lz Summary of Idaho Power NEM Costs and Benefits
2|-year Levelized $ per MWh
Costs
Lost Utility Revenues
Integration Costs
Total Costs
Benefits
Energy
2OI I IRP
20l3IRP (estimated)
Capacity - both IRPs
Transmission - both IRPs
Total Benefits - 2011 IRP
Total Benefits - 2013 IRP
Benefit / Cost Ratio
20I I IRP
2013IRP
7
8 Q: Please charactefize the basic analytic process which you have used for this cost / benefit
9 analysis.
l0 A: This analysis is a ratepayer impact measure (RIM) test, one of the standard cost-
I I effectiveness tests that are widely used by utilities throughout the U.S. (including by Idaho
12 Power) to evaluate the ratepayer impacts of Demand Side Management (DSM) progrums.6
l3 Under the terms of the Memorandum of Understanding for Prudency Determination of DSM
l4 Programs, Idaho Power uses three primary cost-effectiveness tests: the total resource cost test
l5 (TRC), which "reflects the total benefits and costs to all customers (participants and non-
u See Califurnia Standard Practice Manual: Economic Analysis of Demand-Side Programs and
Projects (October 200 I ) . Idaho Power's use of such tests is described in the 201 I IRP, Appendix
C, at66-67.
tPC-E-12-27 4
BEACH, Direct
Idaho Conservation League
$81
$a
$85
$92
$64
$40
$32
$ 164
$ 136
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participants) in the Iutility service territory:" the utility cost test (UTC), which "calculates the
costs and benefits of the program fiom the perspective of . . . the utility implementing the
program; and the participant cost test (PCI'), which "assesses the costs and benefits from the
perspective of the customer installing the measur.."' Th" RIM test "examines the potential
impact the energy efficiency progranl has on rates overall" including impacts to customers who
do not participate in the DSM or net nretering programs.8 B.carse this is the strictest of the tests,
ldaho Power is "not required to use the non-participant ("no losers") test."e A RIM score above
one indicates that overall rates are likely to decrease due to the net metering program, as is the
case with Idaho Power's net metering program.
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Q: Why do yotr apply a method developed for evaluating DSM programs to evaluate NEM
costs and benefits, when a NEM customer can go beyond reducing their own consumption and
deliver excess energy to Idaho Power's system?
A: In practice a NEM customer is nrost sin-rilar to an energy efficient customer and is
fundamentally different than an independent electrical generator seeking to sell their output to a
utility. I observe that the majority of the output of a net metered DG systen'r serves the
customer's on-site load without ever touching the grid,r" as illustrated in Figure l, and in this
respect looks to the utility like an energy efficiency (EE) or demand-side management (DSM)
resource. By contrast, a qualifying facility or other independent electricity generator relies on the
' Order No 32331ar 9 - 10, IPC-E- I l -05.
* National Action Plan for Energy Efficiency, LJnderstanding Cost-Effectiveness of Energy Eficiency
Programs: Best Practices, Technical Methods, and Emerging Issues for Policy-Makers at 3-6
(November 2008).
' Order No 28894 at 7, IPC-F,-01- I 3.
"' The exact percentage used on-site will depend on the size o[ the solar DG system compared to
the customer's load, and on the customer's load profile through the day. For the typical (con't)
residentialcustomer (such as shown irr Figure l), about 55o/o to 75olo of the DG output is used
on-site, with the rest exported to the grid.
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Idaho Conservatiorr League
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tPC-h-12-27
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grid to sell the output of their generation system. Because of the focus on serving on-site load,
NEM should be evaluated in a manner that is consistent with how other demand-side resources
are assessed.
Figure 1: The 3 States of Net Metering
E
=.!
o0LoElrJ
5 5 7 I 9 101112X31415151718
Customer Load by Hour in 1 Day
Solar Generation
Traditional DSM programs pay customers an incentive to reduce on-site loads. For NEM
the "incentive" is crediting the small portion of the NEM customer's output that is exported to
the grid, instead of paying a wholesale power price. This incentive is conceptually no different
than a rebate, which is paid to a customer when the customer buys an energy-efficient air
conditioner or agrees to manage his irrigation pumping loads. Those DSM programs are
analyzed to ensure that the costs and benefits are balanced such that society as a whole benefits
and other ratepayers are not unduly burdened. Similarly, the purpose of my analysis of Idaho
Power's current NEM program is to ascertain whether the cost of NEM credits at the retail rate is
offset by the benefits to other ratepayers from the reduced demand and the new source of power
that the NEM customer brings to the grid.
6
BEACH, Direct
Idaho Conservation League
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Q: Have other state utility regulators accepted this analytical method?
A: Yes, although there are relatively few exanrples because only recently are states beginning
to analyze net-metered DG. Calitbrnia uses the same set o{'cost-efl'ectiveness tests and the same
avoided cost calculator to analvze the benefits of EE, DSN4, and net-metered DG resources." The
state of Vermont also used this approach to a.ssess the economics of net metering in Vermont. I
included this report as Exhibit 202 because of it includes a literature review of studies that have
looked at the costs and benefits of NEM and distributed generation.'3 The key point is that such
cost-eff'ectiveness evaluations are widely used in many states, including Idaho, to evaluate DSM
programs, so using such an analysis for net-metered DG builds on a widely-accepted framework.
Q: Over what time horizon should the cost and benefits of net-metered DG be analyzed?
A: As with other DSM measures as well as supply-side resource options, the evaluation
should be over the life of the DG system. Accordingly, the analyses presented below are
conducted over a Z}-year period (2013-2032), and the results are expressed in terms of 2O-year
levelized costs and benefits. This also aligns with the 2}-year horizon ldaho Power uses to
evaluate utility resource options in the Integrated Resource Plan.
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l8 Q:Please describe how you calculate the "costs" of a NEM system in your analysis.
'r The California Public Utilities Commission (CPUC) has used this framework to evaluate the
state's solar incentive program. CS/ Cost-Effectiveness Evaluation (April 201l). Available at
ftp://ftp.cpuc.ca.gov/gopher-data/energy-division/csi/CSIo/o20Report-Complete-E3-Final.pdf
The CPUC also has used this approach to do a more focused evaluation of net metering. Net
Energy MeteringCost Effectiveness Evaluation, (March 2010). Available at
http://www.cpuc.ca.gov/NR/rdonlyres/OF42385A- FDBE- 487 6-9 AB3 -
E6 AD522D8862 I 0 / nem-combined. pdf
'' Exhibit 202, Evaluation of Net Metering in Vermont Conducted Pursuant to Act 125 of 2012
(Vermont Public Service Department, fanuary 15, 201-3).
[PC-E-12-27 761 7
BEACH, Direct
Idaho Conservation League
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A: The principal costs of DG are the revenues that the utility loses as a result of NEM
customers serving their own loads and running the meter backward when they export power to
the grid. Table 2 is an analysis of the lost revenues for a hypothetical Idaho Power residential
customer with average usage who installs a 5.0 kW PV system in Boise and who pays the utility's
standard three-tier residential rate. I used the industry-standard PVWATTS calculator from the
National Renewable Energy Lab (NREL)rr to project the hourly output of such a PV system, and
then aggregated that output by month and by Idaho Power's seasonal and peak time periods.
This PV output is presented in Table 3. Table 2 shows that the lost revenues are $644 per year in
2013, or about $78 per MWh. Assuming that rates escalate at 3o/o per year and using the utility's
7olo discount rate, the 20-year levelized lost revenues are $81 per MWh.
I have also considered whether Idaho Power might incur additional costs to integrate
solar DG resources into its system. Given the small amount of solar DG now on-line, such costs
would appear to be very modest, perhaps negligible. A recent Idaho Power wind integration
study reveals "customer demand is a strong determinant of Idaho Power's ability to integrate
wind."'a When wind generation occurs during low load periods, and as the amount of wind on
the system reaches a high percentage of loads, integration costs increase. But Idaho Power's own
IRP shows that the solar resources are a closer fit to the utility's loads. Further, the roughly 3
MW of NEM customers are far smaller than the several hundred MW of wind on Idaho Power's
system. Other utilities in the western U.S. that have analyzed both wind and solar integration
costs have found that solar integration costs are lower.'' Accordingly, we assume that solar
O,,
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'' The NREL PWVATTS calculator is available at:
http : / / rr edc. nrel. gov / solar/ calculato rs / PVW ATT S / v er sion I /
'o Idaho Power 2011 IRP Llpdate Wind Integration Study at 7, (filed with the Idaho PUC in
February of20l3).
'' For example, Arizona Public Service (APS) has found wind integration costs to be $3.25 per
MWh, and comparable solar costs to be $2.00 per MWh (in 2020). APS 2012 Integrated Resource
Plan, at 32. Black & \reatch, "Solar Photovoltaic (PV) Integration Cost Study" (B&V Project No.
8
BEACH, Direct
Idaho Conservation League
rPC-E-t2-27 168
integration costs for ldaho Power are $4.00 per MWh, compared to the current wind integration
costs of $6.50 per MWh.
174880, November 2012). Available at:
http://www.solarfuturearizona.corn/B&VSolarPVlntegrationCostStudy.pdf
9
tlEACH. Direct
I claho Clonservation League
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LPC-E-t2-27 169
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Q: What are the primary benefits of net-metered DG systems for Idaho Power's ratepayers?
A: A net-nretered PV system provides a new source of power for the Idaho Power system,
and allows the utility to avoid energy, capacity, and transmission costs. Idaho Power avoids the
cost of procuring and delivering energy when a NE,M customer meets their own demand on-site,
as well as when a NEM customer exports exces.s energy to be consunred by their neighbors. The
vast majority of NEM custorners use solar panels that provide energy coincident with Idaho
Power's peak demands, thereby deferring or avoiding capacity additions. DG systems avoid
transmission costs because the energy generation occurs at the point of consumption and any
excess generation is delivered to the closest neighbor. Other potential benefits include avoiding
distribution costs, nrarket price rnitigation benefits, and enhanced grid security.
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Month Summer
On-peak
Summer
Mid-peak
Non-Summer
On-peak
Non-Summer
Mid-peak
Annual
Total
lanuary 298 50 348
February 403 67 470
March 581 97 678
Aoril 687 lt4 801
Mav 790 t32 922
Iune 399 554 954
Iulv 437 575 1,01 2
August 410 542 953
September 677 Il3 790
C)ctober 553 92 646
November 339 57 396
December 281 47 328
Annual Total 1.246 1,671 4,610 768 8,296
Percent of
Outout
15o/o 20%o 560/o 9%o l00o/o
IPC-E-12-27 712
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Q: What alternate energy costs did you use?
A: I calculated the lrenefits by applying the alternate or marginal costs takerr principally from
Idaho Power's 201I lntegrated llesource Plan (2011 IRP), fronr prelin'rinary intbrmatiorr which
the utility has released on its 2013 lRP, and fionr ldaho Power's most recent general rate case
filing. These are the alternate costs Idaho Power and the ldaho Conrnrission use to evaluate
clenrand-side programs. 'l'he use of the DSM alternate costs are appropriate given that the
"primary thrust of net nretering," like other demand-side prog,rarns, "i.s to provide customers the
opportunity to offset their own load and energy requirements"rT - in this case, by f'acilitating the
installation of privately-financed on-site renewable generation.
Idaho Power expects the alternate energy costs tbr the 201 3 IRP to be lower than those irr
its 201 I IRP. Accordingly, I have calculated DG / NEM beneflts using lroth ( l) the alternate
energycostsfionrthe20ll IRP'" and(2)anestimateof'20l3lRPalterrlateenergycoststrasedon
Idaho Power's October 2012 DSM Status Update.re "l'o produce the 2013 IRP estinlate, I reduced
the 201 I summer orr-peak and non-sunlnrer rnid-peak alternate costs by 25o/o, and sunrmer nrid-
peak and all off-peak rates by 45o/o, to reflect lower gas and GHG costs. 'l'able 4 shows both sets
of alternate energy cost.s. In'I'able 5, I apply these alternate energy costs to expected DG output
by cost period to determine the total energy-related benefits. 'Ihe 20-year Ievelized energy
benefits from a PV system are $92 per MWh using the 20ll IRP alternate energy costs and $64
per MWh with the estinratecl 2013 IRP values.
" Order No. 28951 at ll.
'* Exhibit 204, Idaho Power's Response to ldaho C<tnservation League Production Request No. I
(confirnring the Conrpany continues to use the 201 I IRP Alternate Costs for DSM resources);
Appendix C, at 67-68 ancl Table DSM-2. 'l'he sutnmer on-peak alternate costs refle'ct the variable
costs of a simple-cycle combustion turbine; the alternate costs in other time periods are basecl on
modeling of the regional power market.
'' Exhibit 2(15, Iclaho Power's DSM Status Llltdate presented to the 201 3 I RP Aclvisory Conrmittee
on October I I , 201 2. .Showing a preliminary estimate of lower avoided costs rhan 20 I I .
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Q: How did you value the capacity benefits of DG resources?
A: I assume that a PV system will contribute firm summer capacity equal to 600/o of the
system's nameplate (AC) capacity. Accordingly, a 5 kW PV system would have a firm capacity of
3 kW. I use the 2011 IRP capacity value of $94 per kW-year (escalated to 20t3 $), and assume a
summer peak loss factor of l3o/o.20 As shown in Table 6, the resulting capacity-related alternate
cost for PV is $40 per MWh of PV output.
Q: Isn't PV a "non-firm" source of power, such that it should receive no capacityvalue?
A: No. Idaho Power's own 2013 IRP screening data assigns a summer on-peak capacity for
distributed PY of 75o/o of these systems'nameplate capacity; thus, the utility assumes that l0 MW
of 4 kW PV systems distributed across southwest Idaho would have a summer on-peak capacity
of7.5MW.2'TherehavebeenmanystudiesofthecapacityvalueofsolarPV,acrosstheU.S.,
employing sophisticated techniques such as the use of reliability models to calculate the effective
load carrying capacity (ELCC) of solar resources.2' Idaho Power's IRP assumption that
distributed PV has a capacity value of 75olo of nameplate is probably too high even on its
'o ldaho Power 2011 IRP, Appendix C at 69, Table DSM- L
" Idaho Power Supply-Side Resource Operating Inputs, Presented to the 2013 IRP Advisory
Committee on December 13, 2012. Available at:
http://www.idahopower.com/pdfs/AboutUs/PlanningForFuture/irpl2013/DecMtgMaterials/Supp
lySideResourceStack_PeakCapacity.pdf
" These studies include:. Xcel Energy Services, Inc, An ELCC Analysis for Estimating the Capacity Value of Solar
Generation Resources on the Public Service Company of Colorado System, (February 2009).
A vailable at: http://www.solarfuturearizona.com/PSCO-Solar-ELCC-report-020909.pdf
' Hoff/Perez, Clean Power Research, Energy and Capacity Valuation of Photovoltaic Power
Generation in New York, (March 2008). Available at: bit.lyldPP2Jl. Hoff/Perez, Clean Power Research, Determination of Photovobaic Effective Capacity for
New lersey, (June 2012). Available at http://www.cleanpower.com/resources/pv-elcc-new-
jersey/
' Hoff/Perez, Clean Power Research, Determination of Photovoltaic Effective Capacity for
Nevada Power, (March 2012). Available at http://www.cleanpower.com,/resources/pv-elcc-
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summer-peaking.systenl, particularly fbr fixed array PV systems. A firm PV capacity value of
600lo of narneplate is more reasonable given the range o[capacity values tbr PV calculated in the
available PV ELCC studies.
Q: Does solar DG avoid transmission costs?
A: Yes. Transnrission costs are avoided because NEM generation is either used on-site or is
exported and immediately corrsumed by the NEM customer's neighbors without loading the
transmission system. DG at the distribution level which serves iocal loads in Idaho Power's
service territory will reduce demand on Idaho Power's transmission systenr. It is particularly
important to include avoided transmission costs given that ldaho Power is transmission-
constrained during summer peak periods, the Boardnran to Hemingway I'ransmission line was
the preferred resource in the 201I IRP, and ldaho Power continues to pursue a partnership in the
Gateway West transmission line.:l
Q: Doesn't ldaho Power incur additional transmission and distribution (T&D) costs either
to serve or to accept power from net metered DG customers?
A: No. When the DG customer's meter runs forward, the DG customer pays for that service
at the full retail rate, including the full costs of the utiliry's "f&D service. When the DG customer
is exporting and the meter runs backward, the DG custorner functions as a generator, selling
power to Idaho Power at a price equal to the retail rate. As with any other generator from which
Idaho Power purchases energy, the utility takes title to the power at the DG customer's meter and
then delivers the power over its distribution system to other customers - the DG customer's
immediate neighbors. Idaho Power then sells that power to the neighbors and receives its full
retail rate in compensation - including the full retailT&D service charges - even though the
" lflo.hO P1.u1er 20! ! lRP at 6 - 7: httn'//www.satewavwestrrroie<:t.corrr/
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I utility has moved the power only a short distance without the use of its transmission system. In
2 sum, the utility is more than fully compensated for all use of its T&D system associated with the
3 services it provides to a net metered customer, and the transmission system costs which such a
4 transaction avoids should be accounted for as a benefit in determining whether the full retail rate
5 is the "right" price for net metered DG exports.
6
7 Q: How have you quantified such avoided transmission costs?
8 A: Idaho Power presented a marginal cost study in its most recent general rate case.24 This
9 study includes the utility's long-term marginal transmission costs - in other words, the
l0 investment-related costs that the utility will save if demand on its transmission system is reduced
I I - based on the transmission capital budget over the 20ll-2020 period. These marginal
12 transmission costs are shown in Table 5.
O,,Table 5: Marginal Transmission Costs
Month $ per kW-year
)anuary
February
March
April
May
Iune
Iuly
August
September
October
November
December
Summer Total 83.47
Solar generation peaks on summer afternoons when Idaho Power's demand is also high.
As a result, solar PV has particular value in avoiding transmission costs during ldaho Power's
2.39
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3.48
0.96
12.59
27.70
32.75
23.02
20.38
6.66
6.93
33.85
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'n 2011 Marginal Cost Analysis, Larkin
from Scott Wright to Matt Larkin).
Workpapers at 59-66, IPC-E-l l-08, (April28,2}ll memo
771
I sunrmer peak nronths (June - August). Accordingly, I used the iunc - August data on rnarginal
2 transmission costs (escalated to 2013 $) to calculate the transmission benefits of solar DG, which
3 are about $30 per MWh, as surnmarizeclin Talrle 6.
4
5 Q: Please summarize the benefits of net-metered solar DG.
6 A: Table 6 summarizes these benefits -- $163 per Iv{Wh using the 201I IRP alternate energy
7 costs and $135 per MWh using the estimated 2013 IRP alternate energy costs.
8 Table 6: Avoided Cost Benefits for a 5 kW Systent by Seasonal and Peak Period
Solar DG Outout
Energy - 2011 IRP
r level $/MWh
Value ($/MWh
Energy - 2013 IRP
Alternate Energy
20-yr level $/MWh
Enerey Value ($/MWh
Capacity
Firm Solar
Firm Solar
Capacity Alternate Cost
Capacity Value
$ and $/MWh)
Firm Solar (kW
Summer Transmission
inal Cost ($/kW-vr
'Iransmission Value
$ and $/MWh
Tolal Value - 20lf IRP
Total Value - 2013 IRP
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Q: What is the benefit-to-cost ratio for net-metered DG?
A: As shown in Tables I and 6, the benefit-to-cost ratio for net-metered DG ranges from 1.6
(zOl3lRP) to I.g (2011 IRP). I note that net-metered DG is cost-effective on an energy basis
alone using the 201I IRP alternate energy costs.
Q: What would be the annual benefits for ldaho Power's non-participating ratepayers if 15
MW of net-metered solar DG were to be installed in Idaho Power's territory?
A: From Table l, the net benefits of solar DG are $51 per MWh based on the 2013 IRP
alternate energy costs. The output of 15 MW of solar DG is 24,900 MWh per year. Thus, the
annual benefits from 15 MW of solar DG would be $1.3 million per year.
Q: Do you consider your assessment of the benefits and costs of solar DG conservative?
A: Yes. First my analysis uses the RIM test, which is widely considered the most conservative
measure of the cost effectiveness of DSM programs. The RIM includes as a "cost" Idaho Power's
forgone revenue attributable to a NEM customer who merely reduces their energy demands, but
still is a net purchaser of electricity, instead ofjust focusing on a NEM customer's export of excess
energy. Second, my analysis does not include additional benefits that other states have quantified
and accepted. Both of these factors would increase the benefit-to-cost ratio.
Many utilities, including Idaho Power, do not use the RIM test to decide whether to
implement energy efficiency programs. One reason is that the RIM test includes as a cost Idaho
Power's forgone revenues due to reduced energy bills." But like DSM programs, the majority of
the output of a NEM system serves the customer's on-site load and never touches the grid (the
"energy efficiency" portion of Figure I ). From the perspective of the impacts on the grid and on
other ratepayers, this portion of the DG output is akin to the installation of an energy efficiency
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measure, or to the customer simply choosing to use less power, and no utility would single out a
particular customer tor e,xtra charges if that customer decided to reduce his use of the utility's
produm. F'urther, customers have PURPA rights to install renewable DCi on their premises and
to serve their own load. Frorn this per.spective, it is only the exported portion of a NEM.$ysteltl
that impacts the grid or non-participating ratepayers. A more precise RIM evaluation of NEM
should focus only on the power exports, inste'ad of the entire output of system, as my analysis
does.'u
However, such an "export-only" analysis is more complex and must be done on an hourly
basis, as the amount of hourly exports depends on the size of the PV system relative to the
cLrstomer's load and on the hourly profiles of the customer's PV production and load. Because
NEM exports tend to occur in the afternoon when the power is nrost valuable, the per unit
benefits of NEM exports typically are larger than the per unit benefits of the entire DG output.
Thus, an export-only evaluation of NEM for Idaho Power would be likely to produce an even
higher benefit / cost ratio that those which I have calculated above.
Second, my analysis does not include a number of benefits of solar DG that have been
quantified and included in studies perfbrrned in other states. Other studies, such as the
Califbrnia cost / benefit studies ret-erencecl above, have included avoided distribution costs, which
can be more difficult to analyze because the data on when distribution circuits peak and when
they are expected to reach capacity are hard to obtain and highly location-specific. Other benefits
which have been quantified include:
. Price mitigation benefits. Lower denrancl fbr electricity (and tbr the gas used to
produce the rnarginal kWh of power) has the broad benefit of lowering prices
across the gas and electric nrtrrket.s in which the utility operates.2T
2n The cost-benefit evaluations of NEM that have been conducted in Califlornia, as referenced in
Footnote 8 above, have focused exclusively on NEM exports.
" For example, a Lawrence Berkeley National Lab study has estinrated th:rt the consumer gas bill
savings associa,tecl with increase<"| ;rnrounts of rerrt-wahle enerev and energv efficiency. expressed
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Grid security. Renewable DG resources are installed as many small, distributed
systems and thus are highly unlikely to fail at the same time. They are also
located at the point of end use, and thus reduce the risk of outages due to
transmission or distribution system failures. This reduces the economic impacts
ofpower outages.
Economic development. Renewable DG produces more local job creation than
fossil generation, enhancing tax revenues.
One study of several eastern U.S. markets estimated these benefits collectively to be from
$100 to $140 per MWh.28 Given that the benefits I have quantified are decisively higher than the
costs, I have not tried to calculate these additional benefits for the Idaho Power system.
Does this conclude your direct testimony?
Yes, it does.
in terms of $ per MWh of renewable energy, range from $7.50 to $20 per MWh. Wiser, Ryan;
Bolinger, Mark; and St. Clair, Matt, Easing the Natural Cas Crisis: Reducing Narural Gas Prices
through Increased Deployment of Renewable Energy and Energy Eficiency at ix, (|anuary 2005).
Available at: http://eetd.lbl.gov/EA/EMP2t Hoff, Norris and Perez, The Value of Distributed Solar Electric Generation to New Jersey and
Pennsylvania, at Table ES-2 (November 2012). Available at: http://mseia.net/site/wp-
content/upload,sl 2012/05/MSEIA-Final-Benefits-of-Solalflenort-ZO I 2- I I -0 l.pdf
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HEDRICK COURT
P. O. BOX 578,
REPORTING
BOISE, ID
BEACH (Di)
ICL
(The following proceedings were had in
open hearing. )
MR. OTTO: Mr. Beach is avai]able for
cross-examination.
COMMISSIONER SMITH: WouJ-d you Iike his exhibits
admitted as wel-l-?
MR. OTTO: Of course I would. Thank you for
reminding me.
COMMISSIONER SMfTH: If there's no objection, we
wil-l admit Exhibits 201- through 205.
( Idaho Conservation League Exhibit Nos.
201--205, having been premarked for identification, were
admitted into evidence. )
COMMISSIONER SMITH: Mr. Mil-l-er, do you have
questj-ons of Mr. Beach?
MR. D. MILLER: I do not. Thank you, Madam
Chai.r.
COMMISSIONER SMITH: How about Mr. Richardson.
MR. RICHARDSON: No questions, Madam Chair.
COMMISSIONER SMITH: Mr. Hammond.
MR. HAMMOND: No questions, Madam Chair.
COMMISSIONER SMITH: Mr. Klein.
MR. KLEIN: No quest j-ons .
COMMISSIONER SMfTH: Ms. Nordstrom.
MS. NORDSTROM: No questions.
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HEDRICK COURT REPORTING
P. O. BOX 5-lB , BOTSE, rD
BEACH (Com)
ICL
COMMISSIONER SMITH: Commissioner.
WelI, good, because now we're down to me.
EXAMINATION
BY COMM]SSIONER SMITH:
O. Mr. Beach, orr page 2 of your direct testimony, at
l-ine 11, you talk about net energy metering r ox NEM, as a
foundational- policy that enables freedom. So whose policy are
you speaking of, whose foundational policy?
A. WeIl, it-'s a foundational- policy for distributed
generation.
O. But whose is it? I mean, f don't know what
A. Well-, it's a policy that's been adopted by 43
states.
O. In what manner, just
A. Well
0. You mean just by having a net metering tariff?
A. Yeah, and having -- many states have statutes
that- put net metering in place.
O. Okay.
A. The det;:il-s differ from state to state, but it's
a foundational policy I think Iargely because it's so
widespread.
O. A1l right. I just didn't know if you were
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HEDI1ICK COURT
P. O. BOX 5'7 B ,
REPORTING
BOISE, ID
BEACH (Com)
]CL
sweeping this into the Constitution somehow.
A. No. I mean, there certainly j_s a some a
an underpinning for net metering in Federal 1aw under PURPA.
O. OkaY.
A. And so t-hat's certainl-y another foundational-
aspect of j-t.
O. Thank you. So earl-ier on that page, you talk
about a report produced for the Vermont Public Service
Department. And I was curious if you chose the Vermont report
because Vermont and I<laho are so simil-ar?
A. No, not- -- we1_I, Do, not necessarily. I thought
that Vermont that i-here have been relatively a relatively
limited number of cost- benefit studies that have been done of
net metering, although 1t is an area that is attracting
increased attention. And I thought that the Vermont study was,
first of all, it's rel-atively easy to digest. Some of the
other studies that have been done in other states are somewhat
larger. And it al-so had a you know, has an excellent
l-iteratur:e survey as part of it, which I thought was useful-.
And I thought it was, you know, very clearly done.
O. Okay. T'hank you. Those are all my questions.
COMMISSIONER SMITH: Do you have any redirect,
Mr. Otto?
MR. OTTO: I do have one.
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HtrDR]CK COURT
P. O. BOX 5'7I t
REPORTING
BOISE, ID
BEACH (Di)
ICL
RED]RECT EXAMINATION
BY MR. OTTO:
O. Commj-ssioner Smith asked you about a policy that
enables freedom. Is the freedom here about customer -- what's
the freedom aspect that you're referrj-ng to?
A. Sure. The freedom aspect is customers taking
greater control of where they get their energy from, and having
the freedom to produce a substantial portion of their energy
needs on the roof of their house, ox, you know, wind machine in
their back yard. It's it's freedom in the sense of energy
j-ndependenoe. It's freedom in the sense of customer choice:
Choosj-ng where you get your power from, what kind of resources
are used t-o supply that power. That's the kind of freedom that
I was speaking of.
MR. OTTO: Thank you. That's all I have.
COMMISSIONER SMITH: Thank you very much,
Mr. Beach. Thanks for your he1p.
MR. OTTO: I have another question, I guess, not
for the witness, for you. Since Mr. Beach is completed, may he
be excusecl from the hearing?
COMMISSIONER SMITH: Is there any objection to
excusing Mr. Beach from the remainder of the hearing?
I see none. He's excused.
MR. OTTO: Thank you very much.
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HEDR]CK COURT REPORTING
P. O. BOX 518, BOTSE, rD
CARDWELL (Di)
Pioneer Power
COMMISSIONER SMITH: You' re welcome.
(The witness l-eft the stand. )
COMMISSIONER SMITH: Al-l- right. How about
Mr. Richardson.
MR. RICHARDSON: Thank you, Madam Chair. Madam
Chair, Pioneer Power call-s Dawn Marie Cardwell to the stand.
DAWN MARIE CARDWELL,
produced as a witness at the i-nstance of Pioneer Power, LLC,
being f irst duJ-y sworn, was exami-ned and testif ied as fol-l-ows:
DIRECT EXAMINATION
BY MR. RICHARDSON:
O. Woul-d you please state your name and spe11 your
l-ast- name for the record, and provide us with your business
address.
A. My name's Dawn Marie Cardwel-l-, C-A-R-D-W-E-L-L,
anci I reside at 962 North Glen Aspen Way in Star.
O. Are you the same Dawn Marie Cardwell who caused
prefiled testimony and Exhibits 401 and 402 to be prefiled in
this docket?
A. Yes, I did.
O. And if I were to ask you the same questions this
morning that. you were asked in your prefiled testimony, would
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HEI)RTCK COURT
P. O. BOX 5'78,
REPORTING
BOISE, ID
CARDWELL (Di)
Pioneer Power
your answers be the same?
A. Yes, they would.
a. And so you have no corrections or additions to
make to your testimony?
A. No.
MR. RICHARDSON: Madam Chair, I would move that
the testimony of Dawn Marie Cardwel-l- be spread upon the record
as if it were read in fuIl, and Exhibits 401 and 402 be marked
for identification.
COMMISSIONER SMITH: If there is no objection, it
is so ordered.
(The following prefiled direct testimony
of Ms. Cardwel1 is spread upon the record.)
LB7
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a"I. Introduction and Overryiew
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a. Please state your name and address.
A. My name is Dawn Marie Cardwell and I was hired by Pioneer Power, LLC as Project
Manager for a net metering project.. My address is962 N. Glen Aspen Way, Star, Idaho 83669.
A copy of my resume is attached as Exhibit "40l." I am testifying on behalf of Pioneer Power,
LLC.
a. Please describe Pioneer Power.
A. Pioneer Power, LLC works with clients seeking to provide services for renewable energy
projects, both net metered and contracted applications. In this instance a 40kW wind turbine was
installed as a net metered installation to offset electrical expenses associated with operating a 200
H.P. irrigation pump. This property is located on a 280 acre ranch in Oreana, Idaho and is
owned and operated by John and Lorna Steiner. The pump is necessary for the hayingo,
14 operations on the ranch and is a significant expense to the entire ranching operations. The net
15 metered turbine is part of the owner's efforts to provide an economical and environmentally
16 desirable way in which to offset the cost of electricity required to operate this irrigation pump.
11 The owners expect to generate approximately 75,000 kWh on an annual basis which will help
1 B offset 400,000 kWh of electrical consumption by the pump. To give you an idea of the nature of
19 this project, I have attached a photograph of the facility as Exhibit 402.
20 a. What is the purpose of your testimony?
2l A. I testify as to the impact of Idaho Power's proposed changes in the treatment of excess
22 energy under the proposed changes to its net metering program.
23 a. Have you testified before a public utilities commission before?
-24 A. No. This is the first time I have been a witness before a public utilities commission.o
Cardwell, Di
tPC-E-12-27
188
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0. Do you address any of the other issues in this case, such as rate design?
A. No. Idaho Power's request to change rate design does not apply to the irrigation class.
However the company's proposal to change the treatment of excess energy will apply to the
irrigation class as well as all the other net metering customers.
a. What is your understanding of the changes Idaho Power is proposing in the way it
treats excess enerry?
A. The Company is proposing to provide net meter customers with a kWh credit in the
amount of excess energy. It will allow that credit to be applied against future bills until the end
of the calendar year when any remaining excess credits will automatically expire. Currently
excess energy is paid for by ldaho Power at the end of the year.
a. What is Pioneer Power's response to ldaho Power's excess credit proposal?
A. I don't like the idea of excess credits expiring because those credits represent real energy
that ldaho Power will likely use to serve other customers. In other words, it looks to me like
Idaho Power is proposing to take property (in the form of electricity) generated by the owners of
net metering projects and at the owners' expense without paying for it. I don't think that is fair.
a. Are there other problems with ldaho Power's proposal?
A. The use of a calendar year, when combined with an expiration of the excess credits,
essentially deprives Mr. Steiner of the benefits of being a net metering customer for the time
frame between the end of the inigation season and the end of the year. If he irrigates from April
through August, all of his generation for the months of September through December will
essentially be for naught and will be sold to Idaho Power's other ratepayers without his being
paid for it.
Cardwell, Di
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0. If Idaho Power's proposal is adopted by the Commission, is there a fair way to
structure the time period over which credits are accumulated and the date on which they
expire?
A. First off, I don't believe Idaho Power's proposal should be adopted, as I discuss further
below. However, if my recommendation is not adopted there is a way to fix this problem.
a. Please explain.
A. For irrigation net metering customers, have the year begin at the end of the irrigation
season at the beginning of fall, say September first. That way they would be able to use the
generation from all twelve months from September through August to offset some of their
summer irrigation load.
a. How would you have this Commission address the other issue you raise with respect
to giving electrical enerry to ldaho Power without being compensated?a'13 A. I don't understand all the legal issues behind tdaho Power's excess credit proposal; they
14 say that they won't be able to pay for excess credits without a contract. So, short of signing a
15 contract, I believe the excess credits should be carried forward indefinitely as long as the
16 customer is connected. That way we can keep our property and it is not taken from us without
L1 payment.
18 a. When you say "indefinitely" do you mean to say that excess credits can accumulate
19 forever?
20 A. Not necessarily. They would accumulate for future use as long as that particular
2l customer is connected. Should a new customer take possession of the facility they would begin
22 over as a new net meter customer.
Cardwell, Di
tPC-E-12-27
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O. rffhat do you propose would happen to the excess credits when the customer moves
or sells the facility associated with the net metering project?
A. At that time the customer would sell the excess credits to Idaho Power at the then
prevailing avoided cost rate.
a. I thought you said that you understood it to be ldaho Power's position that it cannot
buy the excess credits without a contract. How do you reconcile that with your proposal to
sell excess credits when the net metering customer moves away or otherwise stops being a
net metering customer?
A. I think there is an easy way to reconcile this problem. When a net metering customer
decides to cease being a net metering customer then that customer enters into a one-time contract
to sell any excess credits on a one time basis.
a. What rate would Idaho Power pay for those excess credits?
A. The Company could use the then existing avoided cost rate published by the PUC.
a. As a developer of net metering projects, can you help the Commissioners
underctand the economic impact Idaho Power's application has had on your business?
A. Yes, I would like to address the impact this has had on my business model in terms of the
economic impact. I worked on this project from the beginning. One of the incentives for me to
be involved with this project was that Pioneer Power, LLC and I discussed the potential of using
this project as a sort of model project to work out the bugs and be able to show other farmers and
ranchers the potential they may have to benefit from a solar or wind net meter property. If
IPCo's application is approved as is, we have no reason to even approach others as it would
obviously not be cost effective. IPCo's proposal not only hurts existing net metering customers,
it hurts Idaho's economy and destroys "Cireen Jobs" such as mine.
Cardwell, Di
tPc-E-t2-27191
a1 0. Does this conclude your testimony?
A. Yes, it does.
Cardwell, Di
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HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, rD 83701
CARDWELL (X)
Pioneer Power
(The fol-l-owing proceedj-ngs were had in
open hearing. )
(Pioneer Power Exhibit Nos. 407-402,
having been premarked for identification, were admitted into
evidence. )
MR. RICHARDSON: Ms. Cardwel-l- is availabl_e for
cross-examination.
COMMISSIONER SMITH: Thank you.
Mr. Otto, do you have questions?
MR. OTTO: I do not.
COMMISSIONER SMITH: Mr. Hammond.
MR. HAMMOND: I do not.
COMMISSIONER SMITH: Mr. Mi1ler.
MR. D. MILLER: No, thank you.
COMMISSIONER SMITH: Mr. Klei-n.
MR. KLEIN: No.
COMMfSSIONER SMITH: Ms. Nordstrom. Oh, sorry.
MS. HILTON: Just a couple.
COMMISSIONER SMITH: Thank you.
CROSS-EXAMINATION
BY MS. HTLTON:
O. Would it- be fair t.o say that you're concerned
about the potent-iaJ- negati-ve fjnancial impacts of the Company's
193
proposal on Pioneer Power?
A. Yes. Einancial impacts in terms of the cost of
an .Lnstal-lation. Is that what you're asking?
O. Yes, or overall- financial impacts.
A. Yes.
O. And are you famifiar with the Companyrs modified
proposaJ-?
A. To the degree that I understand it, yes. f mean,
it' s probably to a l-imited degree.
O. 1'm specifically r:eferring to the portion
allowing for people to sel-f-select the date of expiration of
the credits.
A. Yes.
0. So do those modifications address your concerns
of negative financial impacts for Pioneer Power?
A. Except for the excess energy that might be
produced in some cases.
O. So, j-t's my understanding that Pioneer Power wil-l-
generate about 75,000 kilowat-t hours annually?
A. They hope to.
O. And that their estimated annual usage is about
400,000 kilowat-t- hours annually?
A. Yes.
O. And you expect that there woul-d be excess?
A. No, but fo:: other potential projects, not for
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HEI)RICK COURT
P. O. BOX 5lB,
REPORTING
I3OISE, ID
CARDWELL (X)
Pioneer Power83701
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HEDRICK COURT REPORTING
P. O. BOX 5'7 B , BOTSE, rD
CARDWELL (X)
Pioneer Power
th.i s specific project-.
O. Okay.
MS. HILTON: No further questions.
COMMISSIONER SMITH: Do you have any questions,
Mack?
COMMISSIONER REDEORD: No.
COMMISSfONER SMITH: Nor I.
Any redirect, Mr. Rlchardson?
MI{. RICHARDSON: No redirect, Madam Chair.
COMMISSIONER SMITH: Thank you for appearing. We
appreciate your he1p.
TLIE WITNESS: Thank you.
(The witness left the stand. )
COMMISSIONER SMITH: A11 r1ght. I propose now to
go to lunch and come back at 1:15.
(Noon recess. )
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