20130626Technical Hearing Volume III.pdf

: : i-
BEFORE THE IDAHO PUBLIC UT]LITIES COMMISSION
rlIaa
?ilti Jt"ll?'2
?iliiiJUl{ 2't;l' r;-l'-'' t-l' t' ' - '-,'.
i ti_t' ;;,'- :i 1 ,i !
IN THE MATTER OF IDAHO POWER
COMPANY'S APPLICAT]ON FOR
AUTHORITY TO MODIEY ITS NET
METERING SERV]CE AND TO ]NCREASE
THE GENERATION CAPACITY LIMIT
CASE NO.
TPC-E-12-27
TECHNICAL
HEARING
HEARING BEEORE
COMMISSTONER MARSHA H. SMITH (Presiding)
COMMISSIONER PAUL KJELLANDER
COMMISSIONER MACK A. REDFORD
PLACE: Commission Hearing Room
472 West Washington StreetBoise, Idaho
DATE: June LL, 2013
VOLUME III Pages 796 - 459
POST OFFICE BOX 578
BOISE, IDAHO 83701
208-33G9208
HEIIRIGK
COURT REPORTING
Suu;g, tlo frya/e,owwfiy aiao /9/8
ORIGINAL
1!: - ,'
F,;'l S:50
liil 8:50
1
2
3
4
5
6
1
I
9
10
11
t2
13
L4
15
76
l7
18
1,9
20
2L
22
23
24
25
HEDRTCK COURT REPORTING
P. O. BOX 5'78, BOTSE, rD
For the Staff:
For Idaho Power Company:
Eor Snake River Al-l-iance:
Eor Idaho Clean EnergyAssociation, fnc.:
For Idaho Conservation
League:
Eor Pioneer Power, LLC:
For City of Boj-se:
APPEARANCES
KARL KLEIN, Esq.
Deputy Attorney General
412 West Washington
Boise, Idaho 83702
LISA D. NORDSTROM, Esq.
and JULIA A. HILTON, Ese.
Idaho Power Company
L227 West Idaho Street
Boj-se, Idaho 83702
KEN MILLER
Cl-ean Energy Program Dj-rector
Snake River Al-liance
Post Office Box L73L
Boise, Idaho 83701
McDEVITT & MILLER, LLC
by DEAN J. MILLER, Esq.
420 West Bannock Street
Boise, Idaho 83702
BEN,JAMIN J. OTTO, Esq.
Idaho Conservation League
7L0 North Sixth Street
Boise, Idaho 83702
RICHARDSON & O'LEARY
by PETER J. RICHARDSON, Esq.
515 North 2'lLh Street
Boise, Idaho 83702
BATT FISHER PUSCH & ALDERMAN, LLP
by JOHN R. HAMMOND, JR., Esq.
101 South Capitol Boulevard,
Suite 10]-
Bo j-se, Idaho 831 02
and -R. STEPHEN RUTHERFORD, Esq.
Boj-se City Attorney's Office
Post Offi-ce Box 500
Boise, Idaho 83701-0500
83701
APPEARANCES
1
2
3
4
5
6
7
I
9
10
11
t2
13
74
15
t6
T1
1B
79
20
2t
22
23
24
25
Rick Gil]iam(City of Boise)
Paul- R. Woods(City of Boise)
Matthew Dunay
(ICEA)
Courtney R. White
(ICEA)
Leif Elgethun
(ICEA)
Matt El-am
( Staff )
Cece Gassner(City of Boise)
Gregory W. Said
( Idaho Power-Rebuttal)
Mr. Hammond (Direct)
Prefiled Dlrect
Ms. Nordstrom (Cross)
Commissioner Smith
Mr. Hammond (Direct)
Prefil-ed Direct
Ms. Nordstrom (Cross)
Mr. D. Mill-er (Direct )Prefiled DirectMr. Hammond (Cross)
Mr. D. Miller (Direct)
Prefi-l-ed DirectMr. Klein (Cross)
Ms . Hil-ton (Cross )
Commissioner Kj ellander
Mr. D. Mil-l-er (Direct )Prefil-ed Direct
Ms. Hil-ton (Cross)
Commissioner Smith
Mr. D. Mil]er (Redirect)
Commissioner Smith
Commlssioner Redford
Mr. Klein (Direct)
Prefiled DirectMr. D. Mil-l-er (Cross )Mr. Otto (Cross)
Ms . Hil-ton (Cross )
Commi-ssioner SmithMr. KIein (Redirect)
Mr. Hammond (Direct)
Prefiled Direct
Ms . Hil-ton (Direct )Prefil-ed RebuttalMr. Richardson (Cross)
Mr. Mil-ler (Cross )Mr. Otto (Cross )Mr. Hammond (Cross)
Mr. Kl-ein (Cross )
Commissioner Smith
]-96
]-99
238
242
245
247
255
258
260
264
266
210
297
300
307
309
311
324
325
326
328
328
330
332
363
368
314
377
380
381
383
389
391
4]-4
433
440
443
449
453
WITNESS
]NDEX
EXAMINATION BY PAGE
HEDRICK COURT REPORT]NG
P. O. BOX 5'18, BOTSE, rD 83701
INDEX
1
2
3
4
5
6
1
I
9
10
11
t2
13
t4
15
1,6
77
1B
t9
20
2t
22
23
24
25
EXHIB]TS
NUMBER PAGE
For Idaho Cl-ean Energy Assocj-ation:
701. Response Staff's Request No. 9 PremarkAdmitted 291
702. Growth trends chart PremarkAdmitted 291
703. Potential inequity chart PremarkedAdmitted 291
704. Net meter chart PremarkedAdmitted 297
705. Analysls PremarkedAdmitted 291
706. Premium paid chart PremarkedAdmitted 297
101. Financial benefit chart PremarkedAdmitted 297
708. Empirical example chart PremarkedAdmitted 297
709. kWh chart PremarkedAdmitted 291
710. Estimation of potential- revenue
reduction
Premarked
Admitted 297
1t!. Cumulative Instal-l-ed Net Metering PremarkedCapacity Admitted 324
Eor Idaho Power Company:
9. Net Metering fnstallations as of Marked 388
June L, 20L3 Admitted 459
HEDRICK COURT REPORTING
P. O. BOX 518, BOTSE, rD 83701
EXHIBITS
1
2
3
4
5
6
7
B
9
10
11
1,2
13
74
15
76
l1
18
1,9
20
21,
22
23
24
25
HEDRTCK COURT REPORTING
P. O. BOX 578, BOISE, fD
Eor Pioneer Power:
403.
404.
Disruptive Challenges,
Rj-sk Analysis Resource
January 2013
Alternati-ves
Marked 4L7Admitted 459
Marked 426Admitted 459
83701
EXHIBITS
1
2
3
4
5
6
7
I
9
10
11
L2
13
L4
15
t6
77
18
t9
20
27
22
23
24
25
HEDRICK COURT
P. O. BOX 578,
REPORTING
BOTSE, rD
G]LLIAM (Di)
City of Boise
BQISE, IDAHO, TUESDAY, JUNE 11, 2013, 1:14 P..M.
COMMISSIONER SMITH: Al-1 right, welcome back,
everyone. Werre ready to go back to the hearing. We had just
concl-uded with Mr. Richardson's witnessr ds I recall-.
MR. RICHARDSON: We have no further witnesses.
COMMISSIONER SMITH: Thank you.
Mr. Hammond, are we ready for your witnesses?
MR. HAMMOND: Yes, Madam Chair. We first call-
Mr. Gi-11iam, Rick Gilliam.
COMMISSIONER SMITH: Just one reminder to people
who are listening on the phone: If you woul-d please mute your
telephones it woul-d be very much appreci-ated, since we can hear
the background noj-ses from your l-ocatj-on.
RICK GILLIAM,
produced as a wj-tness at the instance of the City of Boise,
being first duly sworn, was examined and testified as foll-ows:
DTRECT EXAMINATION
BY MR. HAMMOND:
O. Sir, can you please state your name and spe11
your l-ast name for the record?
1,96
83701
1
2
3
4
5
6
1
I
9
10
11
l2
l_3
L4
15
1,6
77
18
19
20
2t
22
23
24
25
HEDRICK COURT REPORTTNG
P. O. BOX 578, BOTSE, rD
GILLIAM (Di)
City of Boise
A. My name is Rick Gil-Iiam. My last name is spelled
G-I-L_L-I-A-M.
O. Cou1d you teI1 us where you are employed?
A. I work for the Vote Sol-ar Initiative.
O. And where is the Vote Sol-ar Initiative located?
A. The headguarters is in San Franclsco. We have
offices in Colorado, Pennsylvania, and New York. And I'm in
the Col-orado of f ice.
O. In this case, this proceeding, filed by or opened
by Idaho Power, did you cause to be fil-ed direct testimony on
the behalf of the City of Boise?
A. r did.
O. And in that direct testimony, are there any
corrections, changes, additions that need to be made?
A. Yes, there j-s one. Itrs on page L6, line 3.
There's a reference to "the last rate cl-ass. " It should be
"the l-ast rate case. "
O. Thank you. In that direct testimony that you
have caused to be filed on the behal-f of the City of Boise, are
there any other matters that need to be changed or addressed?
A. Not at this time.
MR. HAMMOND: We would ask the prefj-1ed direct
testimony of Mr. Gilliam to be filed -- orr spread upon the
record as if read in this matter. There are no exhlbits, I
believe, to the testlmony, so j-t's simply the testimony that's
L97
83701
1
2
3
4
5
6
7
I
9
10
11
I2
13
t4
15
t6
L7
18
19
20
27
22
23
24
25
HEDR]CK COURT REPORTTNG
P. O. BOX 578, BOTSE, rD
GTLLTAM (Di)
City of Boise
coming in.
COMMISSIONER SMITH: Seeing no objection, it is
so ordered.
(The following prefiled direct testimony
of Mr. Gilliam is spread upon the record.)
198
83701
I
2
J
4
5
6
7
8
9
l0
11
12
13
t4
t5
16
l7
18
r9
20
2t
22
23
a.
A.
a.
A.
Introduction and Overview
a. Please state your name and business address.
A. My name is Rick Gilliam. My business address is 1120 Pearl Street, Suite
200, in Boulder, Colorado.
("Vote Solar"), and oversee policy initiatives, development and implementation. Vote
Solar is a non-profit grassroots organizalion working to foster economic opportunity,
promote energy independence, and fight climate change by making solar a mainstream
energy resource across the United States. Since 2002, Vote Solar has engaged in state,
local and federal advocacy campaigns to remove regulatory barriers and implement key
policies needed to bring solar to scale. We have eighty (80) members in Idaho. Because
our interests in this proceeding are in alignment with the City of Boise's interests, I was
asked by the City to participate in this proceeding on its behalf.
On whose behalf are you submitting this pre-filed direct testimony?
This testimony is submitted on behalf of the City of Boise (the "City").
By whom are you employed and in what capacity?
I serve as Director of Research and Analysis for the Vote Solar Initiative
Please describe your educational background.
I have a Masters Degree in Environmental Policy and Management from the
a.
A.
University of Denver, Denver, Colorado. I also have a Bachelor of Science Degree in
Electrical Engineering from Rensselaer Polytechnic Institute in Troy, New York.
a. Please describe your experience in utility regulatory matters.
A. Prior to joining Vote Solar in January of 2012, my regulatory experience
included five (5) years in the Government Affairs group at Sun Edison, one of the
Gilliam, Di I
City of Boise
]-99
I
2
aJ
4
5
6
7
8
9
10
ll
t2
l3
14
15
16
t7
l8
19
20
21
22
23
24
25
26
world's largest solar developers, as a manager, director and eventually vice president;
twelve (12) years in the Public Service Company of Colorado rate division as Director of
Revenue Requirements; and twelve (12) years with Western Resource Advocates (WRA
- formerly known as the Land and Water Fund of the Rockies) as Senior Policy Advisor.
Prior to that, I spent six (6) years with the Federal Energy Regulatory Commission as a
technical witness (engineer). All told, I have in excess of thirty (30) years of experience
in utility regulatory matters. A summary of my background is attached as Appendix A.
a.Have you previously testified before the Idaho Public Utilities Commission
("PUC' or "Commission")?
A.
a.
A.
No,I have not.
Before what other utility regulatory commissions have you testified?
I have testified in proceedings before the Arizona Corporation Commission,
Public Utilities Commission of Colorado, Nevada Public Utilities Commission, the New
Mexico Public Regulation Commission, the Utah Public Service Commission, the
Wyoming Public Service Commission, and the Federal Energy Regulatory Commission.
a. How did this proceeding come about?
A. According to Matthew T. Larkin, witness for Idaho Power Company ("lPCo"
or the "Company"), the Company initiated this proceeding in response to the
Commission's Final OrderNo.29094, issued in2002. See Direct Testimony of Matthew
T. Larkin atp.3,ll.8-33. In OrderNo.29094, the Commission stated:
We accept for now the Company's proposed cap to
Schedule 84, i.e., the 2-9 MW cumulative nameplate
capacity limit. We apprise Idaho Power, however, that
when the cap is reached, the Company is to immediately
notify the Commission in writing that the Company is in
the position of having to refuse further applications. At
Gilliam, Di 2
City of Boise
200
I
2
3
4
5
6
7
8
9
r0
l1
t2
l3
t4
l5
t6
17
l8
19
20
2l
22
23
24
25
26
a.
A.
that point, this Commission will look 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.
OrderNo.29094 atp.7.
In response to this Order, the Company is proposing to double the current cap
on all net-metered generation capacity for all of its customer classes, not just residential
and small general service customers, from 2.9 MW to 5.8 MW, and proposing to make
numerous other changes that impact net-metered customers.
What is the purpose of your testimony?
The purpose of my testimony is to respond to the Direct Testimony and
exhibits of IPCo witness, Matthew T. Larkin, regarding the Company's proposals to
change certain practices, impose new untested policies, and initiate special treatments for
a very small subset of residential and small general service ("SGS") customers. The
changes outlined by IPCo create barriers to, and thwart deployment of, net-metered
renewable generation, especially solar, and has significant impacts on the economic
viability of these new resources. Further, I will discuss the ramifications of the IPCo
proposals on economic development for the City.
a.Please summarize your testimony.
A. The issues raised by lPCo underscore the success of the solar industry. One of
the most interesting things about this proceeding is that it results from utility concerns
related to what is occurring naturally in the market, namely customers are installing solar
generation to supplement or replace their grid-supplied electricity without any incentivesl
from the state or utility. The actions and changes proposed by IPCo in this case are
' ldrho do"s provicle a capped stale income tax deduction lbr solar energy'devices spread over four years.
207
Gilliam, Di 3
City of Boise
5
6
7
8
9
l0
1l
12
l3
t4
15
t6
17
l8
19
20
2l
22
23
24
25
26
27
28
29
30
3l
32
J5
34
35
36
individually and collectively designed to make customer-sited generation more difficult
to install or more expensive to utilize, or both.
These actions by IPCo are in conflict with the policy and action
recorrmendations of the recently adopted 2012 ldaho Energy Plan.2 The following
policies address resources:
1. The State of Idaho should enable robust development
of a broad range of cost-effective energy efficiency
and power generation resources within environ-
mentally sound parameters.
2. Align legislative policies, regulatory policies, and state
agency activity to consistently reinforce and support
state objectives regarding energy efficiency, energy
production, and delivery.
3. When acquiring resources, Idaho and Idaho utilities
should give priority to cost-effective and prudent: (l)
conservation, energy effrciency, and demand response;
and (2) renewable resources, recognizing that these
alone will not fulfill Idaho's growing energy
requirements and that these resources play a role in
addition to conventional resources in providing for
Idaho's energy needs.
4. Encourage the development of customer-owned and
community-owned renewable energy and combined
heat and power facilities that meet the Energy Plan
objectives of the State of Idaho.
Additionally, Action item E-11 encourages fair treatment of the resources at
issue in this proceeding:
It is Idaho policy to encourage investment in customer-
owned generation; therefore the Idaho PUC, utilities,
municipalities, and cooperatives are encouraged to
ensure non-discriminatory policies for interconnection
and net metering.
2 1'his plan rvas approved by the Energy. Environment and Technology lnterim Cornmittee on January 10,2012- and rvas
lormall_v adopted by the Idaho Legislature on March 6- 2012. The report is available at http://www.puc.state.id.
us/hot/2012_idaho energyjlan linal_2.pdL
202
Gilliam, Di 4
City of Boise
I The proposed changes I will address include (1) the new capacity cap on net-
2 metered generation; (2) the creation of new customer classes (Schedules 6 and 8); (3) the
3 changes in rate structure under the new rale schedules; (4) the changes to the
4 interconnection requirements in Schedule 72; and (5) the treatment of annual net excess
5 generation credits.
6 In each case, I generally find that IPCo has not provided sufficient evidence to
7 justifu the changes it proposes, has not taken other factors into account, and is attempting
8 to impose significant changes on a small group of customers outside the context of a
9 formal rate proceeding in which all rate-related issues can be addressed comprehensively
10 by interested parties.
I I Additionally, I will address certain economic development effects of IPCo's
12 filing.
l3 Background
14 a. The concerns raised by IPCo primarily deal with solar generation. Please
15 discuss the growth in solar generation capacity nationally.
16 A. Across the country, solar generation capacity has been growing at a rapid rate
17 - exceedingTlYo per year for the last five (5) years.
Gilliam, Di 5
City of Boise
203
I
2aJ
4
5
6
l
8
8000
7000
6000
g 5000
? 4o0o
F soooz
2000
'r000
0
200t 2'002 2003 200+ 2005 2006 2007 2008 2009 2or0 20tt 2012
-f,1111s11lative
tvlW
-Aptrual
I{t{
sorrffi: DoElEERETciloru;;;;*;b;rei;ersyD;6B'i,oli"ard SEIA/GTM Research solar
Market Insight Reports.
The growth has occurred across the spectrum of market segments - utility
scale, commercial on-site, and residential on-site. As the latter two (2) categories are of
particular interest in this proceeding, the following chart3 shows the deployment by major
retail market segment over the last few years across the United States.
fl Residen. alf I Commercial#
3so.o(
300.o(
2so.o(itT'o
E 2oo.o(
cttB lso.o(
1OO.O(
5O.O(
o.o(a1( a2( a3( a4(
@2010(w
al( a2( a3( a4(
€,'- 2011(@
a1( a2( a3( a4(
@2012(wtrsF!F'|
Gilliam, Di 6
City of Boise
', US Solai InstelletionS
3 Sorr.", SEIA/GTM Research, U.S. Solar Market Insight.
204
I
2
J
4
5
a.
A.
corresponding growth in manufacturing, increased scale economies and efficiencies, and
driving hardware prices down. For example, the cost of solar modules has declined
precipitously on a $/Woc basis over the past twenty (20) years.
Module Prices
$lw
$6.00
$s.oo
$4.00
$3.00
$2.00
$r.oo
$o.oo (a * rrt \C t. @ Or o F nr rvf .i lo \g r. @t Cir o -r9' 9r Cr\ 91 6\ 6r (i! O <> O O <> c) c' O O C) Fl -,Or €n g\ g.| G\ O\ G\ O () O () O () O O O Q () O
-. i < < F F F al (rl (\t al N N Gr l\l 6l il i{ al
N
(\t
Bloomberga reports an 80%o decline since 2008 and a 99.2% decline in solar module costs
since 1971 .
To what do you attribute such dramatic growth of solar?
The growth is due in large part to increased global demand and the
Why hasn't Idaho's solar market grown as dramatically?
As a result of these declining prices, the Idaho market is starting to grow, albeit
,
8
9
10
11
t2
13
14
15
t6
t7
18
a.
A.
getting off to a late start. While solar remains the most popular energy resource in
virtually every poll, historically it has been more expensive than the altematives,
including grid-supplied electricity. Customer-sited solar penetration levels are largely
tied to the purchaser's cost, net of any incentives provided. Most of the states that have
higher penetration levels have used various types of financial incentives to promote the
adoption of solar on homes and businesses.
l'http://eieaom.corn/2013/04/26lvideo-the-trends-behind-the-vear-of-clean-energy-turbulence/
205
Gilliam, Di 7
City of Boise
1
2
J
4
5
6
7
8
9
10
1l
t2
13
l4
15
16
17
l8
19
20
21
22
The incentives help to reduce the initial cost of solar (or the per kWh cost) so
that the net cost of a solar kWh is "close enough" to that of grid-supplied electricity for
the home or business owner that he or she can rationalize a reasonable payback period.
These policies have "kick-started" the markets, and in many places, attracted significant
development in value chain manufacturing, administrative offices and installation
companies.
Recently, however, with the dramatic reduction in costs noted above, we are
beginning to see solar prices approaching the cost of grid-supplied electricity without
incentives in some states. As one would expect, this is happening in states with higher
electricity costs initially. lnterestingly, although Idahoans enjoy the lowest electricity
prices in the nation in the residential and commercial sectors, solar has been establishing
itselfas a viable alternative resource for Idahoans. This can be seen in the chart on page
11 of IPCo witness Larkin's Direct Testimony.
While starting at a much lower level, growth in solar capacity on the IPCo
system has been increasing at a good pace. Thus, Idaho is seeing the start of a healthy
solar industry, albeit potentially fragile, given proposed size limitations, burdensome
requirements and uncertainty regarding consistent solar policy.
a. Is the solar resource in Idaho sufficient to support a growing solar
market?
A. Yes. The National Renewable Energy Laboratory reports5 Idaho is ranked
eleventh (l1tn) in the country for its solar resource, placing it above states like Texas,
North Carolina, New Jersey and others that have deployed far more solar generation.
5 Denholm & Margolis, The Regional Per Capita Solar Electric Foorprint for the United States. National Renewable Energy
Laboratory Technical Report NREL/TP -6'7 0-42463. December 2007.
206
Gilliam, Di 8
City of Boise
1 The Overall Capacitv Cap on Net-Metered Generation
2 a. Would you say the Company has high solar penetration on its system?
3 A. No. According to IPCo, it had 2.246 MW of net-metered system generation
4 capacity from all of its customer classes installed on its grid at the time of its filing,
5 representing approximately 11146 of one percent of the Company's peak load. As a state,
6 Idaho falls in the bottom quartile of solar deployment. The amount of 2012 energy
7 generation offset by IPCo's systems was approximately l/501h of one percent. At the
8 current cap of 2.9 MW, those proportions rise to 1/1llh of one percent of IPCo's peak
9 load and about l/40th of one percent of the Company's sales.
l0 If IPCo's proposed cap of 5.8 MW is reached in three (3) years, the
1l corresponding shares will be a little less than ll6h of one percent of peak load and ll}}th
12 of one percent of generation. In other words, the existing solar and the amounts related to
13 the current and IPCo's proposed capacity limits on the IPCo system hre all almost too
14 small to be measured. The following chart6 illustrates this point.
u Sorr..r, ldaho Power Company 201 I IRP, and response to discovery.
year.
201
Note last three years estimated to grow at I MW per
Gilliam, Di 9
City of Boise
Residential Load vs. NEM
Capacity
700
L00
oc..l + \o o o N + \t o o c.r + \o o c3 c.r + \c co o N *f \cr\ r-. l\ r\ r\ o o * co 0o o\ cl\. C\ 6i\ Cll o o o o o ri r,r ri do, o. ci.. o! cr. or o\ c:\ c;\ 0l\ o\ ct. o\ o\ cl\ () o o o o o o c> o
- F{ - Fi i Fi i Fi rl : F r{ e-{ d d N i\t Gl Fl .\l a{ (\l nI C{
Gilliam, Di l0
City of Boise
208
I
2
J
4
5
6
7
8
9
l0
11
t2
13
14
l5
l6
t7
18
19
20
21
22
23
24
25
26
27
a. How does IPCo support the need for a cap?
A. While acknowledging that the current penetration is relatively small, IPCo
bases its proposed new limit on the following:
If current growth trends continue or increase, it is
important to maintain a capacity limit to allow the
Company and other stakeholders to evaluate this service
as it expands. This provides the Company with the
ability to identi$ any future modifications that may be
necessary to accommodate more widespread expansion
of its net-metering service.
Larkin Direct at p. l3,ll. 9-15.
a. Do you believe there is a need for a system-wide cap on customer-sited
solar generation?
A. No. While I can understand from the utility's perspective that the recent
growth in net-metered solar generation capacity may be surprising, it is critical to keep
the penetration of this resource in perspective.
a. Can you provide some perspective on the reduced sales and toad for
IPCo?
A. Yes. IPCo's 2011 Integrated Resource Plan projected growth of 7.4o/o per
year, or about an additional 650 GWh over the next three (3) years. If solar generation
continues growing at the highest level it has over the last few years (-1MW/year), IPCo's
proposed 5.8 MW cap would be reached in three (3) years and produce about 8 GWh.
Thus, that 650 GWh of projected sales growth would be about 642 GWh, or about 98.8%
of the originally projected growth.
a. Has IPCo performed any analyses of the future growth of net-metered
solar?
Gilliam, Di I I
City of Boise
209
I
2
aJ
4
5
6
7
8
9
10
1l
t2
13
t4
l5
16
17
l8
l9
20
2t
22
A.
a.
No it hasn't.7
Has IPCo performed any economic analyses of solar generation that takes
into account costs that are avoided by customer-sited generation?
A. No, the Company has made no attempt to quantiff the value of generation
provided by net-metered systems.s
a. Does IPCo experience a fixed cost-related loss from customer-sited net-
metered solar generation?
A. No. The Company has in place a Fixed Cost Adjustment (FCA) mechanism
that is "designed to ensure the company recovers its fixed costs of'serving customers
regardless of the amount of energy conservation".9
a.Has IPCo raised any operational concerns about customer-sited solar
generation?
A. IPCo has presented no evidence of operational concerns in its testimony in this
proceeding. In addition, at the public workshop on April 25,2013, IPCo noted that at
present penetration levels, they have no operational concerns.
a.Are there policies and procedures already in place that address operation
issues?
A. Yes. Interconnection standards are in place across the country that address
technical, engineering and reliability issues of customer-sited generation. In this
proceeding, IPCo is proposing to extensively revamp its interconnection requirements
contained in Schedul e 72, not only making the requirements more onerous, but more
costly as well. These issues will be addressed in more detail below.
7 See Response to ldaho Conservation League's Request for Production No. 6.b.
8 See Response to ICL Discovery Request No. 15.
2L0
Gilliam, Di l2
City of Boise
O I Q. Is IPCo precluded from requesting changes from this Commission related
2 to its perceived impacts of solar at any time?
3 A. No, it is not.
4 a. Have other states imposed caps?
5 A. Yes. Roughly half of states with net-metering have system-wide capacity caps,
6 according to the Database for State Incentives for Renewable Energy. The vast majority
7 of the states with caps set the limit based upon a percentage of retail peak demand.
8 Q. What is the ^yerage percentage limit?
9 A. The average for states that have established caps is approximately 3.5Yo of
10 peak retail demand. This would equal I 14 MW in the case of IPCo, based upon the 2012
l1 peak load of 3245i|idW (2012 FERC Form 1).
12 a. Have there been any economic or operational problems created by solar
13 penetration in the states with no caps?
14 A. Not to my knowledge.
15 a. What do you recommend the Commission do with respect to the overall
16 system-wide cap issue?
17 A. I recommend the current cap be lifted and no cap be imposed. IPCo has
l8 presented neither economic justification nor operational necessity for a cap. There is
19 currently a miniscule amount of net-metered solar generation in Idaho, and it is growing
20 at a slow enough rate that any significant impacts can be anticipated and addressed by
21 this Commission as the need arises, if at all.
22 Imposition of New Rate Classes
23 a. What rate class changes is IPCo proposing?
e http:/Avww.puc. idaho.eov/internet/press/0402 I 2-IPCFCA final.htrn 2 1 1
Gilliam, Di l3
Citv of Boise
I A. IPCo is proposing to implement two new customer classes - Schedule 6 and
2 Schedule 8 for residential and SGS net-metering customers currently on Schedules 1 and
3 7, respectively. Additionally, IPCo is proposing modifications to Schedule 84 and
4 significant changes to its Schedde 72 interconnection procedures.
5 Q. What is IPCo's rationale for creating a new class of customers?
6 A. IPCo appears to believe that a potential inequity exists between customers that
7 have net-metered generation and those that don't within the same rate class. Its objective
8 is to limit the "potential inequity between net metering and standard service for
9 Residential and SGS customers."lo
10 a. What is the amount of the'.potential inequity?"
I I A. In response to Discovery Request No. 9 from Commission Staff, IPCo
12 calculated the difference in bills for customers affected by the filing to be approximately
13 $65,000.00. Based upon IPCo's rationale and proposals, this is the amount that the
14 remaining 440,000+ non-net-metered customers within Schedules I and 7 would have to
15 contribute to keep the Company whole through the FCA.
l6 It should be noted that IPCo's estimates are purely based upon the reduction in
17 revenue it perceives is representative of the cost of net-metered solar generation. IPCo
18 has not performed any calculation of the benefits that distributed solar generation
l9 provides to the grid and to other customers.
20 a. Are there any otherpotentiol inequities in electric utilify rates?
21 A. Yes. The process of determining revenue requirements, classifying and
22 allocating costs, and designing rates is full of assumptions, estimates, modeled data,
23 statistical methods, and adjustments made in a legitimate effort to spread cost
Cilliam, Di l4
City of Boise
212
1
2
3
4
5
6
7
8
9
l0
1l
12
13
t4
15
t6
t7
l8
19
20
2t
22
responsibility to customer classes based on causation, and achieve a reasonably consistent
relationship between costs and revenue so that the utility can have an opportunity to
recover its costs and earn its authorized return on equity between rate cases. For
example, IPCo's cost allocation manual notes that for customers without interval meter
data, coincident demands are estimated using coincidence factors determined through a
load research sample. Moreover, even accepting all the approximations in the process,
the rate for a class is designed for that mythical customer that represents the weighted
mean of the group.
This is further complicated because customers and customer classes tend not to
be static, but change usage and demand patterns over time. Thus, as soon as new rates
are placed into effect, imbalances will begin to occur, with some customers paying more
and some less than their up-to-the-minute theoretically appropriate cost of service, were
one to be performed at that point in time.
This is not intended to be an indictment of the regulatory system - there are
very good reasons why the process has evolved in this way. However, as we start to
make selective changes that move away fiom current structures and practices, we should
carefully examine the basis for doing so and the potential for unintended consequences.
Any assumption that the revenue recovered from an individual customer in a given rate
class is an accurate reflection of the actual cost of providing electric service to that
customer would be a stretch at best.
Some examples of areas where there are potential inequities
following:
the
l0 See Direct Testimony of lPCo witness Larkin. page 20. ll. 9-12
213
Gilliam, Di l5
City of Boise
I
2
J
4
5
6
7
8
9
10
l1
12
13
14
15
16
t7
18
19
20
21
22
The return on equity generated by each customer class (e.g.
residential commercial and industrial classes) and approved by the
Commission in the last rate class differs, meaning that certain rate
classes are paying higher or lower than average shares of IPCo
earnin gs requirements ;
Low income programs are often subsidized by other ratepayers;
Certain geographic areas are more costly to serve than others. An
example is densely populated urban areas, where there is a
relatively large number of customers per mile of distribution line,
versus low-density rural areas. The latter is clearly more
expensive to serve (as the rural electric cooperatives will tell you),
yet there is no differentiation in rates or rate structures;
The distance a customer may be from a distribution substation
affects the amount of equipment (and investment) required of the
utility to serve that customer. Again, there is no differentiation
among customers related to this factor;
Residential (and SGS) rates are designed to recover costs on the
basis of energy consumed. Customers who consume more energy
than average in these rate classes contribute more fixed cost
recovery to the utility than those who use less than average;
Line extension policies: While generally intended to have no
impact on existing customers, the differential between the actual
Gilliam, Di l6
City of Boise
214
I
2
J
4
5
6
7
8
9
l0
ll
12
l3
14
l5
16
t7
18
r9
20
21
22
23
24
cost of attaching new customers and the customer contribution can
be more or less than zero;
Utilities invest new capital to build power plants and transmission
lines to serve growth on its system, resulting in an increase in rate
levels. Those customers whose load has not grown at all share in
the burden of these additional investments.
a. Are you suggesting that each of these "inequities" be culled out and new
rate classes, designs or structures be implemented?
A.Not at all. I raise these issues to debunk the notion that rates are precise, and
that singling out changes in sales due to a very small amount of customer-sited generation
is arbitrary and unfair. Indeed, reductions in sales for any reason, whether related to a
new more efficient refrigerator or a shrinking household, have the same effect.
Moreover, increases in sales due to growing households, new "must have" appliances,
electric vehicles and so forth add to the earnings of the utility.l I
a.Has IPCo defined the specific requirements for eligibility for these new
rate classes?
A. While not laid out in testimony, the proposed new rate schedules include
applicability language that reads as follows:
Customer owns and/or operates a Generation Facility
fueled by solar, wind, biomass, geothermal, or
hydropower, or represents fuel cell technology, with a
total nameplate capacity rating of 25 kilowatts (kW) or
less.
ll The changes described are- olcourse, subject to the effects ofthe FCA in the case ollPCo.
2r5
Gilliam, Di l7
City of Boise
I Presumably, this means that any residential or SGS customer that installs a net-
2 metered system would be subject to the applicable new tariff. Additionally, net-metered
3 systems that exceed 25kW would be subject to Schedule 84, provided they are smaller
4 than 100 kW.
5 Q. In your experience, is it standard practice to cap individual system sizes at
6 such Iow levels?
7 A. No. In the territories of utilities that have low system size caps, the solar
8 markets are virtually non-existent.
9 Q. Is there a need for individual system size caps?
l0 A. No. There is really no need for an individual system size cap for net-metered
I 1 solar generation because the economic viability of such facilities drops dramatically if the
12 system generates more energy than the host can consume.
13 a. Is there a practical limit for these two customer classes?
14 A. Yes. It is rare for a home to be so large as to consume the full amount of
15 energy generated by a 25kW solar system. In Idaho, such a system would generate
16 nearly 34,000 kWh per year - about three (3) times the average usage. Similarly, the
ll SGS class has a monthly consumption limit of 2,000 kwh, after which it would get
18 bumped into a new rate class. These practical considerations make the 25kW limit
l9 virtuallymeaningless.
20 a. Do other states have system size limits?
21 A. Yes. Many states have a one (1) or two (2) MW limit for individual net-
22 metered system sizes, but even this is arbitrary. This is too large for many customers and
23 too restrictive for others. The most practical limits for individual system sizes are those
Gilliam, Di l8
City of Boise
276
I found in Arizona and Colorado, in which the system size limit is tied to the size of the
2 customer.
3 Q. What happens to a larger IPCo customer who would like to utilize the
4 solar resource and net-metering?
5 A. As noted above, anything larger than 25kW would place the customer in
6 Schedule 84, effectively denying the customer the ability to reduce its own load by
7 investing in on-site generation.
8 Q. Has IPCo provided evidentiary support for the need to segregate all
9 present and future net-metered customers into separate rate classes?
10 A. No. It has not.
I I a. Has IPCo clearly defined the attributes and characteristics of customers
12 that would be required to take serryice under these new rate schedules?
13 A. No. There is a great deal of diversity within rate classes today, and IPCo has
14 not clearly described the breadth of attributes in its testimony that would delineate the
15 subgroup of customers that need to be segregated. The applicability section of Schedules
16 6 and 8 appear to be the only place where such characteristics can be found at all, raising
17 a number of questions. Are all net-metered customers required to take service under one
l8 of these two (2) schedules, or is there a minimum threshold system size that would trigger
19 applicability? Are customers taking service from rate schedules other than I and 7
20 precluded from net-metering service under Schedules 6 and 8? Should the schedule only
2l apply to those who export energy since non-exported generation simply reduces
Gilliam, Di l9
City of Boise
211
I
2
aJ
4
5
6
7
8
9
10
ll
t2
13
l4
15
t6
t7
l8
19
20
2t
22
consumption like other demand side technologies and behaviors? Or should it apply to
any customer who can "unduly reduce"l2 their consumption for any reason?
Without clear and fully vetted definitions of eligibility criteria, the law of
unintended consequences is likely to come into play. Rates are price signals, and
customers will respond to these signals. For example, residential customers with high
load factors might install a token or undersized solar system in order to take advantage of
the much lower energy charge proposed by IPCo in its proposed Schedule 6. Indeed, this
new rate could cause a migration that results in a great deal of revenue shifting to lower
load factor customers.
a.I)o you have other concerns with a separate rate schedule solely for net-
metered customers?
A. Yes. IPCo has not provided a cost of service nor demonstrated revenue
neutrality for these proposed new classes of customers or the classes from which they
were derived, calling into question whether it is able to make these changes outside the
context of a formal rate proceeding.
a.You noted that IPCo is modifying Schedule 84. Do you have any
comments on its proposals?
A. Yes. As I understand the proposed new paradigms, all net-metered systems
that are not eligible under IPCo's proposed Schedules 6 or 8 would fall under Schedule
84, provided they do not exceed 100 kW. However, the changes to the existing schedule
are so extensive and intertwined with other Schedules and policies, it is difficult to
segregate the proposed Schedule 84 elements sufficiently to develop an alternative
'' Dir.., Teslimony of lPCo witness Larkin, page 21.l. l0 This undellned ternr is seemingly an ellbrt lo segregate tlrose custonrers
that can reduce consumption beyond sonre threshold from those thal can reduce consurnplion. but not past the unspecified threshold.
21,8
Gilliam, Di 20
City of Boise
1 proposal. I will, however, point out a number of problem areas and then make a
2 recommendation:
3 o The 100 kW limit is overly restrictive and will not allow larger
4 customers to take full advantage of the benefits of investing in solar
5 generation on their premises;
$ o IPCo may require curtailment of customer's own generation at any
7 time;
8 o IPCo may require curtailment of a Schedule 84 customer's
9 consumption (paragraph 6), but it is very unclear how this would
10 occur, given the reductions that may be ongoing resulting from the
11 customer's own generation.
12 a. What are your recommendations regarding the rate class proposals of
l3 IPCo?
14 A. We urge the Commission to reject IPCo's proposals for its proposed Schedules
15 6, 8 and 84. We recommend that the Commission increase the system size limit to l20oh
16 of consumption (or 2 MW), and allow any customer in any class to install net-metered
17 solar generation up to that limit.
18 Proposed Rate Structure Changes for Net-Metered Customers
19 a. Please describe the proposed rate structure changes for net-metered
20 customers.
21 A. IPCo is proposing to increase the monthly flat customer charge from $5.00 per
22 month in both Schedules 1 and 7 to $20.92 and $22.49 per month under proposed
23 Schedules 6 and 8 respectively, representing a 320o/o increase for Residential customers
Gilliam, Di 2l
City of Boise
2]-9
I
2
J
4
5
6
7
8
9
10
ll
t2
l3
14
15
16
t7
18
19
20
21
22
23
and a 350% increase for SGS customers. Second, IPCo is initiating a new type of charge
for these two new customer classes - a demand charge of $ I .48 and $ I .37 per maximum
15' kW load during the month. Neither the proposed increased customer charge nor the
proposed demand charge is employed by IPCo for any other residential or SGS customer.
a. What is IPCo's rationale for the increase in the monthly flat customer
charge?
A. IPCo is proposing to increase the customer charges for residential and SGS
service "to reflect collection of 100% of customer-related revenue requirement."l3
a.Do you believe that IPCo's customer-related revenue requirement results
in a charge exceeding $20.00 per month?
A. No. In fact, IPCo's April 25,2013 presentation during the public workshop at
the Commission showed the amount of the customer-related revenue requirement
currently not being collected in the current $5.00 per month residential service charge,
but rather through the energy charge is $0.0017 per kWh. Multiplying this charge by the
average monthly residential consumption of 1050 kWh in IPCo's service territory yields
$1.785. Thus, IPCo's own data suggests recovery of 100% of the customer-related
revenue requirement in the customer charge is accomplished with a fee of $6.785 per
month.
It should be noted that subsequent to the April 25,2013 workshop, IPCo made
a slight change to its presentation to indicate that the fixed distribution related costs were
somehow being spread to both the demand charge and the customer service charge.
While this may be how IPCo developed such a high customer charge, there remains no
evidentiary support for the development of the charge nor the cost basis or rationale for
Gilliam, Di 22
City of Boise
220
I
2
aJ
4
5
6
7
8
9
l0
ll
t2
13
14
15
t6
17
l8
t9
20
21
22
0.
A.
the type and amount of distribution costs included in the service charge. IPCo repeatedly
said in the April 25th public workshop that its rates are cost-based, but has not provided
the cost basis.
a. Please describe the new demand charge proposed to be required of
customers under Schedules 6 and 8.
A. IPCo proposes to impose a demand charge on net-metered customers. In
testimony, IPCo witness Larkin refers to it as a Basic Load Capacity charge or "BLC."
He notes that it is designed to collect "the demand-related revenue requirement of the
distribution system." 14
a.Do you support the use of demand charges on small customers to recover
distribution related costs as proposed by IPCo in this proceeding?
A.No, I do not. In my view, there are too many unknowns at this point in time.
This type of change is better addressed in a comprehensive rate proceeding where issues
of function alization,classification and cost causation can be fully reviewed.
What costs are proposed to be recovered through the demand charge?
This is unclear. IPCo's filing tells us these are distribution-related costs, but
does not tell us how much of the costs of the distribution system the Company is
proposing to collect through this charge. The pre-filed testimony seems to indicate
l00yo, but the presentation by IPCo at the public workshop on April 25rh suggested
otherwise.
a.Has IPCo provided an analysis of the costs and cost incurrence rationale
to support its new charge(s)?
't 5e" Direct Testimony of IPCo witness Larkin. page 19. line 9.
lu See Direct Testimon,v of IPCo witness Larkin. page 19,ll. 12-14.
Gilliam, Di 23
City of Boise
227
I A. No. In addition to not knowing which costs (by FERC account or otherwise)
2 are being proposed for recovery by these new charges, no analyses have been provided to
3 support the assignment of these costs to new collection parameters.
4 a. Did IPCo study the benefits of distributed generation to help guide the
5 rate redesign?
6 A. No, not to my knowledge.
7 O. What would an examination of the benefits show?
8 A. A number of studies have been performed around the country which compare
9 the benefits provided by distributed solar generation behind the meter with the costs
l0 incurred by the host utility. In virtually all cases, the benefits have exceeded the costs.
1l Based upon a presentation given by the Idaho Conservation League at the
12 public workshop on April 25th, there will be a benefit and cost study submitted into
13 evidence in this proceeding specific to IPCo. I would also point out that IPCo
14 commented at the workshop that solar generation "lines up quite well" with its load
15 patterns - not surprising, as solar generation provides electricity during the day when
16 loads and costs tend to be higher.
11 a. What are the main components of rooftop solar's value?
18 A. When examining the value components of solar, it's important to look at the
19 marginal, not average, costs that are avoided or deferred. Utility rates are based upon
20 accumulated plant investments - some newer and some much older - as well as market
2l prices based on supplementary generation assets. The energy-related rates from this
22 blend are typically illustrated in hourly avoided cost statistics.
Gilliam, Di 24
City of Boise
222
I On a levelized basis, construction of new incremental generation is more
2 expensive than the typical avoided cost rate, regardless of the plant technology. It is
3 similar to comparing the average price of a new car thirty (30) years ago to one today.
4 As load growth increases and generation assets reach the end of their useful life and are
5 retired, new sources of electricity are needed. Utilities generally plan their system and
6 design rates around the summer peak load periods, at the time solar tends to be producing
7 close to its highest generation levels.
8 The chartls below illustrates the relationship between electricity prices in
9 August 2011 compared to solar output. According to IPCo's 2011 IRP, the price for
l0 electricity during those times range from $40-654{Wh in20l l, with a price projection of
l1 $130-l90A4Wh in 2030. Accordingly, avoided energy cost is the first major component
12 to solar's value. The second is capacity value, or the amount of new generation solar can
l3 help avoid or defer.
14 As penetration levels increase, the more likely the existence of solar on the
15 grid will be able reduce the size or the need altogether for new peaking power plants.
l6 This same concept can also be applied to new costly transmission lines.
17 Finally, there are components that are more complicated to quantify, such as
l8 the environmental attributes of solar, economic opportunities, and features of having a
l9 more diversified and less centralized generation portfolio.
''tsources, HourlycostdataprovidedinResponsetolCLDiscoveryRequeslNo. l:solardatalronrNREl-PVWartsmodel.
223
Gilliam, Di 25
City of Boise
Average Hourly Pricing in August 2011 vs.
Fixed Tilt PV Output
BO
70
60
50
40
30
20
t0
0
1. 2 3 4 5 6 7 A 9 1011121374751617 18192071222324
-Etrerygz
Ptices
-Sol:rrOtttpttt1
2 a. What are the implications of factoring in these benefits to IPCo's rate
3 design proposal?
4 A. If the benefits here in Idaho are at all similar to those determined in other
5 jurisdictions, it means that IPCo's current retail rates are likely a fair approximation of
6 the value of distributed generation, and potentially under-compensating solar system
7 owners. More specifically, it means that any perceived cost shift from solar adopters to
8 non-solar customers is more than compensated by the benefits of adding new incremental
9 energy sources with the attributes derived from solar energy.
10 a. Please describe the end result of IPCo's proposed rate structure changes.
1 I A. The end result is a compounding series of deleterious effects on the customers
12 of IPCo. It has been remarkable that individuals in the Company's service territory have,
l3 of their own volition and without financial encouragement from the utility, invested in
14 clean solar-generating resources on their homes and businesses. These customers should
l5 be applauded for their leadership. Instead, IPCo is attempting to undercut the already
16 marginal economics upon which electricity consumers took such action, by shifting cost
Gilliam, Di 26
City of Boise
224
I recovery out of the variable charge and into largely unavoidable monthly service fees and
2 demand charges that have not been justified by any cost or revenue analyses. If IPCo's
3 proposals are approved, current net-metering customers will be paying substantially more
4 than they had planned.
5 In addition, the likelihood of new customers installing solar and other
6 renewable energy technologies on their homes and businesses is greatly diminished. The
7 perceived payback period for such systems would be dramatically longer under the
8 proposed tariff changes, and perhaps more importantly, the uncertainty of rate stability in
9 Idaho would lead solar businesses, especially installers, to look elsewhere.
l0 a. What else concerns you about the proposed rate changes?
1l A. As mentioned, the rate changes are sweeping and violate several principles of
12 proper rate-making. The changes, if adopted, would significantly alter the economics for
l3 system owners. This greatly undermines confidence in the market, which in turn hinders
14 the ability to not only attract investment but also future adopters.
15 a. Can you elaborate on the consequences of lost confidence?
16 A. Investors seek a stable regulatory environment so they can plan and invest in
17 confidence - the higher the uncertainty, the greater the risk to financiers and
18 entrepreneurs. This risk increases the cost of borrowing, if investors do not pull out
19 altogether. Adoption of the proposed rate changes on future customers would likely rattle
20 confidence in the market and deter investment in Idaho, particularly from companies in
2l the distributed-generation market sector. However, applying the proposed changes to
22 both future customers and existing net-metering customers would decimate confidence in
Gilliam, Di 27
City of Boise
225
I Idaho's market and likely set back distributed generation adoption and investment for
2 years to come.
3 Q. What can this Commission do to avoid such a scenario?
4 A. In the event that any rate changes are adopted in this proceeding, which I do
5 not believe are justified based upon IPCo's filed case, they should be gradual and applied
6 only to new customers. Existing customers should be somehow shielded from the
7 impacts of the price, rate design and structural changes. This will send a signal to
8 investors and prospective technology adopters that the rug will not be pulled out from
9 them, rendering them underwater or at significant loss.
10 a. What are your recommendations regarding the proposed changes in rate
1l str:ucture?
12 A. We recommend rejection of IPCo's proposed rate structure changes in this
13 proceeding. If IPCo believes such dramatic changes are warranted, it should resubmit
14 these proposals in a comprehensive rate proceeding, allowing for all elements of the
15 revenue requirement and cost of service to be scrutinized. Further, we encourage the
16 Commission to issue a policy statement that reassures prospective investors that any rate
17 redesign in the future will follow the principle of gradualism.
18 Proposed Changes to Schedule 72: Interconnection
19 a. You noted above that IPCo is making significant changes to its Schedule
20 72 interconnection requirements. Do you have any comments on its proposals?
21 A. Yes. As is the case with Schedule 84, the changes to Schedule 72 are
22 extensive, restrictive, and at times, internally inconsistent. For example, IPCo indicates
23 on page 12 in paragraph 2 thal the FERC-approved Large Generator Interconnection
Gilliam, Di 28
City of Boise
226
I
2
aJ
4
5
6
7
8
9
10
l1
t2
13
14
15
16
t7
l8
19
20
21
22
Procedures and Small Generator Interconnection Procedures
Company's website will apply to the Generator Interconnection
by the provisions of Schedule 72.
(SGIP) posted on the
Process unless modified
One of the most important elements of the FERC SGIP is to provide a path
(known as "fast-track") for small systems to interconnect without going through the same
onerous and costly procedures to which large systems are subject. The FERC SGIP has a
series of screens to determine fast-track eligibility, primarily to avoid unnecessary studies
by the host utility. Schedule 72, however, has no screening process and subjects all
interconnecting systems, no matter how small, to a feasibility analysis, generally costing
thousands of dollars.
IPCo plans to perform a Net Metering Feasibility Review on every net-metered
system, regardless of size, to determine the capability of the Company's electrical system
to incorporate the proposed Net Metering System and determine if any upgrades are
necessary. There is no limit to how much time IPCo can take to perform this analysis.
Larger systems are subject to more costly and onerous requirements.
Another example of a concern with proposed Schedule 72 is the requirement
for a visible "separation of conductors" (a switch does not satisfy this requirement) under
disconnection equipment for systems under l00kW (Schedules 6, 8, and 84), whereas for
larger systems, a switch is satisfactory. Many jurisdictions do not require any separate
disconnection equipment, as all inverters today automatically disconnect the generation
system from the grid during disturbances. IPCo goes on to list a variety of reasons why a
system may be disconnected (e.g., planned or unplanned grid outages) and requires that
Gilliam, Di 29
City of Boise
227
I the system owner pay for the cost of disconnection - presumably the utility service
2 representative walking to the home or business to manually disconnect the system.
3 Further, there are few time limits placed on IPCo for performing analyses that
4 may be necessary - an oversight ripe for abuse.
5 Q Are there other policy changes proposed by IPCo that seem arbitrary
6 and/or discriminatory?
7 A. Yes. The $100.00 application fee for new net-metering customers or
8 customers looking to modiff their system appears high. IPCo states that it "feels this
9 charge is commensurate to the services provided...."'However, "it has not prepared a
10 study that specifically delineates each of these costs." Among the services are
1l administration, customer service, distribution research, and field visit and inspection. As
12 listed in Schedule 66 (Miscellaneous Charges), IPCo has a service establishment charge
13 of $20.00 and a field visit charge of $20.00 to $40.00. It is hard to conceive that the extra
14 services provided to a net-metered customer represent a 60oh to 4Oo/opremium over
15 comparable utility charges.
16 a. To clarify, even a small modification to the system triggers a $100.00
ll application fee?
18 A. Correct. A new net-metering customer pays the 5100.00 fee, and then most
19 modifications and all system expansions thereafter trigger a new $ 100.00 application fee.
20 For example, a customer simply updating a single inverter or adding a panel or two
2l would have to pay an additional $100.00. This would bring the customer's total to
22 $200.00 in fees paid. According to IPCo's pricing, these small system changes require
23 the same level of services as a new net-metering customer interconnecting to the grid.
Gilliam, Di 30
City of Boise
228
I Again, it is hard to comprehend how upgrading an inverter would trigger all the services
2 IPCo requires for a new net-metering customer and at the same inflated price.
3 Q. Is there a nationwide standard for interconnection procedures?
4 A. No. However, many states have modeled their statewide interconnection
5 standards after those included in FERC Order 2006. In addition, the Interstate
6 Renewable Energy Council has developed a set of best practices in both interconnection
7 and net-metering policies that are derived from vibrant solar markets across the country.
8 In these standards, there is great detail on the roles and responsibilities of both the host
9 utility and the interconnecting customer, and the need for maintaining a high degree of
l0 reliability and safety.
1l There is also a set of screening criteria that determines the necessity for a
12 utility to perform feasibility and other studies associated with a new connecting facility.
13 The relevant screen that addresses system size in those standards typically allows for
14 solar capacity penetration by distribution line circuit up to I 5Yo of the peak load on the
l5 line before any additional study is required.
16 It should also be noted that these standards are currently under review in FERC
17 Docket No RMl3-2-000, Small Generator Interconnection Agreements and Procedures.
1 8 The Notice of Proposed Rulemaking suggests an expansion of the 15olo standard,
19 indicating that such penetration levels have created no operational problems.
20 a. What are your recommendations regarding Schedule 72?
21 A. Because of the burdensome and costly requirements imposed by the changes to
22 Rule 72, I recommend that the Commission reject IPCo's proposed changes and that a
23 new docket be opened to review interconnection agreements and procedures in Idaho and
Gilliam, Di 3l
City of Boise
229
I across the country, with the goal of implementing new statewide interconnection rules
2 based upon the best practices it finds will work in Idaho.
3 Proposed Treatment of Annual Net Excess Energv Credits
4 a. What is IPCo proposing in this regard?
5 A. IPCo is proposing that any excess generation credits for a net-metering
6 customer be carried forward as an energy or kWh credit from month to month, rather than
7 providing a financial payment as a billing credit. Second, it proposes that any excess
8 credits that may exist at the end of the year simply "expire."
9 Q: Is this standard practice in the industry?
10 A. Most net-metering policies carry forward a kWh credit from month to month,
11 but provide for payment at avoided energy cost rates for any net excess remaining at the
12 end of a twelve-month period or allow for continuous rollover of the credits. According
13 to the Database for State Incentives for Renewable Energy, about one quarter (ll4) of
14 net-metering states let net excess credits expire at the end of a twelve-month period.
15 Clearly, as IPCo witness Larkin explains on page 28 of his Direct Testimony,
16 there is a benefit to other customers, as energy generated or purchased throughout the
17 year has been reduced. Yet the net-metering customer who has generated the excess
18 energy and created the benefit receives no financial remuneration under the IPCo
19 proposal. In contrast, IPCo currently does compensate net-metered system owners for all
20 excess generation.
Gilliam, Di 32
City of Boise
230
State Treatment of Excess Credits
I2 a. Are there other considerations?
3 A. Yes. The seasonal interplay between solar generation and load patterns tends
4 to result in the lowest level of excess generation credits at the end of the first quarter of
5 the year. By this time, excess generation from the fall has been used up during the winter
6 months, but solar generation has not begun to pick up again. This is logical, as the Spring
7 equinox is the point where the sun and earth begin getting closer, and the northem
8 hemisphere angles towards the sun. Thus, moving the annual true-up date to March 31
9 will minimize the amount of excess credits.
10 a. What are your recommendations?
11 A. I recommend accepting IPCo's proposal to carry forward energy credits for net
12 excess generation from month to month in lieu of financial payments. Further, I
13 recommend moving the annual true-up date to March 3l of each year, and payments be
14 made for any net excess generation at that time at an avoided cost rate. Finally, I
l5 recommend that, at the customer's discretion, the option of continuous rollover of excess
16 generation credits be made available.
Gilliam, Di 33
City of Boise
237
I EconomicDevelopmentConsiderations
2 a. In addition to the benefits identified by other parties in this proceeding,
3 are there other considerations?
4 A. Yes. According to the Solar Foundation, there are 300 solar-related jobs in the
5 state of Idaho as of 2012. This places Idaho 35th in the nation or 20n on a per-capita
6 basis. For a state ranked l lth in terms of solar resources, we believe it can do much
7 better.
8 Q. Why should Idaho and this Commission take solar jobs and related
9 economic activity into account?
10 A. The solar industry has a number of positive attributes. For example,
I I installation services represent about half of the jobs in the value chain from manufacture
12 to utilization. These jobs cannot be outsourced. Moreover, solar generation uses an
13 indigenous resource and means fewer kWhs generated by fuels extracted in other states
14 or energy purchased from other utilities out of state. According to the2ll2ldaho Energy
15 Plan ("Plan"),52o/o of Idaho's 2009 electric energy supply was imported from out of
16 state. Importantly, the Plan notes at page2l:
17 Enhancing energy conservation and efficiency measures
l8 and continuing to support the further development of19 cost-effective in-state renewable energy resources in20 order to reduce Idaho's dependence on imported coal-21 fired power are important aspects of Idaho policy.
22
23 Promoting solar generation as a resource in Idaho can provide new jobs and
24 investment. Further, as the Plan quote above notes, it helps retain dollars in the state by
25 keeping electricity generation local. Most importantly, there is no fuel risk and no water
Gilliam, Di 34
City of Boise
232
I consumption with solar PV technology. Finally, rooftop solar can assist in diversifying
2 and enhancing the reliability of IPCo's system in general.
3 Q. Does Idaho have any other economic activity related to renewable energy?
4 A. Yes. Idaho National Laboratory has a major research program on energy
5 systems and technologies. One of the core divisions in that program is biofuels and
6 renewable energy.
7 Q. What is your recommendation?
8 A. I recommend that the Commission take into account the local and statewide
9 economic benefits that result from reducing barriers to solar deployment. IPCo's filing in
10 numerous ways serves to increase barriers.
I I Recommendations
12 a. Please summarize your recommendations in this testimony.
13 A. First, I recommend that the current cap be removed and no overall system-wide
14 cap be imposed, as the Company has not presented economic justification or operational
l5 necessity. The very low level of net-metered solar generation in Idaho is growing slowly
16 enough for future impacts to be addressed in a timely manner.
17 Second, I recommend rejection of IPCo's proposed Schedules 6 and 8, as well
18 as the changes to Schedule 84. I fuither recommend that the Commission increase the
l9 individual net-metered system size limit to 120%o of consumption (or 2 MW), applicable
20 to any customer in any class.
2l Third, I recommend rejection of IPCo's proposed rate structure changes in this
22 proceeding. There has been no analysis of the cost basis for such dramatic changes.
23 Major rate changes such as these proposals should be addressed in a comprehensive rate
Gilliam, Di 35
City of Boise
233
I proceeding, where all elements of the revenue requirement and cost of service can be
2 scrutinized. In addition, we urge the Commission to issue a policy statement that any rate
3 redesign in the future will follow the principles of gradualism.
4 Fourth, I recommend that the Commission reject IPCo's proposed changes to
5 Rule 72. The changes result in requirements that are burdensome and costly, and which
6 fail to acknowledge the FERC SGIP screening process for expedited interconnection.
7 Because interconnection requirements can be complicated, I recommend a new
8 rulemaking docket be opened to establish new statewide interconnection rules based on
9 the best practices of other states.
10 Fifth, I recommend accepting IPCo's proposal to carry forward energy credits
1l for net excess generation from month to month in lieu of financial payments. Further, I
12 recofirmend moving the annual true-up date to March 3l of each year, and payments be
13 made for any net excess generation at that time at an avoided cost rate. I also recommend
14 that, at the customer's discretion, the option of continuous rollover of excess generation
15 credits be made available.
16 Sixth and lastly, I recommend that the Commission take into account the local
17 and statewide economic benefits that result from reducing barriers to solar deployment,
18 and encouraging sellsufficiency, job creation and the resultant economic development.
l9 a. Do you have any final thoughts for the Commission?
20 A. Yes. In this proceeding, virtually all of IPCo's proposals are designed to make
2l net-metered customer-sited solar generation more costly or more administratively
22 difficult. The formal submittal by IPCo in late 2012 unfortunately put all interested
23 parties into an immediate adversarial position, polarizing the discussion in this
Gilliam, Di 36
City of Boise
234
1 proceeding. There are high resource costs associated with proceedings such as this one.
2 While the Company always has the prerogative to file formally for changes to its rates
3 and tariffs, I urge the Company to meet with interested stakeholders to inform its thinking
4 prior to making such filings.
5 In addition, the Commission could take the lead from a policy standpoint and
6 initiate informal workshops leading to rulemaking proceedings for interconnection (as
7 noted above) and for net metering. Similarly, it could hold informal workshops or open
8 an investigatory docket looking into new and creative rate structures to address the
9 changes to the utility industry.
l0 a. Does this conclude your direct testimony?
l1 A. Yes, it does.
Gilliam, Di 37
City of Boise
235
APPENDIXA: Qualifications
Rick Gilliam
January 2012 to Present: Director of Research and Analysis, the Vote Solarlnitiative,
San Francisco, CA. Manage the technical and policy research for Vote Solar,
and engage in state, regional and national campaigns related to key solar
market policies.
January 2007 to January 2012: Vice President, Government Affairs, SunEdison, LLC,
Beltsville, MD. Directed and managed policy development and
implementation for the Americas at the regulatory and legislative levels.
(Promoted from Managing Director June '09 and from Director Sept. '07.)
December 1994 to January 2007: Senior Energy Policy Advisor, Western Resource
Advocates (formerly the Land and Water Fund of the Rockies), Boulder, CO.
Developed innovative clean energy and air quality public policies within the
economic and cultural framework unique to this region. Led environmental
advocate in development of Arizona Environmental Ponfolio Standard,
Nevada Renewable Portfolio Standard implementation rules, Colorado
Renewable Energy Standard legislative proposals, and the 2003 Utah
Renewable Energy Standard legislative proposal. Principal author of
Colorado's Amendment 37 and lead advocate for related PUC rule
development.
January 1983 to December 1994: Director of Revenue Requirements, Public Service
Company of Colorado, Denver, CO. Primary responsibility for development
of formal rate-related filings for this investor-owned utility for electric, gas
Gilliam, Di 38
City of Boise
236
and thermal energy service in two states and the FERC. Developed and
responded to a variety of proposed mechanisms to encourage the use of
energy efficiency technologies, including innovative rate design approaches.
December 1976 to December 1982: Technical Witness (Engineer), Federal Energy
Regulatory Commission, Washington, D.C. Testified as expert witness on
behalf of the FERC in wholesale rate filings on technical, accounting and
economic issues related to rate design, pricing and other issues.
A. Education
Masters, Environmental Policy and Management, University of Denver, Denver, CO
Bachelor of Science, Electrical Engineering, Rensselaer Polytechnic Institute, Troy, NY
B. Related Publications
Gilliam and Baker, "Green Power to the People," Solar Today, July/August2006.
Dalton & Gilliam, "Walking on Sunshine: Energy Independence on the Rez," Orion
Afield, Summer 2002.
Gilliam, Rick, "Revisiting the Winning of the 'West," Bulletin of Science, Technolog,, &
Society, Aprll2002.
Blank, Gilliam, and Wellinghoff, "Breaking Up Is Not So Hard To Do: A
Disaggregation Propos al," The El e ctric i ty Journal, May 199 6.
231 Gilliam, Di 39
City of Boise
5
6
1
1
2
3
4
I
9
10
11
t2
13
l4
15
1,6
t1
18
19
20
27
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
GILLIAM (X)
City of Boise
(The following proceedings were had in
open hearing. )
MR. HAMMOND: And we woul-d offer Mr. Gilliam up
for cross.
COMMISSIONER SMITH: Thank you.
Mr. Mil-l-er, do you have questions?
MR. D. MILLER: I have no questions, thank you.
COMMISSIONER SMITH: Mr. Richardson.
MR. RICHARDSON: No questions, Madam Chair.
COMMISSIONER SMITH: Mr. Otto.
MR. OTTO: No guestions, Madam Chair.
COMMISSIONER SMITH: Mr. Kl-ein.
MR. KLEIN: No quest j-ons .
COMMISSIONER SMITH: Ms. Nordstrom.
MS. NORDSTROM: Yes, I do. Thank you.
CROSS-EXAMINATION
BY MS. NORDSTROM:
O. Good afternoon.
A. Good afternoon.
A. On page 11 of your direct testimony, you state on
lines 15 and 1,6 that you coul-d understand from the Utility's
perspective that recent growth in net metered solar generation
capaci-ty may be surprising. What causes you to think that
238
83701
Idaho Power is surprised by its recent growth?
A. The testimony of Mr. Larkin that he put in a
chart that showed I don't know if I'd call it high growth, but
certainly more growth in the last couple of years than there
had been historically. So my perspective is that Idaho Power
may be surprised by that level of growth, given that Idaho
Power has very low electrj-c rates.
O.On page 22 of your testimony, you describe
statements made by the Company during and after the public
workshop that took place on April 25, 201,3, with regard to the
customer-related revenue requirement and the customer charge.
Directing your attention specifically to Iine l7 , there's a
number in that 11ne that says $6 and point wel1, 6.J85 per
month. Is that number correct or is the six a typo?
A.No, that number is correct. f think I descrj-be
the methodology in the paragraph that precedes. What I did was
si-mply take the amount of customer-rel-ated revenue requirement
that was set forth in the presentati-on by ldaho Power and
divided that by -- or r multiplied that by the average usaqe per
month to come up with the incremental cost currentl-y being
recovered in the energy rate but, you know, that would be
justifiable to put i-nto the customer charge.
A. WeLl, because I'm looking at line 16,and there's
coincidentala number there that says 1.785. So 1s that purely
or purposeful?
239
3
4
q
6
't
8
9
1_0
11
L2
13
74
15
76
L7
1B
19
20
2t
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 5'18, BOTSE, rD
GTLLTAM (X)
City of Boise83701
1
2
3
4
5
6
7
I
9
10
11
L2
13
L4
15
t6
77
1B
79
20
2t
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 518, BOTSE, rD
GILLIAM (X)
City of Boise
A. No, oo, no. The 6.185 is the sum of the current
$5 monthly charge plus the incremental- cost of customer-rel-ated
fixed costs that currentl-y are being recovered 1n the energy
charge, and the sum of those two woul-d be a customer charge, a
monthly customer charge, that wou1d recover all of the
customer-related fixed costs.
o.On the top of page 24, you criticize Idaho Power
as not having detalled which costs are being proposed for
recovery by these new charges being basic load charges and
service charges. Is that stlll- your testimony today?
A.At the time I wrote this I hadn't seen some of
the information that had been provided to Staff, but f have
seen that Idaho Power did provide the basic data to Staff in
Response to Discovery. However, my testimony still- would be
that the numbers need to be cost justified in that a portion of
those dlstribution costs are going to the customer charge, a
portion are going to this new basic capacity charge. And so
there needs to be the underpinnings of justification for why
it's appropriate to recover, you know, one portion in one area
and the other portion in the other area, and to my knowledge,
that has not been provided.
o.On pages 24 and
describe the val-ue of rooftop
you describe rel-evant to all
sol-ar?
25 of your testimony, you
solar. How is the val-uation that
net metering servj-ces, not just
240
83701
1
2
3
5
6
'7
B
9
10
11
t2
13
74
15
16
t7
18
79
20
27
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 5'18, BOTSE, rD
GILLIAM (X)
City of Boise
A. Wel-l, the val-uation I described in generi-c terms,
the elements that we used in that eval-uation could be applied
to other forms of other technol-ogi-es that woul-d be potential-ly
used for net metering. The actual numbers I used here for
instance, the 40 to $65 per megawatt hour are in the chart
on the following page. That should describe the solar
generation timing versus the timing of the cost of power for
Idaho Power. So, cIearly, for a wind resource or for a biomass
resource, the timing of the generation would be different
or, it may or may not be, but it assumably it would be
dj-fferent, so those costs cou1d potentially be different.
O. And did you attempt to calculate what those would
be for other sources of generation?
A. I did not.
O. Are you aware that the Idaho Commission already
has val-ued nonfirm generation l-ike rooftop sol-ar in
Schedule 86?
A. I don't consider rooftop sol-ar nonfi-rm
generation. ft's not a form of generation that is sol-d to the
Utility for use to meet the Utility's load. In other words,
j-t's not dispatched by the Utility. As Mr. Larkin said, itrs a
form of generati-on that's used by customers to reduce their
consumption.
O. Have you revj-ewed the proposed resolution of net
metering interconnection issues dlscussed in Idaho Power's
247
83701
1
2
3
4
5
6
1
B
9
10
11
L2
13
74
15
1,6
t1
18
t9
20
2t
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 518, BOTSE, rD
GILLIAM (COM)
City of Boise
Exhibit B?
A. I reviewed it at a very high level. And I wil-I
say that if the l-ocal- solar developers, l-ocal- renewable energy
developers, are satj-sfied with the outcome of that process, I
would not take issue with it at this time. However, I woul-d
sti1l recommend to this Commissj-on that it open some form of
either informa1 or formal workshop process leading to a rul-e
making that woul-d be applied statewide for both interconnection
and net meterj-ng policy in the state.
MS. NORDSTROM: I have no further questions.
COMMISSIONER SMITH: Thank you.
Questions from the Commission?
COMMISSIONER K.IELLANDER: No.
COMMISSIONER REDFORD: No.
EXAMINATION
BY COMMISSIONER SMITH:
0. On page B of your testimony, the very l-ast 1ine,
you're comparing Idaho's solar resource to its deployment of
SEG, if I read that correctly?
A. Correct.
O. And you state that others have developed --
deployed far more sol-ar generation. Is that did you
calculate that l-ike on a per-capita basis oL r I mean, how did
242
83701
1
2
3
4
5
6
7
B
9
10
11
72
13
t4
15
1,6
l7
1B
L9
20
21
22
23
24
25
HEDRICK COURT
P. O. BOX 578,
REPORTING
BOTSE, rD
GILLIAM (Com)
City of Boise
you measure that?
A. Measure the potential- for solar in Idaho?
O. No, the deployment that you say is far more, that
others have developed far more?
A. That's purely on a megawatt basis, the amount of
megawatts that have been installed in other states.
O. And it wasn't based on like per capita or
anything else?
A. No. But I wil-I say the Sol-ar Electric Power
Association every year puts out a per-capita study -- weJ-1, a
broad study -- but one of the el-ements incl-uded there is a
per-capita instal-Iation of sol-ar, and I -- I don't have it
memorized, but I don't believe Idaho made at least the top ten
i-n that net 40 that
O. Thank you. And on page 18 of your testimony, at
l1ne 9, you're asked a question about the need for individual
system size caps. And your answer is that there is no need
because the economic viabil-ity of the facility drops
dramatically if the system generates more energy than the host
can consume. Is that correct?
A. Yes, that's correct.
O. So, this concfusion is in the context of a
customer using the self-generation for their own load?
A. Yes, that's right.
A. And not in a context of them getting paid for
243
83701
1
2
3
4
5
6
7
B
9
10
11
L2
13
l4
15
t6
L7
1B
t9
20
2L
22
23
24
25
HEDR]CK COURT REPORTING
P. O. BOX 518, BOTSE, fD
GILLIAM
City of
(Com)
Boi-se
anything extra?
A. Even if they are paid for anything extra, in most
states net excess generatlon at the end of a year or 12-month
period is paid at an avoi-ded cost rate determined by the
Commission. And even using that as a payment for the excess
still makes the economic viability such that it's optimum to
size the system for the l-oad of the house and not beyond.
O. Right. It's always seemed inequi-table to me that
they shou1d be paid at a retail rate, and I guess your
testimony is that most states do it not at a retail- rate?
A. fn terms of the annual net excess?
A. Right.
A. Yes, my testi-mony is that j-t's primarily avoided
cost rates.
O. Thank you.
COMMISSIONER SMITH: Is there any redirect,
Mr. Hammond?
MR. HAMMOND: I don ' t bel-i-eve so . Thank you .
COMMISSIONER SMITH: Thank you for your heIp.
THE WITNESS: Thank you.
(The witness l-eft the stand. )
MR. HAMMOND: City would next cal-l- Paul Woods.
244
83701
1
2
tr
6
7
8
9
10
11
12
13
L4
15
76
L7
18
19
20
2t
22
23
24
25
HEDR]CK COURT REPORTING
P. O. BOX 578, BOTSE, rD
wooDs (Di)
City of Boise
PAUL R. WOODS,
produced as a witness at the instance of the City of Boise,
being f irst duly sworn, was examined and testif ied as fol-l-ows:
DIRECT EXAM]NATION
BY MR. HAMMOND:
O. Sir, coul-d you please state your name and spe11
your l-ast name for the record?
A. Yes. Paul Woods, W-O-O-D-S.
O. Coul-d you please tell me where you're employed,
and in what capacity?
A. I'm the environmental division manager for the
City of Boise in the public works department.
O. And can you brj-efly describe maybe your
professional educational background, college, what sort of
professJ-on you engage 1n?
A. I have a bachel-or's degree 1n ci-vil engineering
from the University of Wlsconsin, a bachelor's degree in public
adminlstration from Boise State, and I am registered as a
professional- engineer as a civil- engineer in the state of
fdaho.
O. Have you caused to be fil-ed in this case
testimony on the beha1f of the City of Boise?
A. Yes.
245
83701
1
2
3
4
5
6
7
I
9
10
11
L2
13
1_4
15
t6
t7
18
1,9
20
27
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
wooDs (oi1
City of Boise
O. Are there any changes or corrections to that
testj-mony that you filed in this case?
A. No.
0. And if we were to ask you the same questions
today that are contained in your direct testimony, would your
answers change?
A. No.
MR. HAMMOND: I'd ask the Commission to spread
Mr. Woods' testimony upon the record as if it read.
COMMISSIONER SMfTH: Seej-ng no objection, it is
so ordered.
(The following prefiled testimony of
Mr. Woods is spread upon the record. )
246
83701
1 Q. Please state your name and business address.
z A. Paul R. Woods. My business address is 150 North Capitol Blvd., 4th Floor,
3 Boise,Idaho 83702.
4 Q. Who are you employed by and in what capacity?
5 A. I am employed as the Environmental Manager in the Boise City Public Works
6 Department.
7 Q. What are your responsibilities in this position at the City of Boise?
8 A. As the Environmental Manager for the City of Boise, I oversee the City's
9 environmental programs, including wastewater treatment services, solid waste
10 management and recycling service, household hazardous waste recycling services, air
7L quality and climate protection services, and assistance with energy efficiency
72 improvements.
13 a. What professional experience do you have that you use in this position?
1.4 A. Over the past 25 years, my experience includes engineering, project
15 management and financial assistance on unique and complex civil and environmental
16 projects in both public and private organizations.
17 a. What is your educational background?
18 A. I have a Bachelor of Science Degree in Civil and Environmental Engineering
19 from the University of Wisconsin - Madison. I also have a Master of Science Degree in
20 Public Administration from Boise State University. I am a licensed professional civil
2L engineer in the state of Idaho.
22 a. What is the purpose of your Direct Testimony in this proceeding?
Woods, Di I
City of Boise
247
10
A. To convey the City's opposition to the Application of Idaho Power Company
("lPCo") in Case No. IPC-E-12-27. The City has retained other outside technical experts
who will testify on the details of the proposed rate changes. My testimony is to provide
the more generalized opposition to the proposed rate filing because it is contrary to the
City's efforts to respond to community interest in sustainable development and re-
development as a vital component of future economic vitality.
a.What is the City's interest in providing sustainable development and re-
development opportunities ?
A. A primary example is the City's Comprehensive Land-Use Plan, developed
with significant public input, which provides in pertinent part that:
11
12
13
t4
15
16
1.7
18
19
20
2L
22
23
24 Furthermore:
25
26
27
28
29
30
31
Boise's growth will happen in a sustainable, efficient, and
responsible manner that maintains and enhances its
treasured quality of life, while meeting the challenges of
the future. Boise is committed to becoming a more
sustainable community by taking steps to enhance the
local, regional, and global environment. A sustainable
community is one where the integrated economic, social
and environmental systems are structured to support
healthy, production, and meaningful lives for its residents,
while laying the foundation for a high quality of life
without compromising the ability of future generations to
meet their own needs.l
Boise is committed to becoming a more sustainable
community by taking steps to reduce its impact on the
environment...the city will also strive to address many
other aspects of sustainability, such as climate
change...energy conservation and altemative energy
production . . ..2
I Blucprint Boise. Boise's Comprehensive Plan. at p. l-1. http://pds.cityofboise.orgy'nredia/l 14868/blueprint-boise-rvoaoc.pdl.
2 Id. ar p. 2-1.
248
Woods, Di 2
City of Boise
1
2
3
4
5
6
7
8
9
10
7t
L2
13
t4
15
16
t7
18
19
20
27
22
23
a. Are there other examples of efforts related to sustainable development
and re-development being led by the City?
A.The Mayor and Council approved a resolution committing the City to strive to
achieve the U.S. Mayor's Climate Initiative. A citizen committee appointed by the
Mayor developed specific recommendations for the City to achieve the goals by:
. Implementing an outreach program for residential developers and
builders that can demonstrate how to build energy efficient homes
and provide education on renewable energy sources including, but
not limited to: pre-wiring and pre-plumbing for potential solar
installations;
Initiating a program to achieve a net zero energy use in new
residential construction by 2030;
Allowing sustainable practices through amendments to the Boise
City Code, including allowances for solar photovoltaic panels on all
existing and new homes; and
Providing incentives for all development that include density
bonuses for sustainable practices above minimum code levels
including renewable energy resources.
The City is moving forward with phased implementation of these recommendations.
a. Has the City of Boise and Idaho Power Company collaborated on efforts
to achieve the City's sustainability efforts?
A. Yes. The City of Boise and IPCo have long been partners in serving the
citizens and businesses of our community. As a recent example, the City provided close
Woods, Di 3
City of Boise
249
1 to $400,000.00 in funding to IPCo to provide home energy audits and installation of
2 energy efficiency measures in over 700 homes in an effort to pilot an improved energy
3 efficiency outreach program. IPCo also provided the City with $1,000.00 in funding to
4 conduct an energy efficiency workshop for the community last summer. The City's
5 intervention in opposition to IPCo's proposals in this case is not typical of our
6 organizations interaction; however, this case is far from typical, as implementation of
7 what the utility proposes in this case could significantly and negatively impact the City's
8 economic development and sustainability policies and goals. Accordingly, the City felt
9 that it was essential to participate in this case.
10 a. You have stated that the City has retained expert testimony on the rate
7L design. Are there concerns that have been identified by City staff with the proposed
LZ rate change?
L3 A. The concern of staff is that if the proposed rate change is approved, the
14 changes would:
15 1. Create rate shock for existing net metering customers who have
16 already invested in net metering;
77 2. Create a rate-gaming opportunity for large residential customers,
18 which would harm non-participating customers;
19 3. Introduce a new rate methodology for recovering fixed costs that is
20 applied only to a small group of customers and eliminates the
21. existing rate design that promotes the efficient use of resources and
22 energy conservation;
Woods, Di 4
City of Boise
250
L 4. Impose inequitable rates for customers with similar consumption
2 pattems; and
3 5. Limit consumer choice and restrict economic development.
4 Q. Why does the City feel the new rate creates rate shock with existing net
5 metering customers?
6 A. For net metering customers who install electrical generation units where the
7 annual output closely matches their annual consumption, their annual costs just for the
8 monthly service charge under the existing tariff for residential and small general service
9 customers are approximately $60.00 per year. Under the proposed tariff, the monthly
10 service charge would increase to $251.04 per year for residential net metering customers
77 and $269.88 per year for small general service net metering customers. It is hard to
12 imagine any net metering customer who installed electrical generation units where the
13 annual output closely matches their annual consumption would have planned for a3l8o/o
1.4 and 348Yo rate increase respectively for the rate class affected in one year under this
15 program. This doesn't even take into consideration the additional Basic Load Capacity
16 charge IPCo requests that it be allowed to impose on these customers.
17 a. Can you describe what you see as the rate-gaming opportunity that would
18 be harmful to non-participating customers?
19 A. Yes. The proposed tariff creates an incentive for the installation of systems
20 that generate very small amounts of power in order to access the lower per KWh rate. If
2t a residential customer with high consumption were to install a very small net metering
22 system, then that customer would be able to access the lower per KWh consumption rate
23 contained in [PCo's proposed tariffs in this case, a rate that is 40o/o lower than the
Woods, Di 5
City of Boise
251
1 existing residential rate. This outcome would reduce revenue to IPCo for consumption in
2 excess of net generation, but we fail to see how this is good public policy. The result
3 would be reduced revenue for consumption very similar to non-participants and therefore
4 a transfer of fixed cost. It appears that this rate design would in fact create a subsidy for a
5 subset of net metering customers.
6 Q. Why does the proposed rate structure introduce a new rate methodology
7 for recovering fixed costs that is applied only to a small group of customers and
8 eliminates the existing rate design that promotes the efficient use of resources and
9 energy conservation?
10 A. Under the existing residential rate structure for both net metering and non-net
11 metering customers, IPCo's fixed costs are reasonably recovered by a combination of the
72 fixed customer charge and per kilowatt hour consumption rate. In this rate design, IPCo
13 recovers its fixed cost in a manner that provides incentives for energy conservation and
1-4 promotes efficient use of resources. The proposed rate structure appears to recover fixed
15 cost through a dramatic increase in the customer fee that is unavoidable and therefore
1,6 removes incentives for energy conservation and efficient use of resources.
77 In addition, the targeting of net metering customers for fixed cost recovery in
18 the residential class seems odd. It would seem as though seasonal or other intermittent
19 users would create a much larger class of residential customers that create potential fixed
20 cost recovery inequities, and that IPCo would evaluate the equitable differences within
2t the class as a whole.
22 a. Can you explain why the proposed rate structure imposes inequitable
23 rates for customers with similar consumption patterns?
Woods, Di 6
City of Boise
252
L
2
3
4
5
6
7
8
9
10
11
t2
13
1.4
15
16
t7
18
19
20
2t
22
A. Yes. If an energy-efficient customer were to consume 300 KWhs in a month,
the cost for this service would be approximately $26.00 in customer and per KWh
charges. A net metering customer with a similar net consumption of 300 KWhs in a
month would incur customer and KWh charges of $34.00. In the rate filing, IPCo did not
provide any detailed cost of service study to detail why such a differential in the
residential class is warranted - other than generalized statements that the net metering
customer "uses" the distribution system. A detailed analysis on the difference in the cost
of service needs to be performed to justify the rate differential.
a. Why does the proposed rate structure limit consumer choice and restrict
economic development?
A. The proposed rate structure serves to limit consumer choice by placing
economic burdens for fixed cost recovery on a small segment of the residential class that
is not applied to others. In this light, the proposed rate appears punitive and an attempt to
limit consumer choice. The dramatic increase in annual cost for these current and future
net metering customers serves as a barrier to the development of this generation resource.
Further, development of this industry in the absence of these barriers could bring new
business and jobs to our community. The Mayor and City Council place the highest
priority on fostering economic development and environmental protection in our
community, and the creation of a stable regulatory environment that promotes net
metering is consistent with their priorities.
a.Does the type of net metering service that is at issue in this case something
which the City of Boise wishes to continue to promote and foster?
Woods, Di 7
City of Boise
253
L
2
3
4
5
5
7
8
9
10
1.1
12
13
a.
A.
A. Yes. The City believes that net metering can be employed to help it meet its
sustainability goals. Furthermore, net metering can both help citizens of Boise manage
their energy consumption, while also providing IPCo with a clean and local energy
generation resource. The City believes further development and expansion of net
metering will also promote the economic development of industries that support
renewable power generation in this area which, of course, leads to the addition of new
jobs and investments in our community. The City's interest in net metering and
customer-sited generation is not unique and is a trend that continues to grow. For
example, the city of Lancaster, Califomia, has recently required almost all new homes to
either come equipped with solar panels or be in subdivisions that produce one kilowatt of
solar energy per house.3
Does this conclude your testimony in this case?
Yes.
'' See With Help liom Nature. a Torvn Aims to Be a Solar Capital. l-he Nes York Tinres. by' Felicity Barringer. Published
April 8.2013. rvrrrv.nvtinres.com/2013/04/09/us/lancaster-calil'-locuses-on-hecomins-solar-capital-ol-universe.
254
Woods, Di 8
City of Boise
(The following proceedings were had in
open hearing. )
MR. HAMMOND: And we would open up Mr. Woods for
cross.
COMMISSIONER SMITH: Thank you.
Mr. Mill-er.
MR. D. MILLER: No questions, thank you.
COMMISSfONER SMITH: Mr. Richardson.
MR. RICHARDSON: No questions, Madam Chair.
COMMISSIONER SMITH: Mr. Otto.
MR. OTTO: No questions, Madam Chair.
COMMISSIONER SMITH: Mr. Klein.
MR. KLEIN: No questions, thank you.
COMMISSIONER SMITH: Thank you. Ms. Nordstrom.
CROSS_EXAMINATION
BY MS. NORDSTROM:
O. Good afternoon.
A. Good afternoon.
0. Does the City of Boise currently require Idaho
Power to coll-ect a franchise fee as a percentage of customers'
base charges?
A. Yes.
O. Do the City's expenses paid by franchise fees go
255
3
4
5
6
7
I
9
10
11
l2
13
t4
15
t6
!1
18
19
20
2t
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 518, BOTSE, rD 83701
wooDs (x)
City of Boise
1
2
3
4
5
6
1
I
9
10
11
L2
13
L4
15
16
l7
1B
1,9
20
2L
22
23
24
25
HEDR]CK COURT REPORTING
P. O. BOX 578, BOTSE, rD
wooDs (x)
City of Boise
away if revenues generated by franchise fees decline?
A. Can you restate the question, please?
O. Do the City's expenses paid by franchj-se fees go
away if revenues generated by franchise fees decl-j-ne?
A. Not to my understanding, oo.
O. If Idaho Power customers are all-owed to continue
to offset the entirety of their total- energy bi1ls, is the City
of Boise concerned about how it wil-1 address the resulting
franchise fee revenue shortfal-l-?
A. The City of Boise has to set its budget every
year in accordance with the Idaho Constitutionr so f can't
speak for what future el-ected official-s woul-d do in setting
their budget, but obviousl-y they would have to address that as
they set their budget each and every year.
O. As the environmenta1 manager for the City of
Boise, do you believe it furthers the City's sustainability
goals to put rates in effect that aIl-ow customers to avoid
contrj-buting to the energy efficiency rider?
A. Can you restate the question for me?
O. Yes. As the environmental manager for the City
of Boise, do you believe that it furthers the Cityrs
sustalnability goals to put rates into effect that would a1l-ow
customers to avoid contributing to the energy efficiency rider?
A. You know, I think the City of Boise looks to not
just generate revenue through the energy efficiency rider, but
256
83701
I
2
3
4
5
6
1
I
9
10
11
L2
13
74
15
1,6
t1
1B
19
20
2t
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 518, BOTSE, rD
vfooDs (x)
City of Boise
if the fees avoided it but accomplish the same thing, I think
that wou1d be achieving the same goa1. I don't think its goal
is simply to see money raised under the energy efficiency
rider; it's to see the outcome of energy efficiency efforts.
MS. NORDSTROM: Thank you. I have no further
questions.
COMMTSSIONER SM]TH:
the Commissioners?
Do we have questions from
COMMISSIONER REDFORD: No.
COMMISSIONER KJELLANDER: NO.
COMMISSIONER SMITH: Nor I.
Any redirect?
MR. HAMMOND: No further, f have no redirect
COMMISSIONER SMITH: Thank you very much.
THE WITNESS: Thank you.
(The witness left the stand. )
MR. HAMMOND: Madam Chair, I'm in a bit of a
quandary: We maybe assumed that we were going right down the
line and Joe would be next. My next witness, Cece Gassner, had
to go pick up her parents who were flying in from out of town,
don't know the city, and had to get them to a location. She's
not here at the moment. I apologize for that. Her testimony
is very brief. If you want to skip her and we can come back, I
apologize, but that's sort of where Irm at.
COMMISSIONER SMITH: Okay. We ' l-I go to
251
83701
1
2
4
5
6
7
B
9
10
11
72
13
14
15
L6
L7
18
t9
20
2t
22
23
24
25
HEDRICK COURTP. O. BOX 518,
REPORTING
BOISE, ID
DUNAY (Di)
rCEA
Mr. Miller.
MR. D. MILLER: We'd be happy to fill in here.
And for our first witness, cal-l- Matt Dunay.
MATTHEW DUNAY,
produced as a wj-tness at the instance of the Idaho Clean Energy
Association, being first duly sworn, was examined and testified
as f ol-Iows:
DIRECT EXAM]NAT]ON
BY MR. D. MILLER:
O. Sir, would you state your name and spe11 your
last name for the record, please?
A. Sure. It's Matthew Dunay, D-U-N-A-Y.
O. Mr. Dunay, did you previously have occasion to
prefile written prefiled testimony in this case consisting of
four pages?
A. r did.
O. Are there any additions or corrections that need
to be made to your testimony?
A. There are not.
O. And there were no exhibits accompanying your
testimony. Is that correct?
A. Correct.
258
83701
B
9
10
l-
2
3
4
5
6
7
11
t2
1_3
L4
15
76
L7
1B
l9
20
2L
22
23
24
25
HEDRICK COURTP. O. BOX 518,
REPORTING
BOISE, ID
DUNAY (Di)
ICEA
O. If I asked you the questj-ons that are contained
in your written prefiled testimony today, would your answers be
the same as they are there written?
A. They would be.
A. Are those answers true and correct, to the best
of your knowledge?
A. They are.
MR. D. MILLER: Madam Chairmanr we would ask that
the testimony be spread on the record as if read, and wouLd
tender the witness for cross-exami-nati-on.
COMMISSIONER SMITH: Seej-ng no objection, we will
spread the prefiled testimony upon the record as if read in
full-.
(The followj-ng prefiled direct testimony
of Mr. Dunay is spread upon the record. )
259
83701
I Q. What is your name and business address?
2 A. My name is Matthew Dunay, and my address is 780 ELeru St., Boise,Idatro
3 83712.
4 a. What is your occupation?
5 A. I own and operate a solar installation company called Altenergy Incorporated.
6 We are located in Boise, Idaho and have been operating here since 201 l. Most of our
7 revenue is produced from installing net-metered solar photovoltaic systems on homes
8 and businesses.
9 Q. Do you have any certifications or licenses in the solar industry?
l0 A. Yes, I have a NABCEP installer certification (North American Board of
I I Certified Energy Practitioners) and I am a licensed specialty electrical PV joumeyman
O 12 in the State of ldaho.
l3 a. Why are you testifuing?
14 A. I am testifuing for two reasons first, because these proposed rate changes have
l5 had a severely negative impact on my business and, second, to protect my past, present
l6 and future customers.
17 a. Has the threat of these requested rate changes hurt your business?
l8 A. Yes, regardless of the outcome of this case, my business has been affected in a
19 negative way. This process has already taken four months and will likely take six
20 based on prevailing schedule. Even if these rate requests are denied, our business will
2l still have lost 1/2 of our revenue producing year.
22 a. Do these requests to change the current net metering policy account for any
23 benefits net metered solar energy systems bring to all Idaho Ratepayers?
260 Dunay, Di I
Idaho Clean Energy Association
1 A. No, I believe the company has not assessed any of the benefits net metered solar
2 energy systems bring to the Idatro Ratepayers in their current plan to change the net
3 metering rate schedule. These benefits include providing peak power, reducing the
4 need for new infrastructure (transmission lines and power plants) and making Idaho's
5 electrical grid more efficient. All of these benefits lead to the cost reduction of
6 electricity and benefit Idatro Ratepayers.
7 Q. How have these rate change requests hurt your business?
8 A. Lost productivity and lost revenue. We have at least three "shovel ready" solar
9 net metered installations that have been put on hold until these proposed rate changes
l0 are denied. It should also be noted that we have had many conversations with potential
1l customers who are not even interested in solar installations until they can be assured the
12 Company's requests will be denied. Furthermore, our company has spent many hours
l3 fighting these unfounded proposed rate changes by attending meetings, analyzing data,
14 talking with rate payers, and writing testimony. For a small company, these extra
l5 burdens are very difficult to endure without going out of business. They amount to
l6 extra regulatory burdens that are bad for businesses.
17 a. How does a cap on total net metering capacity affect your business?
l8 A. A cap on total net metering capacity causes my business to be put on hold
19 while a new total capacity is approved by the IPUC. This process so far has taken four
20 months. Based on the current growth rate of net meter customer, the Company's
2I proposed 5.8Mw cap will be reached with 2-3 years. ['m very concerned that the
22 current total cap of 5.8MW will cause my business to go through another 6 month
23 recession until a new agreement is reached. It is very important to me and the business
267
Dunay, Di 2
Idaho Clean Energy Association
I community that one result of this effort is the formation of policy and a distinct
2 program structure that will last for a significant time.
3 Q. Were you notified that the Company was considering any of these proposed rate
4 changes before it filed Case N o.IPC-E-12-27?
5 A. No.
6 Q. Were you or anyone you know in your industry asked by the Company to
7 consult or contribute these proposed rate changes?
8 A, No.
9 Q. Do you believe these proposed rate changes will have a negative effect on the
l0 solar industry within Idaho Power's service Territory?
I I A. Yes. Based on my own analysis, submitted comments and discussions with the
12 public, I believe these proposed rate requests will have a dramatic declining effect on
13 the amount of installed solar energy systems. Most of our past customers chose to
14 install solar PV systems to protect themselves from the rising costs of energy. They
l5 want the freedom to produce their own electricity on their own roofs. They are paying
16 for the infrastructure to connect their homes and businesses to the grid through the
17 current fixed fees charged by the Company.
18 [f the requests to increase monthly fees and to change the rate structure for net
19 metering customers are granted, there will be less potential solar customers. If the cap
20 is only doubled, there will be more hardship for solar companies while a new cap is
2l negotiated. Jobs in the solar industry will be lost and solar energy companies will go
22 out of business because of lost potential customers and lost productivity.
23 a. Does that conclude your testimony?
Dunay, Di 3
Idaho Clean Energy Association
262
1A.Yes it does.
Dunay, Di 4
Idatro Clean Energy Association
263
1
2
3
4
5
6
1
B
9
10
11
t2
13
74
15
t6
77
1B
79
20
27
22
23
24
25
HEDRICK COURT REPORT]NG
P. O. BOX 578, BOTSE, rD
DUNAY (X)
ICEA
(The following proceedings were had in
open hearing. )
COMMISSIONER SMITH: Mr. Hammond, do you have
questions?
MR. HAMMOND: Just briefly.
CROSS-EXAMINAT]ON
BY MR. HAMMOND:
O. As an instal-Ier of these systems, net meterj-ng
systems, is it mostl-y solar systems? Is that my understanding?
A. Yes.
O. Do you have a general understanding from your
experience about how possibl-e power generati-on, if it was
excess of the customer's usage, where that would go, where that
excess generation would go onto Idaho Power's system,
potentially?
A. Yes, I do.
O. Can you explain, to the best of your knowledge,
how that might operate?
A. Sure. If there were two homes side by side, one
had a solar right, the other did not, the efectrons that were
activated in the house that had the solar right would flow
first into that house. If there were no loads that were
consuming electricity, they woul-d f l-ow out onto Idaho Power's
264
83701
6
1
1
2
3
4
5
B
9
10
11
12
13
14
15
t6
l1
1B
t9
20
27
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
DUNAY (X)
ICEA
lines and then they would fl-ow to the next available line,
which would be probably a neighboring house that was consuming
electricity.
MR. HAMMOND: Thank you. That's all f have.
COMMfSSIONER SMITH: Mr. Richardson, do you have
questions ?
MR. RICHARDSON: I have no questj-ons,
Madam Chair.
COMMISSIONER SMITH: Mr. Otto.
MR. OTTO: I have no questions.
COMMISSIONER SMITH: Mr. Klein.
MR. KLEIN: No questions.
COMMISSfONER SMITH: The Company.
MS. HILTON: No quest j-ons.
COMMISSIONER SMITH: Commissioners.
COMMISSIONER REDEORD: No.
COMMISSIONER SMITH: Nor I-
Any redirect, Mr. Miller?
MR. D. MfLLER: No redirect.
COMMISSIONER SMITH: Thank you for your heIp.
THE WITNESS: Yep.
(The witness l-eft the stand. )
MR. D. MILLER: Madam Chairman, I'm not sure if
it's necessary or not, but just in case, ftdy the wltness be
excused?
265
83701
1
2
3
4
5
6
7
I
9
10
11
t2
13
1-4
15
L6
L1
1B
t9
20
27
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 5'7I , BOTSE, f D
WHITE (Di)
ICEA
COMMISSIONER SMITH: Is there any objection to
excusing the witness? Seeing none, he may be excused for the
remainder of the proceeding.
MR. D. MILLER: Thank you.
We would now, wlth your indulgence, call- Courtney
White.
COURTNEY WHITE,
produced as a witness at the instance of the Idaho Cl-ean Energy
Association, being first duly sworn, was examined and testified
as f oll-ows:
DIRECT EXAMINATION
BY MR. D. MILLER:
o. Ready?
A. Water.
O. Ms. White, would you state your name and spell
your last name for the record, please?
A. My name is Courtney White. My last name is
W-H_T-T-E.
O. And are you the same Courtney Write (sic) that
previously caused prefiled written testimony consisting of 27
pages to be filed with the Commission in this proceeding?
A. Yes.
266
83701
1
2
3
4
5
6
7
I
9
10
11
t2
13
74
15
1.6
L7
18
1,9
20
2t
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
WHITE (Di)
]CEA
O. And were there exhibits accompanying your
testimony?
A. Yes.
O. And were those exhj-bits numbers 101 through
7 ]-0?
A. Yes.
O. Are there any additions or corrections that we
should make to your testimony?
A. Yes, I do, I have two corrections to make.
O. Is the first of those on page 9?
A. Yes.
0. The questj-on starts on line 22?
A. That is correct.
O. And through an error probably in my office, did
w€, on l-ine 22, repeat the question that i-s on l-ine 1,1,?
A. Yes.
O. Shoul-d the questj-on on line 22 read: How does
the Company characterize the purpose of this filing?
A. Yes.
O. And is the second correcti-on required on page 1,9?
A. Yes.
O. And on line '7, should the word "three" be
"fourtt?
A. On line 77, the word "three" should be "four."
O. Thank you.
267
83701
1
2
3
4
5
6
7
B
9
10
11
t2
13
l4
15
t6
L1
1B
t9
20
27
22
23
24
25
HEDRTCK COURT REPORTING
P. O. BOX 578, BOTSE, rD
WHITE (Di)
ICEA
COMMISSIONER SMITH: Page L9, l-ine 17, the number
three should be the number four.
MR. D. MILLER: Right.
With your permission, Madam Chairman, I'd like to
just ask two additional preliminary questions that I shoul-d
have put in the testimony.
O. BY MR. D. MILLER: Ms. White, do I understand
correctly that you are not a lawyer?
A. That is correct.
O. At several- places in your testimony, you use the
word "dj-scriminatory" to descrj-be aspects of the Company's
proposal. Did you intend to use that word in the legaI sense
and were you intending to express a 1ega1 opinion?
A. I was expressing an analysis, not a legal
opinion. I used the word as a business analyst woul-d use it.
I will Ieave it to others to make judgment on the legality of
ir.
0. With those additions and corrections, if I asked
you the questions that are contaj-ned in your written prefiled
testimony, woul-d your answers today be the same as they are
there written?
A. Yes.
O. And are those answers true and correct, to the
best of your knowledge?
A. Yes.
268
83701
1
2
3
4
5
6
7
I
9
10
11
L2
13
L4
15
76
L7
18
19
20
2L
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
WHITE (Di)
ICEA
MR. D. MILLER: Madam Chai-rman, we woul-d ask that
the written prefi1ed testimony be spread on the record as if
read and that Exhibits 701 through 710 be marked for
identification, and would then tender the wj-tness for
cross-examination.
COMMISSIONER SMITH: Seeing no objection, it wil-l-
be so ordered.
(The fol-lowing prefiled dj-rect testimony
of Ms. White is spread upon the record.)
269
83701
I
2
J
4
5
6
7
8
9
10
t1
t2
13
T4
l5
16
t7
l8
19
20
2t
22
23
a. Please state your name and business address.
A. Courtney White, Management Department, 1910 University Drive, Boise,ID,
83725.
a. What is your present occupation?
A. I am an adjunct professor with Boise State University.
a. What is your educational background?
A. I have a B.E. in Mechanical Engineering from Vanderbilt University and an
MBA'from Stanford Graduate School of Business.
a. What are your qualifications?
A. I have been employed in various business fields, including roles as a
management consultant, a profit-center manager, and an educator. My work throughout
each role has focused on making better business decisions through the ability to gather
observations, analyze data, and interpret the implications. Business decisions often rely
on forwardJooking analyses to project the impact of those decisions and to weigh both
the upside and downside of various options, thus my work tends to center around those
types ofanalyses.
a. What is the purpose of your testimony?
A. Through review of the changes proposed by the Company, I have found that the
filing creates more problems than it claims to solve. The purpose of my testimony is to
identiS the issues created by the filing and to put these in context relative to the issues
the Company claims to be resolving. I hope to also add a forward-looking perspective
and consideration to how the proposed changes will impact decisions, none of which
have been addressed to date in the testimony provided by the Company.
white, Di I
Idaho Clean Energy Association
270
I
2
J
4
5
6
7
8
9
l0
il
l2
l3
t4
l5
l6
t7
l8
l9
20
2t
22
23
a.
A.
Please outline the topics of your testimony.
I will be addressing the following:
I. The proposed cap on net metering creates more costs than benefits;
II. The filing is inconsistent with state policy;
III. The inequity claimed by the Company is driven by a few customers
with excess generation; there is no need for a separate rate structure for
net metering;
IV. The proposed rate structure is inequitable and discriminatory;
l. Inequity between standard service and net metering customers;
2. Inequity between low usage and high usage customers;
V. Excess generation should be given a financial value;
VI. The filing will likely not remain revenue neutral;
a. Please describe Exhibit 701.
A. In response to Staff Production Request No. 9, the Company submitted a
comparison of annual bills tbr current net meter customers at current and proposed
rates. The response contained confidential customer identification information.
Subsequent to filing Response No. 9, the Company made a supplemental filing
updating kWh consumption for some customers. Exhibit 701 incorporates the
corrections provided by the Company in the supplemental filing and replicates the
updated summary data from Response No. 9 with confidential customer identification
removed. Exhibit 701 includes a table of data followed by two graphs to convey this
data visually. I will refer to Exhibit 701 at several points in my testimony.
I. The proposed cap on net metering creates more costs than benefits;
white, Di 2
Idaho Clean Energy Association
211
I Q. What was the explanation for the cap on net metering capacity provided by the
2 Company?
3 A. Idaho Power describes the cap as follows:
4 "If current growth trends continue or increase, it is important to maintain a
5 capacity limit to allow the Company and other stakeholders to evaluate this service as it
6 expands." (Larkin Direct Testimony, page 13, lines 10-12).
7 Q. Is it necessary to have a capacity limit to allow the Company to evaluate the
8 service?
9 A. No. Idaho has a regulatory process that already allows the Company the
l0 opportunity to evaluate the service and apply for changes.
1l a. Is there any guidance at a federal or interstate level with regard to an aggregate
12 capacity limit on net metering?
13 A. The Interstate Renewable Energy Council, Inc. (IREC) works with support from
14 the U.S. Department of Energy to establish best practices in the field of renewables and
15 energy efficiency. In its best practices for net metering, the IREC recommends:
16 "An Electricity Provider shall not limit the cumulative, aggregate generating
17 capacity of net-metered systems in any manner...IREC believes aggregate caps
18 arbitrarily and unnecessarily limit private investment in Renewable Energy Generation
l9 and needlessly curtail the flow of benefits that are associated with customer-side
20 Renewable Energy Generation. Moreover, aggregate caps ignore the fact that many
2l large systems do not export energy yet disproportionately count towards meeting a cap,
22 limiting the number of small systems that are eligible. For these reasons, IREC has not
White, Di 3
Idaho Clean Energy Association
212
I
2
3
4
5
6
7
8
9
l0
ll
t2
l3
t4
l5
t6
t7
l8
l9
20
2t
22
adopted an aggregate enrollment cap in these rules." (IREC MR-NM2009: IREC Model
Net-Metering Rules, p. 3).
a. Holv does the Company's cap compare to other states with regard to capacity
limits on net metering?
A. Based on my own research, I have found no other state or investor owned utility
outside of Idaho with a cap as low as the Company's current cap on net metering
capacity as a percentage of peak load demand for the prior year. If the cap is doubled
as proposed, there still would be no other state in the nation with a lower cap on net
metering relative to the prior year's peak load demand.
a. If there were no cap on net metering in ldaho, would you predict that the net
metering capacity in Idaho would rapidly exceed that in other states'i
A. No. A key variable in evaluating the financial benefits of investing in customer-
owned generation is the price of electricity. Idahoans have some of the lowest
electricity rates in the country, which is one of the reasons Idaho currently has such a
low level of investment in customer-owned generation and which ensures that this state
will continue to lag others in terms of net metering capacity as a percentage of total
peak load demand. I have not seen evidence from the Company indicating why it is
exceptional in needing to limit the capacity of net metering to a far lower level than
other states.
In sum, I have seen no evidence that the cap is necessary or that Idaho benefits
from a cap on aggregate net metering capacity.
a. When will net metering capacity reach the proposed cap?
white, Di 4
Idaho Clean Energy Association
273
I
2
J
4
5
6
7
8
9
l0
ll
t2
13
t4
l5
16
t7
l8
l9
20
2l
22
A. I have not independently forecasted the growth in net metering based on the
proposed rate structure. As referenced above (Larkin Direct Testimony, page l3), the
Company indicates that their filing is made with the assumption that growth trends will
continue or increase. If current growth trends continue, the proposed cap would be
reached by 2017. If current growth trends increase, the proposed cap would be reached
earlier. See Exhibit 702.
a. You have testified above that there is no benefit to having an aggregate capacity
limit. Have you identified the costs to having a capacity limit?
A. There are at least 3 costs to the capacity limit proposed.
1. The Risk / Return Tradeoff. In the field for financial analysis, there is a
well-established principle often called the risk/return tradeoff - the potential benefits
that an investment will retum relative to the probability (or risk) of actually achieving
those benefits. For example, given a choice between two options that provide the same
potential benefits, if one option is riskier, the lower risk option would be the better
investment. When the risks associated with an investment increase, the expected cash
flows from the investment must increase in order to maintain the same expected value.
By proposing a short-term policy with expectation of another review period in 2016
prior to reaching the cap, the Company increases the risk level of investments in
customer-owned generation. As evidenced by the Application in this case, the
Company has also demonstrated its willingness to propose dramatic swings in the
variables affecting these investments. To implement the proposed low cap on net
metering would maintain an unnecessarily high risk level for potential investors in
white, Di 5
Idaho Clean Energy Association
214
I customer generation. Thus the low cap creates a real cost - the negative impact on the
2 risk/return balance for investments in distributed generation.
3 2. A stratery built on capacity limits should be evaluated comorehensivelv.
4 not piecemeal. A decision to constrain one source of capacity is a decision to rely
5 more on another source of capacity. ll'the Company advocates that capacity limits are
6 necessary to allow the company the opportunity to evaluate its services, then a more
7 equitable and non-discriminatory approach would be to address the appropriate goals
8 and limits on electricity sourced from all types of resources so that the risks and future
9 costs to customers can be considered. The Company has not provided evidence that, in
l0 the absence of a cap, the Company will f'ace new risks or costs for net metering which it
I I would have no opportunity to address. Meanwhile, for example, the Company is
12 currently evaluating a $500 million dollar investment to upgrade the coal plants from
l3 which it sources electricity. Many ratepayers would appreciate the opportunity to
14 consider a cap on power sourced from coal. By considering the entire portfolio of
l5 resources, Idaho Power and the PUC could better consider the full implications of using
l6 capacity limits as a means of evaluating rates and services.
17 3. Unnecessary disruptions. The proposed cap leads to unnecessary
l8 disruptions for businesses in the market for distributed generation. For example, the
l9 pending Application has caused a six month disnrption as potential investors in
20 distributed generation wait to learn the price structure that will determine the financial
2l retum on their investment. The Company was either aware or should have been aware
22 that the dramatic change in rate structure would have a dramatic change in the
23 economic dynamics of net metering. I would have expected the Company to involve
white, Di 6
Idaho Clean Energy Association
215
I stakeholders to develop a mutually agreeable solution rather than enter an expensive
2 and lengthy period of litigation. I would also have expected the Company to propose a
3 solution it felt confident would be sustainable for more than a few years after its
4 implementation. Instead, the Company describes in its testimony (Larkin Direct
5 Testimony, page 13, line 16) that the program will need to be evaluated again soon:
6 "By increasing the current capacity limit to 5.8 MW, the Company is facilitating
7 the expansion of its net metering service while maintaining the opportunity to
8 appropriately evaluate and request to modify this service as necessary".
9 Q. If there are no substantial issues with the net metering service, is it reasonable to
l0 expect that the Company would simply apply to increase the capacity limit rather than
I I apply for modifications that would lead to another expensive and lengthy review
12 period?
13 A. Prior to this filing, I would have assumed that is reasonable to expect that the
14 company would not apply for changes which would create greater regulatory cost for
15 all parties than the cost of the issue the Company seeks to address, but the Company's
16 actions indicate differently. The Company was aware that the total dollar value of the
17 perceived inequity of the filing was immaterial at apparently $74,000, and that it was
I 8 driven by a handful of customers. See, Exhibit 701 .
19 Thus, the Company has demonstrated that it does not hold itself accountable for
20 weighing the costs of disruptions and deliberations relative to the value of its
2l application if the Idaho PUC were to again pass a capacity limit as described in the
22 Company's testimony. Given a capacity limit is not necessary to give the Company the
23 opportunity to evaluate and apply for modifications to the service, I recommend that
white, Di 7
Idaho Clean Energy Association
216
I there be no arbitrary capacity limits, This would help ensure that applications to the
2 PUC are driven by material issues. This would also clarify to the Company that the
3 Company should consider the disruption costs and regulatory costs of its applications
4 relative to the value of the issues it claims to address.
5 II. The filing is inconsistent with state policy;
6 Q. What is Idaho policy with regard to customer-owned generation?
7 A. The 2012ldaho Energy Plan adopted by the state legislature states, p. l0:
8 "E10. In accordance with federal law, the Idaho PUC should continue to
9 administer its responsibilities under the Public Utility Regulatory Act in a way that
l0 encourages the cost-effective development of customer-owned renewable generation
t I and combined hent and por,vcr facilities".
O 12 The Energy Plan reiterates in E-l I of page l0:
l3 "It is Idaho policy to encourage investment in customer-owned generation"
14 a. How has the Company described this filing to the public in terms of
l5 encouraging or discouraging investment in customer-owned generation?
16 A. The Company published a "Readers View" in the ldaho Statesman which
17 describes the filing as follows:
l8 "ldaho Power proposal will encourage small-scale renewable projects"
19 (Published: January 17,2013)
20 bap/
2l Ps
22
23
21'l white, Di 8
Idaho Clean Energy Association
I Q. Do you view that statement as consistent with the information provided by the
2 Company which you have reviewed?
3 A. No I do not. Exhibit 701 shows the impact of the filing on current net metering
4 customers. Of those customers,TSYo would be financially worse off due to the impact
5 of the filing. This does not encourage further investment.
6 Q. Do professional installers of customer-owned generation appear to agree with
7 the Company's statement that the proposal will encourage small-scale renewable
8 projects?
9 A. No they do not. The Idaho Clean Energy Association is on record opposing the
l0 filing.
I I a. How else might the Company encourage investment in customer-owned
12 generation?
13 A. As a finance person, I would expect- in general-that a company seeking to
14 encourage investment would do so by increasing the net benefits, lowering the upfront
15 costs, or reducing the risks. As mentioned, the filing worsens the net financial benefits
l6 of investing in customer-owned generation. The upfront costs were not lowered, and
17 the Company's request to frequently evaluate the net metering program increases the
l8 risks associated with the customer's investment. This filing discourages investment in
19 customer-owned generation, and is therefore inconsistent with Idaho state policy.
20 III. The inequity claimed by the Company is driven by a few customers with
2l excess generation; there is no need for a new rate structure for net metering;
22 a. How else might the Company encourage investment in customer-owned
23 generation?
white, Di 9
Idaho Clean Energy Association
2"t 8
I A. The company describes the purpose of its filing is to address a potential inequity
2 between net metering and standard seruice customers (Larkin Direct Testimony, page
3 re):
4 "This creates a potential inequity between net metering customers and standard
5 service customers, as net metering customers are provided the opportunity to unduly
6 reduce collection of revenue requirement by receiving credit for generation at the full
7 retail rate while standard service customers are left to compensate for the revenue
8 shortfall."
9 Q. What is the dollar value estimated fbr the potential inequities which the filing
l0 addresses?
I I A. I'he value is $i74r000. I'he Company has proposed implementing Schedule 6
12 and Schedule 8 to correct the potential for an inequitable recovery of revenue
l3 requirement between standard customers and net metering customers. Therefore, the
14 difference between current bills and the bills restated under the proposed terms
l5 represents the value of the potential inequity the Company clairns to correct. The
16 Company discloses that the financial sum of this claimed inequity for current net
17 metering customers, for the year 2012, totals approximately $74,000. This is the sum of
l8 the differences in bills restated under current rates for 2012 and the bills resulting from
l9 implementation of Schedule 6 and Schedule 8. See, Exhibit 701.
20 a. Do you view this as a material issue?
2l A. No. Relative to the scope of impact that the Company's effectiveness and
22 efficiency can have on power rates, this is not a material dollar figure. Please keep in
23 mind that the $74,000 figure does not represent a known problem, it is the value of the
white, Di l0
Idaho Clean Energy Association
219
I
2
aJ
4
5
6
7
8
9
l0
11
12
l3
t4
l5
l6
t7
18
19
20
2l
22
23
potential inequity claimed by the Company. For example, much of the $74,000 is
represented by the value of customer-generated electricity which the Company
proposes customers should forfeit at the end of December but which the Company
sell to other customers.
a. Is this claimed inequity driven by all net metering customers?
A. No, please refer to the graphs in Exhibit 701. As an analyst, when I view this
distribution, I notice that the majority of the inequity claimed by the company is driven
by customers with very high levels of excess generation. To be clear, I arn not
asserting that excess generation is a problem. My observation is that the inequity which
the Company claims to correct is linked almost entirely to the policy of how annual
excess generation is compensated. There is no need for a separate rate structure, or to
change the compensation for monthly excess generation.
a. What is the value of the inequity represented by customers who use net
metering only to offset their power bills?
A. Less than $6,000. Please refer to Exhibit 703. My goal was to understand the
degree to which the issues raised by the Company were related to (l) customers who
use net metering only to offset their power bills, relative to (2) issues raised by the
Company related to excess generation. I found that 86%o of net metering customers
used net metering in20l2 only to offset their annual power bills. The total value of the
inequity claimed by the company for this 86% of customers is less than $6,000 for
2012. See, Exhibit 701.
a. How does this finding affect your characterization of the issues raised by the
Company?
white, Di ll
280
Idaho Clean Energy Association
I A. The Company has invested much time in raising the theoretical question of
2 whether net metering customers should be on the current rate schedule or a separate
3 rate schedule, but the actual dollar impact of this theoretical question is less than
4 $6,000. The facts are, regardless of whether one agrees or disagrees with the
5 Company's concerns, those concerns are driven by the treatment of annual excess
6 generation.
7 Given the scale of issues the PUC and the Company manage, I would
8 characterize that a potential inequity valued at $6,000 per year is a distraction. There is
9 no need to segregate a sub-class of customers and implement a dramatically different
l0 rate structure to address a $6,000 potential inequity.
I I IV. The proposed rate structure is inequitable and discriminatory;
12 a. Does Idaho state policy address discrimination specific to net metering?
l3 A. Yes it does. The 2012 Idaho Energy Plan specifically calls out the need to
l4 ensure non-discriminatory policies toward net metering:
15 'E-l l. It is Idaho policy to encourage investment in customer-owned
l6 generation; therefore, the Idaho PUC, utilities, municipalities, and cooperatives are
17 encouraged to ensure non-discriminatory policies fbr interconnection and net
18 metering." (page l0).
l920 a. Is there any guidanae at a lbderal or interstate level with regard to the
2l establishment of separate tarifts for net metering?
72 A. The lnterstate Renewable Energy Council, Inc. (IREC) works with support from
23 the U.S. Department of Energy to establish best practices in the field of renewables and
2Bt white, Di 12
Idaho Clean Energy Association
I energy efficiency. In its best practices for net metering, the IREC clearly states that net
2 metering customers should not be charged tariffs different than standard customers:
3 "Utilities should not be permitted to force customers to switch to a different
4 tariff." ht4p ://www. dsireusa. or g/so lar/solarpol icy guide/?i d: I 7
5 Q. How would you assess the proposed changes with regard to discrimination?
6 A. The proposed changes are not equitable and are discriminatory. First,I will
7 address why the proposed changes treat net metering customers inequitably relative to
8 standard service customers. Secondly, I will address why the proposed changes treat
9 customers with low energy usage inequitably relative to customers with high usage.
10 The Inequitv Between Standard Service and Net Meterine is Four Fold
I I 1. Standard customers are allowed to lower their bills by lowering
12 consumption in a manner that net metering customers would be denied due to the
13 higher monthly fees proposed in the filing.
14 For example, Exhibit 704 shows the monthly charges proposed for an example
l5 net metering customer as calculated by the Company and provided in Response to
l6 Staffs Request No. 9 (00101890). In this example, the service charge and basic load
17 charge total $48 each month, thus no amount of energy conservation would allow the
18 customer to lower his or her bill in the same manner as a standard customer with
19 equivalent usage and demand. A standard customer could work at an out-of-town
20 location for months, leave only the refrigerator on, and pay proportionately less for
2l actual electricity consumed; a net metering customer would be denied this flexibility
22 due to high monthly fees.
White, Di l3
282
Idaho Clean Energy Association
I The testimony filed by the Company, Matthew Larkin states as follows (p. 22, lines
2 5-7):
3 "All residential and Small General Service customers utilize the Company's
4 distribution system regardless of whether or not they take standard or net metering
5 service."
6 The Company stresses that the choice to take standard or net metering service
7 does not change the fact that all customers utilize the distribution system. Nevertheless,
8 the Company's proposal is that standard service customers have the flexibility to pay
9 more or less than the average costs of these services, while net metering customers
l0 should not. I agree that all customers utilize the distribution system, and acknowledge
I I that there arc diffErEnt policies lbr how to pay for that use. However, to segregate net
12 metering customers and apply a different policy to those customers is discriminatory.
l3 Our country has learned through history that "separate but equal" often does not turn
l4 out to be very equal.
15 As shown earlier, the total dollar value of the potential inequity represented by
l6 customers who use net metering to offset their power bills is less than $6,000 in20l2.
17 This does not justify segregating net metering customers and applying a separate rate
l8 structure.
l9 2. The proposed changes put a negative value on kWh production for
20 numerous customers.
2l The testimony liled by the Cornpany states as follows:
22 "net metering is intended to allow customers to otl'set all or a portion of their
23 energy usage" (Larkin Direct Testimony page. 28, line 24 to p. 29,line I ).
White, Di l4283
Idaho Clean Energy Association
I Nowhere has the Company provided evidence that a kWh produced by a
2 customer should have a negative value. The Company has focused on the recovery of
3 fixed costs, but it has not shown evidence that a customer becomes more costly to serve
4 if the customer lowers his or her kWh consumption. When a ratepayer invests in
5 generating his or her own electricity, and thereby lowers the volume of kWh's supplied
6 by Idaho Power, an equitable policy would allow the customer to reduce his or her bill.
7 Please refer to Exhibit 705. This exhibit describes an analysis to consider the
8 choice net metering customers would have of whether to pay the higher fees resulting
9 from the proposed net metering rate schedule or to tum off their generation systems,
l0 generate no electricity, and avoid paying the unfavorable new terms proposed for net
I I metering. In this analysis, we used empirical data provided by the company for net
12 metering customers with 12 months of active billing data in 2012. To more accurately
l3 estimate production levels, only solar net metering customers were included.
14 This analysis indicates that if the proposed terms are implemented, over 20o/o of
l5 the net metering customers inthe population evaluated would be financially better off
16 (their total bills to the Company would be less) if they turned off their customer-
17 owned generation systems in order to be billed under the same terms as standard
l8 customers rather than pay the unfavorable rates proposed for net metering. A rate
19 structure is not equitable if the choice to produce electricity makes a customer
20 financially worse off.
21 3. A change in tariff policy for residential customers should be
22 addressed more readily. This filing proposes a Basic Load Charge for net metering
23 customers, but not for standard customers. This new tariff is difficult for customers to
White, Di 15
284
Idaho Clean Energy Association
I monitor, predict, or control. Though numerous public comments and media
2 publications reference the formula for this tariff, there is a conspicuous absence of
3 discussion of the actual dollar value this tariff would represents because there is very
4 little understanding of the total dollar value or the behavior of billing demand readings
5 across customers.
6 To be equitable and non-discriminatory, the Company would need to
7 demonstrate that the BLC charge cannot be applied equitably to standard customers.
8 The application and Testimony filed by the Company have not provided evidence
9 demonstrating why this taritf is driven by costs linked to net metering customers only,
l0 not to standard service customers. The charge is driven by the customer's peak
I I demand. The sun is typioally shining when the Company hits peak dcmand, thus the
12 maiority of net metering custorners reduce the costs of rneeting aggregate peak demand.
13 My interpretation of the Company's view through their public comments is that
14 they believe higher tariffs to customers, such as the BLC charge, would be appropriate
l5 for all standard service customers. If this new tariff were passed for net metering
l6 customers, one can expect the Company would use that passage as leverage in seeking
17 to apply the tariff to other customers. Those customers have not been represented in this
l8 case before the PUC, and they deserve to be. A dramatically different type of tariff
19 which the Company believes could be applicable to all residential customers should be
20 discussed in the proper venue so that all afl'ected parties can be represented and the full
21 impact of the change in policy can be evaluated.
22 4. The difference in bills between net metering and standard customers
23 at a high usage level is substantial and unjustified. The proposed rate structure
White, Di 16
Idaho Clean Energy Association
28s
I enables net metering customers with highKWh usage to pay lower bills than standard
2 customers with the same net usage. To be non-discriminatory in its rate design the
3 Company would need to explain the cost dift'erences that justifu why - for two
4 residential customers with equivalent demand and consumption - the net metering
5 customer costs less to serve than the standard customer. Exhibit 706 provides an
6 example of a net metering customer with average monthly consumption averaging
7 about 5100 kWh/month. A standard service customer with the exact same usage and
8 demand would pay $1,203 more for the year analyzed (2012, using empirical data
9 provided). Neither the difference in costs nor conditions of use can justify why the
l0 standard service customer should be charged $1,203 more.
I I Inequitv between customers with low energv usase and hish enersy usase
12 a. Why do you assert that the filing is inequitable between customers with low
13 energy usage and customers with high usage?
14 A. When a customer evaluates the net financial benefits relative to the upfront
l5 costs of investing in their own generation, the key drivers affecting the net financial
l6 benefits are typically the projected value of the kWh produced over time, and the
17 expected timing and volume of production. Through my experience, two customers
18 looking at the same system in similar applications would see similar financial benefits.
19 The proposed changes shift the focus from the economics of the system to the situation
20 of the person investing.
2l Please refer to Exhibit 707. ln this analysis, I compared three hypothetical
22 customers: one using 500 kWh per month ("Low"), one using 1050 kwh per month
23 ("Typical"), and one using 5000 kWh per month ("High"). I evaluated the dollar
White, Di t7
286
Idaho Clean Energy Association
I change in an annual bill resulting from the offset of 200 kWh per month through
2 customer-owned generation. Given the seasonality of production can vary, and in order
3 to exclude the impact of excess generation, I made a simplifuing assumption - that the
4 production level and consumption level were the same on a monthly basis. The
5 purpose of the analysis is to show the difference in benefits across customers.
6 The first graph in Exhibit 707 shows that, if the three different customers
7 invested in the same system with the same production, the value of the system is similar
8 across the three customers under the current rate structure. It is marginally better for
9 the "High" usage customer given the tiered rate structure.
l0 The second graph in Exhibit 707 shows that, if the three different customers
I I invested in the same system with the same production, the value of the system is
12 vastly different across the three customers under the proposecl rste structure. In
l3 fact, the "Low" usage customer would see a net increase in their power bills. They
14 would be penalized for investing in generation to ofTset their power consumption. The
l5 "High" usage customer would enjoy, in this hypothetical example, a $1400 savings in
l6 his or her power bills. A rate structnre is not equitable when people with high usage
17 have the freedom to reap substantial financial benefits by offsetting their energy
l8 consumption and thereby getting onto the lower per-kWh rate structure, yet a person
l9 with lower usage would be financially worse off if they invested in the exact same
2A system to off'set their own consumption.
2l V. Bxcess generation should bc givcn a financial value
22 a. How does the proposal that customers can accumulate kWh credits rather than
23 financial credits affect customers?
White, Di l8281
Idaho Clean Energy Association
I A. The Company de-values customer-produced electricity by treating it as a kWh
2 credit rather than a financial credit. To quantifr the impact of this proposal, please
3 refer to Exhibit 709. Given the empirical data provided by the Company, five
4 residential customers with excess generation were selected. The first graph shows the
5 monthly net usage for these five customers. For each customer, I have compared their
6 20t2 bills under the terms proposed (provided by the Company) relative to their 2012
7 bills under the proposed rate structure but with one single change: that their excess
8 generation is given financial value rather than a kWh credit. This is for exemplary
9 purposes and is not a statistical representation of the net metering population.
l0 In the second graph in Exhibit 709, one can see that the 2012 bills for this
I I sampling of customers are increased by 7% to 20oh due only to policy of treating their
12 excess generation as a kWh credit rather than a dollar credit. The analysis does not
13 reflect the value lost through the expiration of credits, nor does it reflect the time-value
14 of money.
15 a. Can you describe why it would be more eqtritable to give excess generation a
16 financial value?
17 A. I will discuss tluee issues.
18 1. Less liouiditv = less value. People familiar with financial theory are aware
19 that two assets are valued very differently if one is more liquid than the other. For
20 example, consider the term "liquidity premium": if two items have all the same
2l qualities with the exception that one can be traded more easily than the other, the more
22 liquid item is worth more. The Company has acknowledged that excess generation has
23 value and attempted to justify that the rates proposed are equitable. If customers do not
White, Di l9
288
Idaho Clean Energy Association
I
2
3
4
5
6
7
8
9
l0
ll
t2
l3
l4
l5
16
t7
l8
l9
20
2t
22
23
receive for their excess generation the rates proposed by the Company on a monthly
basis but instead accumulates kWh credits, they are receiving less than the value
proposed by the Company.
2. A kWh produced in summer is worth more than a kWh produced in
non-summer. The Company has demonstrated that electricity is most costly on hot
summer aftemoons, and its rates reflect this. Because the Company proposes that
excess generation be given no financial value, the seasonal value of power is not
reflected in the proposed terms. For example, please refer to the sample set of
customers in Exhibit 709. These customers produce excess kWh during the summer,
then consume electricity again in the fall. Thc Company will collect revenue at
sumucr rates, but ths custonrcrs reducE their energy charges at thll rates. These rates
are 40Yo lower than the rates at which the Company collects revenue lbr excess
generation. Crediting monthly excess generation at retail rates would accurately reflect
the seasonal value of electricity.
3. A kWh nroduced in the dav is worth more than a kWh produced at
Eieht. Net metering customers with solar produce electricity when the sun is shining.
According to the Time of Day rates posted by the Company on its website, the Summer
Energy rates are 12.04 cents per kWh from lpm to 9pm, and 6.59 cents from 9pm to
Ipm. This is a 5.45 cent difference, a much greater ditference than the2.54 cents in
distribution and customer service costs included in the average residential rate.
As the Company strives to implement pricing policies that accurately reflect
costs and benefits, excess generation needs to be given financial value in order to align
with those costs and benefits. The trend for the Company has not been to level all per-
white, Di 20
Idaho Clean Energy Association
289
I kwh prices to a flat rate throughout the day and year, but rather to strive for pricing
2 policies that reflect how the value of a kWh varies throughout the day and year. In
3 order for net metering customers to be treated equitably in both the near term and long
4 term, the value of excess generation should also reflect how the costs of a kWh varies
5 throughout the day and year. Enabling excess generation to be credited at retail rates
6 achieves this.
7 4. Net meterins customers should be allowed to offset distribution costs.
8 Under the terms proposed, the Company wishes to remove distribution and custorner
9 service costs from the energy charges and prevent customers from offsetting these costs
l0 through customer-owned generation. The composition of costs incurred by the
I I Company to supply customers is managed by the Company - a utility might invest
12 relatively more in generation and less in the costs of getting power to the point of
13 consumption, or it might choose to import electricity from sources outside the state and
14 thereby may spend relatively less on generation and more on getting each kWh to the
15 point of consumption. Many businesses balance the costs of production with the costs
l6 of getting product to the customer, yet the price reflects the value at the point the
17 customer takes title.
18 A net metering customer has chosen to invest in generating electricity close to
l9 the point of consumption, and the customer should be allowed to offset the charges
20 billed by the Company to deliver electricity to that same point of consumption.
2l Because the proposed terms remove distribution costs from the per-kWh rates and only
22 allow excess generation to be treated as a kWh credit, the customer is not allowed to
23 apply the value of excess generation to offset the full value of a kWh delivered to the
white, Di 2l
Idaho Clean Energy Association
290
I point of consumption. Crediting excess generation with a financial value enables the
2 customer to offset the charges billed by the Company to deliver electricity to the
3 customer.
4 Q. Any additional observations you would like to make regarding the treatment of
5 excess generation?
6 A. Yes. Please note in Exhibit 709 the typical pattern of net usage for this sampling
7 of five solar PV customers. They build credits through excess generation for May
8 through October, begin to consume more than they produce in November and
9 December, then their net usage skyrockets up in January. The Company collects
I0 revenue, much of it at summer rates, for the excess generation produced by these
l l customers, yet they are not allowed to carry forr,vard credits to January. Given the
12 seasonality of solar PV, customers who otherwise could offset all of their annual
l3 consumption are prevented from doing so by the Company's proposal that the
14 credits expire in December.
l5 a. Any additional observations you would like to add?
I6 A. In my experience as a strategy consultant, a key question we often assess is this:
17 Is the organization making the best use of its resources? This involves an analysis of
l8 how resources are currently being utilized and whether that aligns proportionately with
19 the opportunities to create value. For example, a company focusing too much on
20 thousand dollar issues can make million dollar mistakes.
2l For the Company, a crucial resource is its people's tirne, and a key source of
22 value is the ability to tbrecast and manage future supply and demand for power.
23 Investing time to propose and manage a separate rate structure for net metering is not
White, Di 22
Idaho Clean Energy Association
291
I the highest and best use of time. Proposing extreme changes to address immaterial
2 issues is a costly approach and distracts people from activities that create greater value.
3 A question was posed asking whether standard customers are subsidizing net
4 metering customers, and the answer is no. The Company has better opportunities to
5 serve its ratepayers and shareholders than investing time in a separate, unnecessary, and
6 problematic rate structure.
7 Vl. The filing will not remain revenue neutral
8 Q. The Company has stated that the proposed terms are revenue neutral. Do you
t have a forward-looking perspective on this?
l0 A. I project that overall this proposal may not remain revenue neutral but may
1l increase the revenue requirement burden on lower usage customers.
12 Changing incentives has the impact of changing behavior. The rate structure
13 proposed by the Company increases the monthly fixed fees paid by net metering
14 customers and lowers the per-kWh rates. For example, please refer to Exhibit 708. This
15 empirical example shows how a standard customer can lower their bill by $5,000 per
16 year by switching from the standard service schedule to the net metering schedule. If
17 fifteen other customers do this, it would offset the increase in fees raised by the
l8 proposed terms on current net metering customers. There are thousands of customers
l9 who would be eligible to lower their power bills by switching from standard service to
20 net metering. Standard service customers will be left to compensate for this revenue
2l shortfall.
22 a. Has the Company made the public aware of this issue?
white, Di 23
Idaho Clean Energy Association
292
I A. The Company has publicly conveyed the message that the filing is needed to
2 ensure standard customers are not subsidizing net metering customers. To my
3 knowledge, the Company has not disclosed to the public that standard rate payers will
4 likely be subsidizing high usage customers who opt to take advantage of the proposed
5 net metering schedule.
6 Q. Can you estimate the number of high usage customers who would have a
7 financial incentive to become net metering customers in order to take advantage of the
8 proposed rate schedule?
9 A. Please refer to the scatter chart for residential customers in Exhibit 701. In this
l0 chart, one can see a clear correlation between the customer's usage level and the impact
I I of the proposed terms on each customer's cuffcnt bills if restated for 2012. 'fhere is a
12 crossover point at which customers to the right of the line - those customers with higher
l3 net usage- will see decreases in their bills. This crossover point represents monthly
14 usage of approxirnately 1500 kwh, or 18,000 kWh per year.
l5 To verify whether this is a reasonable crossover point, consider I will estimate
l6 the difference in bills for a hypothetical residential customer with usage of 18,000
17 kWh/yr. On average, based on assumptions described in Exhibit 710, I will
l8 conservatively assume that the customer would save 2.59 cents/ kWh in energy
19 charges. For a customer with 18,000 kWh/yr, that would amount to an annual savings
20 of $466 in energy charges to switch to net metering. The incremental sewice fees
2l would be $ 191 per year. As long as customers using 18,000 kWr/yr have Basic Load
22 Charges that average $23lmonth or less, this is a reasonable breakeven point. The
23 empirical evidence indicates that it is very reasonable to assume that BLC charges
White, Di 24293
Idaho Clean Energy Association
I
)
J
4
5
6
7
8
9
10
ll
t2
l3
t4
15
16
t7
l8
t9
20
2l
22
would average less than $23lmonth at this usage level. Therefore, it is reasonable to
estimate that customers with annual usage over 18,000 kWh would be eligible to
decrease their bills by shifting to the net metering rate schedule.
The Company has disclosed in IPCO Response to ICEA First Production
Request that there are 70,000 customers on Schedule I with net usage equal to or
greater than 18,000 kWh/yr. Thus, this approach indicates that the number of
residential customers who could lower their bills by shifting to net metering would be
in the 70,000 range. As discussed earlier, the net increase in revenue that would have
resulted from the proposed terms for current net metering customers in 2012 is
approximately $74,000. The reduction in revenue collected from thousands of high
usage customers who could switch to the lower per-kWh net metering schedule would
quickly offset that $74,000.
a. Can you scope the dollar impact of high usage customers shifting from
Schedule I to Schedule 6?
A. To scope the dollar impact of high usage residential customers shifting to the
net metering schedule, please refer to Exhibit 710. This analysis uses the Company's
distribution of customers (as provided in IPCO Response to ICEA First Production
Request). The analysis estimates, across different usage levels, the net impact of
shifting from Schedule I (the standard service rate schedule) to Schedule 6 (the
proposed net metering rate schedule). The purpose of this analysis is to isolate the
impact of changing rate schedules, thus the cost of the generation system and the
benefit of the production resulting from such a system were not included.
white, Di 25
Idaho Clean Energy Association
294
I
2
5
4
5
6
7
8
9
l0
lt
t2
l3
t4
t5
t6
t7
l8
l9
20
2l
22
23
Based on the assumptions as described in Exhibit 710, the total reduction in
revenue represented by customers who would have a financial incentive to shift from
Schedule I to Schedule 6 is in the range of $14 million.
a. Do you project that all customers able to lower their bills by switching to the net
metering schedule would do so?
A. No, I would not project that 100% of customers eligible to lower their bills
would do so. In my work, in situations like this, we often consider the issue with a
what-would-it-take approach: Of the customers able to lower their bills by switching to
the net metering schedtrle, what would it take tbr this issue to offset the $74,000
potential inequity claimed by the Company? In this case, the $74,000 potential inequity
claimed by the company would be offset if a half a percent or more of the potential
reduction in revenue occurs as high usage standard service customers shift to net
metering. These estimates clearly indicate that the proposed new rate structure creates
issues of greater financial impact than the potential inequity it claims to correct.
a. Which customers would have the greatest incentive to shift from Schedule I to
Schedule 6, and what is the potential revenue reduction that those customers would
represent?
A. The higher the customer's usage, the greater the potential savings the customer
could incur by becoming a net metering customer. For example, in2012, the Company
had over 5000 residential customers with usage over 36,000 kWh per year. These
customers would have the opportunity to save hundreds of dollars per year if billed
under the proposed net metering terms rather than the standard service tems, so the
filing would create a very strong financial incentive for these customers to shift to net
white, Di 26
Idaho Clean Energy Association
295
I metering in order to benefit from a rate schedule that favors high energy usage. In
2 aggregate, using the same assumptions described in Exhibit 710, the reduction in
3 revenue represented by these customers with usage over 36,000 kWh per year is
4 estimated to be over $2 million.
5 For clarity, as discussed above, there are far more than 5000 customers who
6 would also have a financial incentive to shift to net metering; this estimate of over $2
7 million in revenue reduction is provided to help scope the size of this issue represented
8 by the 5000 customers with the greatest financial incentives to shift to the proposed net
9 metering rate schedule.
l0 In sum, the proposed rate structure creates greater inequities than it is designed
1 I to address.
12 a. Does this conclude your testimony?
13 A. Yes.
296
white, Di 27
Idaho Clean Energy Association
1
2
3
4
5
6
7
B
9
10
11
L2
13
t4
15
t6
77
18
19
20
21,
22
23
24
25
HEDRICK COURT REPORT]NG
P. O. BOX 578, BOTSE, rD
WHITE (X)
ICEA
(The fol-lowing proceedings were had in
open hearing. )
(Idaho CLean Energy Association Exhj-bit
Nos. '707-1L0, having been premarked for identification, were
admitted into evidence. )
COMMISSIONER SMITH: Mr. Hammond, do you have
questions ?
MR. HAMMOND: No, Madam Chair.
COMMISSIONER SMfTH: Mr. Richardson.
MR. RICHARDSON: No questions, Madam Chair.
COMMfSSIONER SMITH: Mr. Otto.
MR. OTTO: No questions, Madam Chair.
COMMISSIONER SMITH: Mr. Kl-ei-n.
MR. KLEIN: Yes, thank you.
CROSS-EXAMINAT]ON
BY MR. KLE]N:
O. On page 8 of your testimony, you dj-scuss how the
Company's filing is inconsistent with State poJ-icy?
A. Yes, sir.
a. And State policy is to encourage small--scale
renewabl-e projects?
A. Specifically on that page, I said that State
policy was that the Public Utilities Regulatory Act, to
297
83701
1
2
3
4
5
6
1
8
9
10
11
t2
13
L4
15
L6
L'l
18
19
20
2t
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
WHITE (X)
ICEA
implement it in a way that encourages the cost-effecti-ve
development of customer-owned renewable generation and combined
heat and power f acili-ties.
0. Thank you.
A. The assertion of encouraging small-scale
renewable projects was a quote from Idaho Power, not from me.
O. Okay. Thank you.
One more.
A. Sure.
O. In your view, can the Commj-ssion ever tighten the
rul-es for renewable projects without discouraging renewable
development?
A. When you say "tighten the rulesr " can you please
describe that further? By tighten the rufes, do you mean
I'm sorry, f 'm not sure what tighten the rul-es would mean.
O. Eliminating payment?
A. El-iminating pay- I'm sorry.
O. Can the Commission never eliminate payment for
excess generation?
A. If the Commission were to determi-ne that excess
generation is of no val-ue, the Commission would be free to
assign whatever val-ue is accurate.
I think, if I could go back to your origi-nal
question, the heart of your question is can they implement a
change that would in any way have a negative impact on
298
83701
1
2
3
4
5
6
1
B
9
10
11
t2
13
74
15
t6
L7
18
19
20
2t
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
WHITE (X)
ICEA
investment. Can I phrase it that way? I think I am fuIly
supportive, 100 percent, of contlnuing to more fairly implement
our rates and policies in a way that is fair and equitable. I
would agree with that. If that means an adjustment that there
is there are cases where an adjustment might have a negative
impact, for example, on the return on j-nvestment of a renewabl-e
energy system, so it is possibl-e.
I think the State policy here was clarifying
that if I coul-d use the expression there needs to be a
very good reason to go 1n the opposite direction, not out of a
hypothetical prediction that there may one day be an j-ssue, but
that there be a measurabl-e and valid reason i-n order to create
an incremental cost and thereby discourage j-nvestment.
MR. KLEIN: Thank you.
COMMISSIONER SMITH: Are there questions from the
Commissioners ?
COMMISSIONER REDEORD: No.
COMMISSIONER SMITH: No? Nor I.
Any redirect, Mr. Mil-ler?
MR. D. MILLER: lTust one, if I might.
MS. HILTON: Can I jump in Idaho Power ask
a few questions?
COMMISSIONER SMITH: Oh, I'm sorry. I skipped
right over the Company, so I apologize.
MR. D. MILLER: They probably don't have any
299
83701
1
2
3
4
q
6
1
B
9
10
11
L2
13
L4
15
L6
L7
1B
L9
20
2t
22
23
24
25
HEDRICK COURT
P. O. BOX 578,
REPORTING
BOISE, ID
WHITE (X)
ICEA
quest j,ons.
COMMISSfONER SMITH: Probably not.
MS. HILTON: We just have a few.
CROSS_EXAMINAT]ON
BY MS. HILTON:
O. Ms. White, oo page 24 of your testimony, you
testify that standard ratepayers are likeIy to subsi-dize
high-usage customers who switch to net metering service. Are
you aware that the Company's proposal would create a rate
structure that more accurately reflects cost of service, and
can you explain how that change woul-d result in a subsidy?
A. Can you refer to the l-ine item, please?
O. Let me find it. It's line 1.
A. Okay. So you're quoting me that the Company has
conveyed the message that the filing is needed to ensure
standard customers are not subsidizing net metering customers?
O. So the next sentence
A. I was using your words.
O. -- where it says: To my knowledge, the Company
has not discl-osed that standard ratepayers will- Iikely be
subsidizing hiqh usage customers.
A. Yes. To explain the logic behind that?
O. So I'd like to understand, because it's the
300
83701
1
2
3
5
6
7
B
9
10
11
L2
13
t4
15
1,6
L7
1B
1,9
20
2L
22
23
24
25
HEDRICK COURT REPORT]NG
P. O. BOX 578, BOTSE, rD
WHITE (X)
]CEA
Company's testimony that it more accurately reflects cost of
service, so I'm curious where the subsidy is that you see that
you point out.
A. Sure. So the overarchj-ng issue that has been put
before the PUC is if the revenues being col-lected from standard
customers is appropriate rel-ative to net metering customers.
And changes have been filed that shift money and language has
been used about ensuring that costs are not bei-ng col-Iected
from standard customers that should have been coll-ected from --
ox, are bej-ng covered by standard customers that are not belng
covered by net meterj-ng customers.
So if you l-ook at the total- val-ue of the shift in
funds that this entire Applicatlon woul-d have if applied to
20L2 existing customers, the total- value of al-I implications in
this Appli-cation was $74,000. That's the sum. So those are
the numbers as provided by Idaho Power. So that's the total-
shift, let's sdy, in terms of the change in revenue between net
meteri-ng and standard.
Now, when you change financial incentives, you
change behavior. So if you create an extremely strong
fj-nancial incentive for a high usage customer who might have
considered being a net metering customer, maybe they're
thinking about it, maybe not, and then they say, whoa, it just
got $5,000 more compelli-ng, then there will- be an incentive for
those customers who right now, for example, if I use ten times
301
83701
1
2
3
4
5
6
7
I
9
10
11
L2
13
l4
15
L6
71
1B
19
20
27
22
23
24
25
HEDRTCK COURT REPORT]NG
P. O. BOX 578, BOTSE, rD
WHITE (X)
]CEA
more than average of power and fixed costs are in the
volumetric and fixed costs are in the volumetric charges,
then I'm paying ten times more than average, roughly, of those
fixed costs. By becoming a net metering customer, I am no
Ionger paying more than the average of those fixed costs;
instead, I am going to pay the fl-at fee as proposed in this
Application.
O. So I'd l-ike to tie this back to the question.
A. Correct.
O. So the statement is that high usage customers who
are J-ike1y to switch then create a subsi-dy, and yet the
proposal is to more accurately align cost of service. So f'm
not seeing
A. Not seeing that. Certainly. Let me explain.
First, I prefer not to use the word "subsidyr "
but I did use it in this case as that was used by the Company.
If you were applying your policy across a1I
customers, resj-dential, both standard and net metering, then
you would achieve the goal you were describing. When you apply
the policy to a subset of those customers and those customers
have standard customers have the ability to shift and to
become net metering customers, then the impact of your proposal
will be that there wil-l- be people with a very high usage that
have the opportunity to l-ower their bj-l-l-s. So, for example, if
you look at so let's start with an example. If there's
302
83701
1
2
3
4
5
6
1
B
9
10
11
1,2
13
L4
15
16
77
18
19
20
2!
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
WHITE (X)
ICEA
confusion, it's very important to clarify.
In Exhibit 701, the customer provided information
showing that one high usage customer woul-d see a decrease in
bil-ls of approximately $5,000. That's a net metering customer
for whom the $5r 000 currently collected from that customer
would have to be collected from a standard servi-ce customer.
So the impact of these proposals is that high
usage customers, i-ncluding net metering customers, 25 percent
of those customers wj-Il see a decrease in their bil-l-s, and
that's a shift that means that that much revenue i-s not
collected from standard, it shifts between classes.
O. It sounds, to me, l-ike what you're describing is
not necessarily a subsidy, but a shift of costs and a shift of
costs that
A. That are
O. j-s more accurater so I'm having a hard time
understanding how you are characterizing this.
A. Sure. If it were more accurate, it's the
accuracy -- you're saying -- Iet me understand your question.
You're saying that let's say a customer who uses
5,000 kilowatt hours a month, that it j-s more accurate for that
customer because they are overpaying for fi-xed cost, it is more
accurate that they move to this rate schedule because the rate
schedu.l-e is more accurate. My point would be that that's not
due to how net metering uses the system,' that's due to a
303
83701
1
2
3
4
5
6
1
B
9
10
11
1,2
13
l4
15
t6
t7
1_8
L9
20
2t
22
23
24
25
HEDRTCK COURTP. O. BOX 518,
REPORTING
BOTSE, fD
WHITE (X)
ICEA
difference in usage.
Your concern over equitably paying for
distribution cost is more related to the l-evel- of usage than it
is to whether or not the customer is using the system in a net
metering manner. If they have a paneJ- on their roof or not,
it's more l-inked to the usage.
So you have excuse me. The Company has said
that the purpose of this was to ensure costs were not being
covered by standard which shou1d be shared by net metering.
Over time because of the incentives that you have been
putting that you advocate putting in p1ace, that $74,000
that you're saying in 2012 would have shifted between net
metering and standard wil-1 be outweighed by the thousands of
customers who have an incentive now to change rates.
COMMISSIONER SMITH: Hencer w€ see the
confirmation that the word "subsidies" shoul-d not be used --
THE WITNESS: Yes.
COMMISSIONER SMITH: -- and the word
"cross-subs j-dies " is appropriate.
O. BY MS. HILTON: Seems that we're not getting
anywhere, so moving on. So you, on page 23
A. Sure.
O. state that a question was posed asking whether
standard customers are subsidizi-ng net metering customers, and
the answer is oor and the implication is that the Company
304
83701
answered no.
made?
A.
results of
say where
a.
A.
Can you point me to where that statement was
I was not quoting the Company. T was showing the
the empirical data. So, the question was can I
it came from or
Certainly.
So if you take the data provided by Idaho Power
and you separate, for example, the issue of any customer who
had excess generation and you look at the customers who onJ-y
use net metering to offset their power bi11s on an annual-
basis, if you look at the correctj-on achieved by the proposal
that Idaho Power has made, the value of that correction is less
than $6,000. So in my -- as an analyst, when someone looks at
an issue of this scale and says "Is this a significant issue?"
and we size it up and itrs less than $61000, I j-nterpreted from
that that the answer is no.
O. So isn't there a pretty big distinction between a
si-gni-ficant issue as opposed to no issue?
A. Let's see. You have no issue and you have an
issue worth the time that's being invested in these
del j-berations. I woul-d say that this is f ar, far, far closer
to no issue than it is to an issue that meri-ts the time and
disruption and cost to the people who have been affected.
O. So would it be fair to characterize your
testimony as taking the position that the Company's filing
305
2
3
4
5
6
'7
8
9
10
11
L2
13
L4
15
76
t7
1B
t9
20
27
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 518, BOTSE, rD
wHrTE (X)
ICEA83701
1
2
3
4
5
6
7
B
9
10
11
L2
13
74
15
t6
77
1B
1,9
20
2L
22
23
24
25
HEDRICK COURT REPORT]NG
P. O. BOX 578, BOTSE, rD
WHITE (X)
rCEA
discourages net metering?
A. Is it my position that it discourages net
metering?
O. Yes, that's the question.
A. Yes.
0. Yet, you dj-scuss on page 23 that there are
thousands of customers who would be eligible to lower their
power bil-1s by switching from standard servj-ce to net metering.
So how does that discourage net metering?
A. Ah, for clarity, I think of net metering as a
program in whj-ch people j-nvest in a customer-owned generation.
The people that you're ref erencing that woul-d have a f inancj-al-
motive to switch are peopl-e motivated by the inequities in the
rate schedule, not motivated to invest in a renewabl-e energy
project. So it encourages people to shj-ft rate schedules. It
does not encourage people to invest in customer-owned
generation.
MS. HILTON: Al-1 right. No more questions.
Thank you.
COMMISSIONER SMITH: Any questions?
COMMISSIONER KTIELLANDER: Just one.
COMMISSIONER SMITH: President Kjellander.
306
83701
1
2
3
4
6
6
1
8
9
10
1_1
L2
13
t4
15
16
L1
1B
t9
20
2L
22
23
24
25
HEDRICK COURT REPORT]NG
P. O. BOX 578, BOTSE, rD
WHrTE (Com)
ICEA
EXAMINATION
BY COMMISS]ONER KJELLANDER:
O. Just a point of clarification.
A. Sure.
O. When I looked at your Exhibit No. 701 and I did
the math -- which is probably the mistake: I did it and I
looked at the amount that I thought was credited back to
customers, I onJ-y come up with 56,000. I thought I heard you
say it was somewhere around 74r000. I don't see that j-n
Exhlbit 701. Is it in another exhibit?
A. You
O. Am I missing something? Because I'm only
counting the red j-tems in --
A. Oh, you're counting the red?
O. Yeah. I thought those were the credits that were
paid back to customers.
A. My number refers to the net sum of all customers
regardless of whether it j-s there was a credit or a debit.
So you perhaps added up, depending on what you added up, but
you added up customers that saw a decrease in their bills?
a. No, that saw a credit.
A. That saw a credit.
O. Paid back to them.
A. That saw
307
83701
I
2
3
4
5
6
1
I
9
10
11
t2
13
L4
15
t6
!1
1B
19
20
27
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
WHITE (Com)
ICEA
And my sum of 74,000 woul-d have been the sum of
al-I customers, because I was focused on the movement of cost
between net metering and standard. The Company has not raj-sed
issue that people wlthin net metering are subsidizing each
other to use their term -- cross-subsidizing each other.
A. So let me
A. Sure.
O. see if I understand this.
A. Sure, sure.
O. Seventy-four thousand that you use was not a
reference to how much was paid back as a credit to customers
during 10t?
A. No, no.
O. Then I misunderstood what you said, thank you.
A. Certainly. The 74,000 is
O. Thank you.
A. Okay.
COMMISSIONER SMITH: Now Mr. Miller.
MR. D. MILLER: I think Ms. White has equipped
herself quite well and eliminates the need for redirect.
COMMISSIONER SMITH: Yes, the hardest questions
would come from your own lawyerr so smart not to do that.
Thank you for your help.
THE WITNESS: Thank you.
(The witness l-eft the stand. )
308
83701
1
2
3
4
5
6
7
8
9
10
11
12
13
t4
15
t6
77
18
1,9
20
27
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
ELGETHUN (Di)
ICEA
MR. D. MILLER: The Cl-ean Energy Associatj-on
woul-d now caff Leif Elgethun.
LEIF ELGETHUN,
produced as a witness at the instance of the Idaho Cl-ean Energy
Association, being first duly sworn, was examined and testified
as fol-l-ows:
DTRECT EXAM]NATION
BY MR. D. MILLER:
O. Sir, wouJ-d you state your name and spe11 your
l-ast name for the record, please?
COMMISSIONER SMITH: Mr. Mi11er, I think your
mike has gone off or away.
MR. D. MILLER: A thousand apologies.
O. BY MR. D. MILLER: Would you state your name and
spell your l-ast name for the record, please?
A. Leif Elgethun, E-L-G-E-T-H-U-N.
O. And did you previously cause to be filed with the
Commission in this proceeding wri-tten prefiled testimony
consj-sting of L2 ex, pardon me, 13 pages?
A. Yes, I did.
O. And accompanying your testimony, was there an
Exhibit No. 71L?
309
83701
1
2
3
4
5
6
1
B
9
10
1l-
T2
13
t4
15
76
L7
18
19
20
27
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
ELGETHUN (Di)
ICEA
A. Yes, there was.
O. Are there any additions or corrections that need
to be made to your testimony?
A. No, there j-sn't.
O. If I asked you the questions that are contained
in your written prefiled testj-mony today, would the answers
that are written in your prefiled written testimony be the
same?
A. Yes, they wouId.
O. Are those answers true and correct, to the best
of your knowledge?
A. Yes, they are.
MR. D. MILLER: Madam Chairmanr w€ would ask that
the testimony be spread on the record as if read in ful-l- and
that Exhibit 7lt be identified, and would make the witness
avail-able for cross-examination.
COMMISSIONER SMITH: Seeing no objection, the
prefiled testj-mony will be spread across the record as if read
and Exhibit No. 777 will be admitted.
(The following prefiled direct testimony
of Mr. Elgethun is spread upon the record. )
310
83701
I Q. Please state your name and business address.
2 A. My name is Leif Elgethun and my business address is 1775 W State St. PMB
3 125, Boise, ID 83702.
4 Q. Please describe your educational background.
5 A. I hold a bachelor of science in chemical engineering, chemistry, and
6 mathematics and masters of engineering in engineering management, all from the
7 University of ldaho. I am a licensed Professional Engineer in the State of Idaho and a
8 LEED AP BD-C (Leadership in Energy and Environmental Design Accredited
9 Professional with an emphasis in Building Design and Construction).
l0 a. Please describe your professional work experience.
I I A. I am currently a partner in four companies, all within the clean energy sector.
12 The majority of my time is spent with Site Based Energy, headquartered in Ketchum,
13 which provides energy efficiency and renewable energy consulting and construction
14 services. My role is Sr. VP of Development with primary responsibilities including:
l5 business development, project development, project management, engineering
16 oversight, and corporate strategy. I am a partner and managing member in HydroGen
17 LLC, a renewable energy development firm focused on small hydroelectric facilities on
l8 existing infrastructure. My primary responsibilities are business development, project
19 development, project management, engineering oversight, and corporate strategy. I
20 also am a partner in E-Newables, an energy finance consulting firm and Retrolux,
2l software as a service (SaaS) for electrical contractors that manages their business
22 processes, including energy efficiency and cost estimating.
23 a. On whose behalf are you testiffing?
311 Elgethun, Di I
Idaho Clean Energy Association
I
2
J
4
5
6
7
8
9
l0
lt
t2
13
t4
l5
16
17
l8
l9
20
2t
22
23
A. I am testiffing on behalf of the Idaho Clean Energy Association (ICEA).
a. Please describe the Idaho Clean Energy Association.
A. The Idatro Clean Energy Association is a nonprofit organization dedicated to the
advancement of renewable energy, energy effrciency and their associated technologies
in the State of Idaho.
a. Has the IECA adopted a Mission, Vision and Goals statement?
A. Yes. Our Mission, Vision and Goals are:
Mission: The Idaho Clean Energy Association is dedicated to advancing Idaho's
independence and economy through growing our clean energy industry.
Vision: ICEA is Idaho's leading voice for policies and programs to promote
Idaho's clean energy resources in order to maintain reliable, affordable energy and
grow our economy.
Goals: Bring together clean energy businesses to network, collaborate, and
advocate for policies and programs that grow our industry; Engage with Idaho's
policymakers to make clean energy the top priority of state energy policy; Provide
Idaho's clean energy industry with a consistent and clean voice in regulatory
proceedings and policy making arenas; Educate Idaho's citizens on the opportunities to
use our energy resources efficiently and develop our own clean energy resources.
a.
A.
a.
A.
a.
Approximately how many persons are employed by ICEA members?
Approximately 100 employees.
What is your position with the ICEA?
I am Chairman of the Board of Directors.
Are other witnesses testifying on behalf of the ICEA?
Elgethun, Di 2
Idaho Clean Energy Association
3\2
I A. Yes. Mrs. Courtney White provides technical testimony touching on:
2 L The proposed cap on net metering creates more costs than benefits;
3 II. The filing is inconsistent with state policy;
4 III. Any claimed inequity claimed is driven by a few customers with excess
5 generation; there is no need for a new rate structure for all net metering
6 customers;
7 lV. The proposed rate structure is inequitable and discriminatory;
8 l. tnequity between standard service and net metering customers
9 2. Inequity between low usage and high usage customers
l0 V. Excess generation should be given a financial value;
I I VI. The filing will likely not remain revenue neutral;
12 And, Mr. Matthew Dunay provides technical testimony touching on the etl'ects this
13 proposal is having on his business, which solely relies on small net metered solar PV
14 systems in ldaho.
l5 a. What is the purpose of your testimony?
16 A. I will describe the growing market for green energy products and services and
l7 the impact of the Idaho Power's (The Company) proposed changes to its net metering
l8 tariffs upon that market. I will also set lbrth ICEA's position on treatment of the
l9 Company's proposed changes to the rate structure, aggregate cap, excess generation,
20 application fee, and interconnection.
2l a. [s there growing consumer demand for clean energy products and services?
22 A. Yes there is. For example, Figure I contained in the Direct'Iestimony of
23 Mathew Larkin illustrates this growing interest. See Exhibit 7l I attached hereto.
313 Elgethun, Di 3
ldaho Clean Energy Association
I Q. Why do you believe the market for customer-owned electric generation is
2 growing?
3 A. I believe there are several reasons. In general, individuals and businesses have
4 an increased interest in controlling their energy costs through cost ef,fective investments
5 on their properties. This interest has been met with positive actions, including
6 marketing, education, direct non-profit financial support, and the energy efficiency
7 rebate program from the Company if the method of control is conservation or energy
8 efficiency. The Company has also exhibited positive actions with respect to their net
9 metering progftlm until this filing, with an appropriately designed and executed existing
l0 tariff coupled with great customer service.
l1 However, the cost and complexity of generation sources have typically limited
12 this program to participants with additional motives beyond cost control,limiting the
13 scope and adoption of customer-owned generation. The increased interest in net
14 metering in particular can be attributed to three primary factors: lower installed cost,
15 desire for energy independence and security, and increased awareness of
16 environmental degradation due to fossil fuel consumption.
t7 With respect to PV solar, for example, technology is improving and prices are
l8 declining,'bringing PV solar closer to price parity with Company retail rates. For
19 simple rooftop installations, the 20 year levelized cost for customer owned PV solar
20 (including federal tax implications) currently is on par with projected 20 year levelized
2l retail rates provided by the Company in their 2011 IRP.
22 Additionally, customers are increasingly interested in offsetting purchases of
23 electricity from a utility and reducing dependence upon utility generation. Self-
Elgethun, Di 4
Idaho Clean Energy Association
314
I
2
J
4
5
6
7
8
9
l0
ll
t2
l3
l4
l5
t6
t7
l8
l9
20
2l
22
generation can also serve as a partial hedge against increasing electric service rates. In
addition, installers have seen an increasing interest in battery backup, especially in
more rural areas that have had longer durations of power going offline due to system
failure.
Finally, customers are interested in investing in technologies that make a
contribution towards reducing reliance on fossil fuels. This is not usually the deciding
factor in most installations, but does provide the a large portion of the initial interest in
a renewable energy system. Most potential customers list this as a growing concem
and as a primary concern in their decision to install a renewable energy system.
a. Do you believe there are public policy reasons for facilitating the growth of this
market?
A. Yes. The primary public policy reasons fbr facilitating the growth of this
market are job growth, grid security, grid reliability, and individual liberty. In
particular, the Idaho State Legislature adopted the 2012 State Energy Plan, in particular,
Policy Goal 3 which states:
" Vfhen acquiring resources, Idaho and ldaho utilities should give priority to
cost-ffictive and prudent: (l) conservation, energl efficiency, and demand
response; and (2) renewable resources, recognizing that these alone will not fulfill
Idaho's growing energ/ requirements and that these resources play a role in
addition to conventional resources in providingfor ldaho's energt needs. "
[r ttp ://wrvw.gre rs.y. i da lr o. gov/e tt erqya l I i a tpet.tlZ O t Z i aan o
f, Page 31.
315 Elgethun, Di 5
Idaho Clean Energy Association
I In addition, several municipalities within the Company's service area have also
2 made renewable energy a priority., The City of Boise has intervened in this case,
3 expressing concern that the Company's proposals will undercut the City' sustainability
4 goals. (See, City of Boise's Petition to lntervene, January 29,2012. City of Ketchum has
5 filed Public Comments opposing the application, Ketchum, Hailey, and Blaine County
6 now require renewable energy generation in their Exterior Renewable Energy
7 Mitigation Program:
8 thttp://www.co.blai
9 3,A228294. 1987%TDiuploads/Exterior_Renewable_Energy_lr4itieation_Proeram.pdtl.
l0 a. What role does a viable net metering (NEM) structure play in allowing this
I I market to develop?
12 A. The ICEA believes a NEM structure that fairly compensates participants is
13 essential to growth in this market. This is the most important role NEM should provide
14 to the market and is an area ICEA is in agreement with the Company. We disagree
l5 with the method by which the Company is determining'fair' and have outlined our
16 objections to their methods in testimony provided by Ms. White.
17 Another very important factor that will allow this market to continue to develop
18 is a sense of stability in the rate structure going forward. Customers and installers
19 understand that their rates will change over time, and attribute an increasing value to
20 this fact due to increasing rates, but do not understand fundamental changes to the way
2l the program is structured. Most participants place the cost of their system and the
22 associated time dependent value of that system as the deciding factor before making a
23 substantial investment. Each participant will undergo a financial assessment of that
Elgethun, Di 6
Idatro Clean Energy Association
316
I
2
3
4
5
6
7
8
9
l0
ll
l2
t3
t4
t5
t6
t7
t8
r9
20
2l
22
23
system based on the rules of the day and expect that while certain components of that
system may change, that the underlying structure will remain consistent. To remain
viable, the NEM program needs to have firm sidebars put in place by the Commission
to ensure participants have as much certainty in their financial analysis as possible.
a. Does ICEA believe the current NEM structure-which credits customers at the
applicable retail rate-is appropriate?
A. Yes. Ms. White's and Mr. Thomas Beach (on behalf of the ldaho Conservation
League) testimony provides a detailed analysis, but we believe the monetary benefits
to the Company exceed the monetary costs accrued by the Company for the net
metering class under the current rate structure and overall market conditions. We
believe we could show the Company should pay a multiplier of the retail rate to NEM
participants and still have a revenue neutral NEM class. However, we also believe the
current system should be retained due to its simplicity and congruence with the
historical program and the majority of other state programs.
As I will discuss below, ICEA does believe some modification may be
appropriate to address the relatively small issue of excess generation, but the basic
structure should remain in place. ICEA strongly opposes the Company's proposed
changes to the rate design. Ms. White more fully discusses these objections in her
testimony.
a. Please describe the effect upon the renewable generation market that resulted
from the filing of this case (IPC-E-12-27)by the Company on November 30,2012.
A. The filing has created great uncertainty among potential customers and the
renewable industry. The resulting uncertainty has provided a very real chilling effect in
Elgethun, Di 7
Idaho Clean Energy Association
371
I
2
aJ
4
5
6
7
8
9
l0
ll
t2
l3
l4
l5
t6
t7
l8
l9
20
2t
22
23
the market. Many installers have had shovel ready projects put on hold until the case is
resolved while having new potential projects shelved until the case is resolved. A
survey of ICEA members has resulted in only one company reporting steady business.
On the other end of the spectrurn, one ICEA member has not had a single install since
the Company filed their proposal. In particular, my firm, Site Based Energy, has
completely shut down our Idaho small renewable energy installation program,laid off
one employee, had multiple projects shelved, and lost tens of thousands of dollars spent
in marketing, training, and proposals put out in Fall of 2012 to ramp up a program to
meet demand.
a. Please describe the effect on the NEM market that the proposed system wide
cap will have.
A. As explained previously, the proposed changes by ldaho Power has had
negative consequences for installers since they were filed. The proposed cap raises the
system size from 2.9 MW to 5.8MW. At the current rate of growth in the system, the
next cap will be reached in 3-5 years. If there will be another 6 month disruption to the
program, this results in a negative chilling effect on the NEM market equal to 10-17%
(0.5 years/5 years = l0%o,0.5 years/3 years: l7o/o) over the next 5 years. More
importantly, in the years of contention, it accounts for 50% of annual revenues. For
small privately held companies typical of those installing NEM systems in Idaho, this
represents an undue regulatory burden on their businesses, resulting in negative
consequences for the overall NEM market.
a. If the Company's proposed rate design changes were approved, what would be
the effect on the renewable generation market, in your opinion?
Elgethun, Di 8
Idaho Clean Energy Association
318
I A. As the Company has acknowledged, the proposed rate design changes will have
2 a disparate effect on customers depending on their usage. The proposed rate design
3 will have a negative effbct on small users while providing positive benefits to large
4 users. As there are more small users than large users, it stands to reason that the overall
5 effect will be negative. In addition, it is our opinion that this will sow negativity in the
6 market with customers coming to the conclusion that the State and the Company do not
7 support renewable energy. Further, the market may conclude that their investments in
8 customer owned electrical generation resources are not secure, which will reduce debt
9 financing. Overall, it is reasonable to conclude the proposed rate design will have a
l0 severely negative effect on the market, which stands in direct contrast to the stated
I I policy of both the State and the Company.
12 a. Please explain the Company's proposal for net excess generation, as you
l3 understand it.
14 A. ldaho Power proposes to terminate the practice of cash payments for net excess
l5 generation, to allow carry-forward of credits to subsequent billing periods based on
16 power generated (kwh), and to require forfeiture of any accumulated credits at the
17 conclusion of a customer December billing period. (Larkin, Direct Testimony, pgs.26-
l8 27.)
19 a. Does ICEA support this proposal?
20 A. Only in part. ICEA does not object to temrinating cash payments at the retail
2l rate for net excess generation. The other features of the proposal are arbitrary, punitive,
22 and unfair. The selection of December as the forfeiture date is arbitrary and could have
23 negative consequences for participants that generate excess power in the summer that is
319 Elgethun, Di g
Idaho Clean Energy Association
I carried forward to offset winter and spring loads. In addition, the selection of one year
2 for forfeiture is arbitrary, punitive, and unfair as participants that try to become true net
3 metering customers will have annual variability in their systems. An unlimited term
4 will help reduce the variability of a participants loads. Complete forfeiture of credits
5 without payment is punitive, unfair. The Company's proposal to take this customer
6 produced product and sell it to their neighbors without payment is akin to theft and is
7 the most egregious of the entire Company proposal.
8 Q. Does ICEA have an alternative proposal?
9 A. Yes. ICEA proposes that:
l0 l. The company place a financial, not kWh, value on excess generation. The
1l value should be at the participants highest rate tier for the month in which the excess
12 energy is generated and should include all rate specific adjustments applied in that
13 month. This will ensure that power is valued during the time it is generated, not the
14 time it is offset with future energy usage. An example is solar power which has
15 maximum output during the Company on peak, summer rate tier. The power should be
16 paid at a rate closest to this generation time, not paid during the off peak, non-summer
17 rate tier.
18 2. Allow excess generation to be carried forward as long as the customer
L9 continues their account. Item 3 will ensure the Company's concems regarding payment
20 are met. If the commission finds a term to be necessary, then a minimum three year
2l period is appropriate and acceptable. This will allow for annual variation in system
22 loads but will ensure the Company does not have an indeterminate liability.
Elgethun, Di l0
320
Idaho Clean Energy Association
I 3. Allow a customer to transfer any excess generation credits to IPCo in retum
2 for a payment based on then current avoided cost at any time. The participant should
3 be able to sell their power to the Company at any time at the current avoided cost rate.
4 This will ensure the participant is compensated for their power, but will limit that
5 compensation to the same rate paid to an independent power producer. This has been
6 shown to satisfu FERC rules regarding power sales from a NEM customer.
7 4. If a term is implemented, then the Company shall automatically transfer all
8 expiring excess generation credits to IPCo on a monthly basis in return for a payment
9 based on then current avoided cost. If the participant is not able to utilize their excess
l0 generation credits within the three year carry forward period from the month it is
I I generated, expiring credits should be compensated, but at the current avoided cost rate
12 for the same reasons as in item three above.
l3 a. Do you believe this proposal more fairly balances the needs of customers and
14 the utility?
15 A. Yes I do.
l6 a. Do you have any concerns with the Company's proposed interconnection
l7 procedure?
l8 A. ICEA members met with Company Staff and IPUC Staff to negotiate technical
19 details for interconnection. We feel our concerns have been met and recommend
20 accepting the Company's proposed modified interconnection rules negotiated with
2l input from the ICEA.
327
Elgethun, Di I I
Idaho Clean Energy Association
I Q. To your knowledge did Idaho Power make any effort to reach out to members
2 of the renewable energy industry to discuss possible changes to NEM before filing Case
3 No. IPC-E-12-27?
4 A. To my knowledge it did not.
5 Q. Could you please summarize ICEA's recommendations in this matter?
6 A. Yes. ICEA respectfully recommends that in its Final Order the Commission:
J t Maintain the current rate structure for net meter service and reject the
8 Company's proposed rate structure because it is arbitrary, discriminatory and
9 punitive;
l0 . Reject the Company's proposal for a system cap on the meter metering program
I I because the Company has not demonstrated a reliability or economic need for a
12 cap and because a cap introduces uncertainty into the system;
13 . Reject the Company's proposal to forfeit net excess generation at the end of a
14 customer's December billing period and adopt instead ICEA's proposal which
15 would:
16 . Place a financial, not kWh, value on excess generation;
17 r Allow excess generation to be carried forward indefinitely (preferred) or
18 for a three year period (acceptable);
19 . Allow a customer to transfer any excess generation credits to IPCo in
20 return for a payment based on then current avoided cost at any time;
2l r If a period is set, then the Company shall automatically transfer all
22 expiring excess generation credits to IPCo in return for a payment based
23 onthen current avoided cost.
Elgethun, Di t2
322
Idaho Clean Energy Association
I r Accept the Company's proposed modified interconnection rules negotiated with
2 input from the ICEA.
3 Q. Does this conclude your testimony?
4 A. Yes, it does.
323 Elgethun, Di 13
Idaho Clean Energy Association
1
2
3
4
5
6
7
B
9
1_0
11
L2
13
L4
15
t6
77
1B
19
20
2t
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
ELGETHUN (X)
ICEA
(The following proceedings were had in
open hearing. )
(Idaho C.l-ean Energy Association Exhibit
No. 171, having been premarked for identification, was admitted
into evidence. )
COMMISSIONER SMITH: Do you have questions,
Mr. Hammond?
MR. HAMMOND: No, Madam Chair.
COMMISSIONER SMITH: Mr. Richardson.
MR. RICHARDSON: I have no questions,
Madam Chai-r.
COMMISSIONER SMITH: Mr. Otto.
MR. OTTO: I changed my mind. No questions,
Madam Chair.
COMMISSIONER SMITH: Good declsion.
Mr. Kl-ein.
MR. KLEIN: No questions.
COMMISSIONER SMITH: For the Company.
MS. HILTON: Just a few. Thank you.
CROSS-EXAMINATION
BY MS. HILTON:
O. Mr. E1gethun, you raised a number of
interconnection concerns at the publ j-c workshop. Dj-d ICEA
324
83701
1
2
3
4
5
6
7
I
9
10
11
!2
13
t4
15
1,6
l1
t-8
t9
20
21
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
ELGETHUN (Com)
ICEA
participate i-n any interconnection settlement discussions?
A. Yes, we did.
O. And were your concerns with interconnection
addressed?
A. Yes, they were.
O. A11 right, thank you.
COMMISSIONER SMITH: Do we have questions from
the Commi-ssioners?
COMMISSIONER REDEORD: No.
COMMISSIONER KTIELLANDER: No.
EXAM]NATTON
BY COMM]SSIONER SM]TH:
O. I only have one. It's on page 2 where you were
describing the Idaho Clean Energy Association, and you said
you're the chairman of the board of directors?
A. Yes, I am.
O. And who is on the board?
A. Currently, we have about seven members on the
board of dj-rectors. Courtney Vfhite, who testified earlier, is
our newest additi-on. We al-so have Ben Otto, who is in the
room; he j-s our only nonprofJ-t representatj-ve, p€r our board
bylaws. The other members are Ian Warren with US Geothermal;
Kelley Dagley, who is in the room, as an individual- consumer;
32s
83701
Kevin King with EvenGreen Technologies (sic) . Oh, wow, I am
probably missing one.
O. I didn't mean to embarrass you.
A. No, no. I'm just trying to actually remember
which ones they might be. But, primarily, the people on our
board are meant to be business owners.
O. Okay. Thank you. I appreciate that.
COMMISSIONER SMITH: Any redirect, Mr. Mill-er?
REDIRECT EXAMINATION
MR. D. MILLER:
O. Followlng up on Commissioner Smithrs question,
just for general information, coul-d you describe for the
Commission how the Clean Energy Association came into being and
why it came into being?
A. Yes, sure.
One more board member I just remembered:
Andy Tyson with Creatj-ve Energies out of Eastern Idaho.
Three of us, three parti-cular business people in
Idaho, realJ-zed that there wasn't a good business voice in the
state of Idaho to promote clean energy, to j-ncl-ude both
renewable energy and energy efficiency. We l-ooked for
nonprofits to house that voice within, did not find one that
fj-t the business interest, and incorporated over a year ago
326
4
5
6
7
B
9
10
11
L2
13
t4
15
76
t7
18
19
20
27
22
23
24
25
HEDRICK COURT
P. O. BOX 578,
REPORTING
BOISE, ID
ELGETHUN (Di)
ICEA83701
1
2
3
4
5
6
1
I
9
10
l_1
L2
13
74
15
L6
71
18
19
20
21,
22
23
24
25
HEDRICK COURT
P. O. BOX 5'7I ,
REPORTING
BOISE, ID
ELGETHUN (Di)
]CEA
with the intention of representing the business and consumer
interests in Idaho.
Since that timer we have expanded our membership
to j-nclude quite a few new business members. We actually have
separate membership categories for businesses and
nonbusinesses, with the businesses getting voting rights.
A. ,Just one finaf questi-on: Let me direct your
attention to page L2 of your testimony, j-t goes over on
page 13. Since the filing of this testimony, have you read the
rebuttal testimony of Mr. Larkin and the direct testj-mony of
Mr. Said?
A. Yes, I have.
0. And have you been present in the hearing
throughout the day today?
A. Yes, f have.
O. Based on your revj-ew of the Company filings and
what's been said here today, does any of that change the
recommendations that you set out here for the Commission to
consider?
A. No, they don't.
O. Very good.
MR. D. MILLER: That's all I have.
327
83701
1
2
3
4
5
6
7
B
9
10
11
L2
13
!4
15
L6
L7
18
19
20
27
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
ELGETHUN (Com)
]CEA
EXAMINAT]ON
BY COMMISSIONER SMITH:
O. So just one final- questj-on: And did you notice
any delay at the IRS in considering your nonprofit status?
A. Actua11y, that is something that we're currently
in the process of doing is getting our 501 (c) (3) . Currently,
we are a nonprofit for Idaho, but we haven't gotten our IRS
designation. But we are a completely independent
organization.
O. Thank you.
COMMISSIONER SMITH: Do you have any more
wi-tnesses, Mr. MiIl-er?
COMMISSfONER REDFORD: I have a question.
COMMISSIONER SMITH: Oh, I'm sorry. Commissioner
Redf ord has a quest j-on.
EXAMINATION
BY COMMISSIONER REDFORD:
O. Fol-l-owing up on your prefiled testimony at
page !2,line 10 through line 12, is your opinion that there
should be no cap?
A. Yes, sj-r. We bel-ieve the Company has adequate
resources and adequate abilities to modify the program at any
328
83701
1
2
3
4
5
6
1
I
9
10
t_1
L2
13
L4
15
1,6
l7
18
19
20
2t
22
23
24
25
HEDRTCK COURT REPORTING
P. O. BOX 518, BOTSE, rD
ELGETHUN (Com)
ICEA
poi-nt that they so choose, and we do not believe that a cap j-s
appropriate.
In addition, there has been many of my members of
my organization that have seen disruptive the disruptive
effects of this process to their business, and si-x months for a
process l-ike this is hal-f a year of somebody's revenue and it's
a pretty big deal to have to go through this. I'm a business
owner: ft' s tough.
COMMISSIONER REDFORD: Thank you.
COMMISSfONER SMITH: .Just note that six months in
the regulatory world is the speed of Iight.
THE WITNESS: I definitely agree, which is why we
want to mini-mi-ze the times we have to do this.
COMMISSIONER SMITH: Thank you. Thanks for your
he1p.
(The witness l-eft the stand.)
MR. D. MILLER: I don't know if it will be
necessary, but if there is no objection, coul-d the witness be
excused?
COMMISSIONER SMITH: Seeing no objection, the
witness is excused for the remainder of the proceedings.
MR. D. MILLER: Madam Chairman, the Idaho Clean
Energy Association rests.
COMMfSSIONER SMITH: Thank you.
I don't see your wj-tness, Mr. Hammond, so we'11
329
83701
1
2
3
4
5
6
7
8
9
10
11
72
13
L4
15
t6
L7
18
19
20
21,
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
ELAM (Di)
Staff
go to the Staff.
MR. KLEIN: Staff calls Matt Larkin orr
Matt Larkin -- Matt El-am.
MATT ELAM,
produced as a wj-t.ness at the instance of the Staff, being fj-rst
duly sworn, was exami-ned and testified as follows:
DIRECT EXAMINATION
BY MR. KLETN:
O. Coul-d you please state your name and spel1 your
last name?
A. Yeah. Matt E1am, E-L-A-M.
0. And where do you work and in what capacity?
A. I work at the Public Utilities Commission for
Staff, and Irm a utilities analyst.
O. Are you the Matt El-am who fil-ed testj-mony in this
matter?
A. Yes, I am.
O. Do you have any changes to your testimony?
A. No, I donrt.
0. If I were to ask you the questions set forth in
your testimony, would your answers be the same today?
A. Yes, they would.
330
83701
1-
2
3
4
5
6
7
B
9
10
11
t2
13
L4
15
t6
77
18
l9
20
27
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 5'78, BOTSE, rD
ELAM (Di)
Staff
MR. KLEIN: With that, I move to spread his
testimony on the record.
COMMISSIONER SMITH: Seej-ng no objection, it is
so ordered.
(The following prefiled direct testimony
of Mr. EIam is spread upon the record. )
331
83701
.l
l_
2
3
4
5
6
7
I
9
t_0
11
L2
L3
t4
15
16
L7
18
l_9
20
2L
22
23
24
25
O. Please state your name and business address for
Lhe record.
A. My name is Matt Elam. My business address is 472
West Washington SEreeL, Boise, Idaho.
a. By whom are you employed and in what capacity?
A. I am employed by the Idaho Public Utilities
Commj-ssion (Commission) as a Utilities Analyst.
O. What is your education and experience?
A. I recej-ved a Bachelor of Arts degree in Economj-cs
from Boj-se State Universi-ty in 2003. I began work at the
fdaho Public Utilities Commission in May of 2008. In
addition to my formal educaEion, f have attended the
Michigan St.ate UniversiEy Institute of Public Utilities
Demand Forecasting course. I also serve on the National
Association of Regulatory Utility Commissioners (NARUC)
committees, and have attended various educatj-onal,
professi-onaI, and energy industry-related seminars.
a. Please describe your duties at the Commission.
A. As a Utilities Analyst in the Engineering Section
at the Commission, I work primarily on natural gas and
el-ectric cases. I analyze utility rate applications, rate
design, and tariff proposals. I have testified in
proceedings before the Commission on cases dealing with rate
design, and have written position papers on numerous
regulatory policy issues.
cAsE NO. rPC-E-12-27
05/Lo/13
EI,AM, M. (Di) 1
STAFF
332
1
2
3
4
5
6
7
I
9
10
11
L2
13
l4
15
16
l7
18
19
20
2L
22
23
24
25
a. What is t,he purpose of your testimony?
A. The purpose of my testimony is to describe Staff's
analysis of Ehe Company's current Net Metering Service and
its proposed changes.
O. Please summarize your testimony in this case.
A. Staff supports the Company's proposal to double
the Program Cap from 2.9 MW to 5.8 MW. But Staff does not
support the Company's proposals to: l-) change base rat,es; 2)
calculate Excess Net Energy as a kWh credit instead of a
financial credit; 3) have a forfeit period for Excess Net,
Energy; and 4) exclude net metering customers from the Fixed
Cost Adjustment (FCA) mechanism.
O. How will your testimony be
A. My testimony is subdivided
headings:
Table of Contents
organized?
under the following
Page No.
I. Base Rate Change
II. Singling Out, Net Metering
IIr. Basic Load Capacity(BLC) Charge
IV. Shifting Between Schedules
V. Cost,-of - Servi-ce
VI. Program Cap
VII. Excess Net Energy
I. Base Rate Change
CASE NO. IPC.E-72-2705/Lo/t3
Page
Page
Page
Page
Page
Page
Page
ELAM, M. (Di) 2
STAFF
2
5
L4
L5
t7
20
24
O. Please explain how the Company proposes to change
current base rates for residential and smal1 general servj-ce
net metering customers.
333
L
2
3
4
5
6
7
8
9
10
11
1,2
13
t4
15
15
l7
18
l-9
20
2L
22
23
24
25
A. The Company proposes increasing the current
monthly Servj-ce Charge to collect the customer-related
revenue reguirement. This would increase the current
monthly Service Charge for resident,ial net metering
customers from $5.00 to 520.92, and the current monthly
Service Charge for smal1 general service net metering
customers from $5.00 to #22.49. The Company also proposes a
Basic Load Capacity charge that collects the demand-related
revenue requirement associated with the distribution system.
The Company proposes Basic Load Capacity charges of $L.48
per kW for residentj-al neE meterJ-ng customers and $1.37 per
kW for sma11 general service net metering customers.
The Company proposes to offset the additional
revenue collected from the higher monthly Service Charge and
Basic Load Capacity Charge by proportionally lowering the
energy charges to collect the same annual revenue from the
net metering customer group as it does under the current
rate structure. The proposed changes are as follows:
Residential:
Summer
0-800 kwh
801-2000 kwh
Over 2000 kwh
Non-Summer
0-800 kwh
801-2000 kwh
Over 2000 kwh
cAsE NO . ]PC-E- 1-2-2705/to/13
Current Rates
$0.078428
$0.095788
$0.11s165
$0.0723ss
$0.080s19
$o . oe 9e60
Proposed Rates
$0.0s2s83
$o .064223
$0 .07721,s
$0 . 04 8s1,2
$0.0s398s
$0.05031s
ELAM, M. (Di) 3
STAFF
334
l-
2
3
4
5
5
7
I
9
L0
t_L
L2
13
1,4
15
15
t7
t8
l-9
20
2t
22
23
24
25
Sma1l General Service:
Summer
0-300 kwh
Over 300 kwh
Non-Summer
0-300 kwh
Over 300 kwh
cAsE NO. rPC-E-12-27
os/to/1-3
Current Rates
$o . o 90435
$0. r-0e108
$0.090435
$0 . 0 9524s
Proposed Rates
$0.043r-48
$0.0520s7
$0. o+3148
$0.04s442
a. Does Staff support the Company's proposal to
change base rates as part of this filing?
A. No. St,aff does not support the Company's proposal
to change base rates for several reasons. First, the
proposal singles out one smal1 group of customers within the
residential class when other similarly situated customers
exist within the c1ass. Second, the proposal implements a
Basic Load Capacity Charge, which has never been j-ntroduced
to the residential or smal1 general service c1ass. Third,
the Company's proposal incents high usage residential
cusEomers to install sma11 generation facilities simply to
gualify for the more favorable net metering rate. Fourth,
the proposal uses the results of a cost-of-service study
that was never intended to be used for changing the design
of base rates for a smal1 group of customers within a class.
Fina11y, despj-te any concerns about the likelihood that some
of the costs of serving net metering customers will be
subsidized by other customers, the overall dol1ar lmpact of
ELAM, M. (Di) 4
STAFF
335
1
2
3
4
5
6
7
8
9
10
11
L2
13
L4
15
a5
L7
18
t9
20
2t
22
23
24
25
net metering is smaII.
II. Singling Out lfet Metering
O. Please explain why the Company believes net
met,ering customers should pay the fuII customer-related and
demand-related revenue requirement in a monthly Service
Charge and Basic Load Capacity Charge.
A. The Company says the current net metering program
creates a "potential inequit,y between net meterlng customers
and standard servj-ce customers, as net meE,eri-ng customers
are provided the opportunj-ty to unduly reduce collection of
revenue requirement by receiving credit for generat.ion at
the fu1I retail rate while standard service customers are
left to compensate for revenue short,faI1." P. 18, Larkin
test,imony.
O. Does a net metering customer who recelves credit,
for generation at the fu1l retail rate pay their fj-xed
costs?
A. Some do not. According to the Company,s most
recent cost-of-service study, if a residential net metering
customer generat,es enough excess net energy to compTet,ely
offset thej-r usage during the year, their service charge
covers only 8? of their fixed costs. So if a residential
net metering customer achieves net zero consumption, their
distribution-related costs and most customer service-reIat.ed
costs will need to be recovered from other standard service
cAsE NO. IPC-E-L2-27
0s/L0/1"3
ELAM, M. (Di) 5
STAFF
336
1
2
3
4
5
6
7
8
9
10
1l_
1,2
13
l4
15
L6
t7
L8
t9
20
2t
22
23
24
25
customers within the residential c1ass. On the other hand,
if t,he net metering customer has enough net annual energy
consumption, fixed costs may be adequately recovered through
the energy rate comPonent.
a. How does the current percent,age of fixed costs
collected outside of the Schedule L energy rat,e compare to
the other schedules and the Company's proposal?
A. In response to Staff Production Request No. 29,
the Company provided the following table illustrating the
percentage of fixed costs collected ouLside of the energy
rate for all Schedules since its most recent cost-of-service
study in Case No. IPC-E-LL-08:
Rate Schedule t !'rxect goaE RecoveryExcluded from Energy Rates
Schedule 1 8?
Schedule 5 (Proposed)s3B
Schedule 7 t4*
Schedule 8 (Proposed)7s*
Schedule 9 38?
Schedule 19 60*
Schedule 24 35?
O. Did Staff analyze the impact each residential and
smal1 general service net metering customer may have on
standard service customers given the distribution and
customer related cost,s that may go uncollected?
A. Yes. Based on the average usage of a residential
customer and the Company's cost-of-service results from the
last general rate case, Staff looked at the distribution and
CASE NO. TPC-E-L2-27os/to/a3 ELAM, M. (Di) 6
STAFF
337
L
2
3
4
5
6
7
8
9
t_0
Ll-
L2
L3
L4
15
l_5
L7
18
L9
20
2L
22
23
24
25
customer-related costs that go uncollected if a net metering
customer achj-eves net zero consumption. The annual impact
on non-participating customers from one resldential net
metering customer with net zero consumption is approximately
$320. The annual impact on non-participating customers from
one smaIl general service net met,ering cust,omer with net
zero consumptlon is approximately $253. So given the number
of customers actively taking service as of December 31,
201-2, Idaho Power's unrecovered distribution and customer-
related costs have the potential of costing non-
participating residential customers approximately #81-, 920 on
an annual basis (255 customers x $320 per customer), and
non-participating smaII general service customers
approximately $5,313 on an annual basls (Zt customers x $253
per customer) . If the program cap were j-ncreased t.o 5.8 MW
as Idaho Power proposes, the additional potential inequity
caused by unrecovered distribution and customer related
costs may double, or be approximately $153,840 for the
resi-dential class on an annual basis. This small identified
inequity caused by the residential net metering customers is
insignificant when compared to annual residential revenue of
over $409 miIlion.
O. fs it realistic to assume a net metering customer
will offset their entire usage during the year?
CASE NO. IPC-E-12-27
os / to /1-3
ELAM, M. (Di) 7
STAFF
338
l_
2
3
4
5
6
7
I
9
1-0
l-1
L2
1-3
l4
L5
1,6
L7
l_8
L9
20
21,
22
23
24
25
A. No, not for most residential customers. Based on
t,he data provided by fdaho Power, it appears about L4? of
residential net, metering customers generated enough annual
excess net energy to entj.rely offset their consumption for
the year. For the small general service net metering
customers, about 578 of customers generated annual excess
net energy.
A. P1ease explai"n how a customer achieves net zero
consumption on an annual basis?
A. The current program a1Iows net metering customers
to ro11 over their Excess Net Energy credits from month to
month, so customers can essentially treat Idaho Power's
system as a battery for storing energy they generate beyond
what they use in any given month. For example, a net
met,ering customer wit,h Photovoltaic (PV) generation (and
without their own battery storage) will more than 1ikeIy
need the utility to provide energy at night or when
conditions are not optimal for solar generation. But if the
customer generates enough excess net energy when solar
generation is optimal, they will accrue Excess Net Energy
credits. Thus, the Excess Net Energy credits may accumulate
to the point of completely offsetting what the customer uses
during the night or whenever self-generation is not
adequate. Therefore, oD an annual basis, the customer may
CASE NO. IPC-E-L2-27
os/Lo/L3
ELAM, M. (Di) g
STAFF
339
o
1
2
3
4
5
6
7
8
9
10
1_ l-
L2
l_3
L4
L5
15
L7
l-8
L9
20
2t
22
23
24
25
pay nothing for their nightly usage or whenever they cannot
generate enough to offset what is used.
O. Even if a customer achieves net zero consumption
for the year, won' t they pay their share of fixed cosLs
through the annual FCA mechanism?
A. No. First, the FCA is a per kWh charge, so if a
net metering customer achieves net zero annual consumption,
they will only pay t,he rate during months t,hey actually use
energy. They will not pay the FCA rate during months they
generate excess net energy. In addition, the FCA is
intended to ensure that the Company collects appropriate
fixed costs from an entire customer class as a whoIe. It
does not ensure Ehat individual customers within a class pay
their fair share of fixed costs compared t.o other customers
in the cIass.
A. Does a customer who participates in demand-side
management (DSM) programs and consequently has 1ow usage
cover their fuII fixed costs?
A. No. Customers who have made energy efficiency
improvements and thus have low energy usage will cover some
of their fixed cosEs, but may not cover all their fixed
costs.
O. On pages 14 and L5 of Mr. Larkin's testimony, he
sEates, the Company's pricing proposal limits "the potential
for ineguity by applying charges to net metering customers
cAsE NO. rPC-E-12-27os/to/1-3 ELAM, M. (Di) 9
STAFF
340
l_
2
3
4
5
6
7
I
9
10
11
L2
L3
L4
L5
L6
L7
18
19
20
2L
22
23
24
25
that accurately reflect the cost to serve them. " Does the
affect of the Company's pricing proposal address an inequJ-ty
between net metering customers and standard service
customers?
A. No, not outside of a rate case. The Company's
rate design proposal only impacts net metering customers,
not standard service customers. Rates do not change for
standard service customers, so the Company's proposal has no
effect on them as a result of this case.
O. Does Staff support the Company's proposal that
customers taking service under Schedule 5 or Schedule 8 not
be subject to FCA rates contained in Schedule 54?
A. No. Staff does not propose changes to base rates,
so the Company is sti11 vulnerable to much of the same fixed
cost recovery concerns that may be addressed by the FCA.
O. Are there customers within the residential and
small general servi-ce classes who are similar to net
metering customers?
A. Yes. Consider, for example, a residential
customer who has a vacation home, or a sma1l general servj.ce
customer who has a workshop. If the vacation home or
workshop is used very littIe during the year, the customer
would pay litt1e more than the $5.00 monthly service charge.
Based on the Company's most recent cost-of-service study,
the customer service charge only covers 88 of the Company's
cAsE NO. rPC-E-12-2705/Lo/t3 ELAM, M. (Di) 10
STAFF
341
L
2
3
4
5
6
7
8
9
l-0
l-1
t2
13
t4
15
1,6
1,7
t_8
1,9
20
2L
22
23
24
25
fixed costs of providing service. Simllar to a net metering
customer who achieves net zero annual consumption, Idaho
Power could collect insufficient revenue from the sale of
kWhs to cover remaining fixed costs. However, both customer
Eypes stl11 require service when they want to use it. To
provide service, Idaho Power must st,i11 have distribution
(poIes, wires, transformers, etc.), transmission, and
generaEion plant in p1ace.
O. Can t.he Company install fewer facilities because
net metering customers generate electricity, or someone with
a vacatj-on home or workshop rarely uses them?
A. No. The energy offered to customers by Idaho
Power is fj-rm, meaning that it is available whenever
customers want to use it. Net generation, on the other
hand, is provided by customers to Idaho Power on a non-firm
basis. There is no obligation or conEracted delivery for
net metering participants, and t,he characteristics of net
meterj-ng change with the addition of participants, weather
trends, and new technologies. The Company must design its
system to meet a net met.ering cusEomer's peak demand when
power is not being generated, such as at night, or cloudy
days, or when the wind is not blowing. Similarly, the
Company must design its system to meet the peak demand when
a customer's vacation home is occupied or t.he workshop is
being used.
CASE NO. IPC-E-I2-27
os / to /1-3
ELAM, M. (Di) 11
STAFF
342
1
2
3
4
5
6
7
I
9
10
11
L2
13
L4
L5
L5
L7
1_8
L9
20
2L
22
23
24
25
O. Does net metering provide capacity value during
the system Peak?
A. It depends on the types of resources being used
for generation, the confj.guration of the resources, and the
usage characteristics of the net metering customers during
the system peak. Consider, for example, a customer who
generates using a flat plate PV solar installation. Their
system's orientation might be southwest to offset their
personal peak and possibly the Company's system peak, or it
might, be directly south to maximize the amount of energy
generated throughout t,he day. Not only will the
configuration of the resource impact the capacity value of
flat plate PV soIar, iE also varies depending on when the
utility peaks during the day. For example, historically the
utilj-ty's summer peak sometimes occurs as early as three or
four o'clock in the afternoon; other times it occurs as late
as eight o'clock ln the evening. According to the capacity
factors used for Idaho Power's 20ll Integrated Resource
P1an, the on-peak capacity factor for 1 MW of distributed
flat plate PV solar was 26*. The on-peak capacity factor
established by the Commission for evaluating PURPA projects
with flat plate PV solar is 35?. In other words, on)-y 26-
35? of the nameplate capacity of flat plate PV solar
contributes towards reducing the utility's peak because the
cAsE NO. rPC-E-t2-27
0s/L0/13
Er,AM, M. (Di) 1,2
STAFF
343
L
2
3
4
5
6
7
8
9
10
11
t2
13
L4
15
15
L7
l_8
19
20
2L
22
23
24
25
utility's peak load typically occurs several hours after the
solar system peaks.
O. If net metering customers sti11 require the
Company to install facilities to serve load and may not
cover their fu11 fixed costs, why does St,aff oppose t,he
Company's base rate change at this time?
A. Bven though net metering cusEomers may not pay
their fu1I fixed costs, Staff does not support the Company's
proposed base rate change outsj.de of a general rate case.
If the Company is going to propose adjusting base rates for
this sma11 group of customers, Staff believes it shouLd be
done in a general rate case when the costs of serving every
customer within the class are fu11y vetted out.
O. How does net metering potenti-aIIy benefit non-
participating customers and the Company?
A. Aside from potentially providing a capacity
benefit during the utility's peak, net meterj-ng potentially
allows the Company to meet growing load with current
resources. Consider, for comparison purposes, non-
participants funding the DSM Rider through a kWh charge.
Standard service customers pay t,he Company for
administrative overhead to run the programs and pay
participanEs rebates or incentive payments to permanently or
temporarily reduce 1oad. Llke net metering, this may aI1ow
the Company to use current resources to meet growing load,
cAsE NO. rPC-E-1,2-27os/to/t3 ELAM, M. (Di) 13
STAFF
344
1
2
3
4
5
6
7
8
9
l-0
l_1
L2
13
L4
15
16
L7
L8
t9
20
21,
22
23
24
25
potentially delaying the need for additional resources.
According to Idaho Power's 2OL2 Demand-Side ManagemenL
report, the Company paid i2,L43,235 in energy efficiency
j-ncentives to residential customers in Oregon and Idaho.
P. l-4, DSM 201,2 Report. Furthermore, net metering cusEomers
pay for and maintain their own systems, reduce power supply
costs, and support, the continuing development of renewable
energy generation that may offer environmental benefits.
III. Basic Load Capacity (BLC) Charge
O. Please explain how the Basic Load Capacity (BLC)
is calculated.
A. The Basic Load Capacity is the average of the two
greatest non-zero billing demands (kW) during the 12-month
period, which j-ncludes and ends with the current billing
period.
O. Please explain why the Company proposes to
implement a Basic Load Capacity Charge for resi-dential and
sma11 general servj-ce net metering customers.
A. Accordlng to the Compdrry, "the basj.c load capacity
charge more accurately reflects the cost of serving these
cusLomers while avoidj.ng many of the incremental costs that
have existed prior t.o the installation of AI4I." P. L6-L7,
Larkin testimony.
cAsE NO. rPC-E-12-27os/to/13 ELAM, M. (Di) t4
STAFF
345
1
2
3
4
5
6
7
8
9
L0
1l-
L2
l_3
L4
l_5
16
L7
L8
L9
20
2t
22
23
24
25
O. Before Advanced Meteri-ng Infrast,ructure (AI4I)
meters, what would the Company have to do to implement
demand-related rates for net metering customers?
A. The Company would have had to replace residential
and smaIl general service net metering cusEomers' standard
mechanical meters with more expensive demand meters.
A. Has the Company proposed a Basic Load Capacity
Charge for the entire resj-dential or smal1 general service
class?
A. No.
been standard
O. rs
a Basic Load
class do not?
CASE NO. IPC-E-12-2705/ao/B
A. No. Even though I agree with the general concept
of a Basic Load Capacity Charge given how costs are
assigned, I disagree with the Company's proposal to
implement one so1e1y for net metering customers at this
time.
IV. Shifting Between Schedules
A. Please explain how the Company's proposal might
cause standard service customers to switch to net metering.
A. The Company's proposal shif ts the customer-relat,ed
and demand-related revenue requirement associated with t.he
distribution system from the per kWh energy charges into the
However, Basic Load Capacity charges have
for other customer classes for many years.
it reasonable that net metering customers have
Capacity Charge when other customers in the
ELAM, M. (Di) 15
STAFF
346
1
2
3
4
5
6
7
8
9
10
t1
L2
13
t4
15
16
t7
l_8
19
20
2t
22
23
24
25
proposed monthly Service Charge and Basic Load Capacity
Charge. Consequently, if a customer can save enough on t,he
energy portj-on of their b111 to offset the increase to the
Service Charge and Basj-c Load Capaclty Charge, the customer
will switch from standard service to net metering.
O. Do you believe the Company's proposal could
benefit high-usage customers who install a smaII amount of
generation and switch to net metering for the favorable
rate?
A. Yes. The Company's proposal benefits high-usage
customers who install a sma11 amount, of generation for two
reasons. First, the base rate proposal shifts the customer-
related and demand-related revenue reguirement from the per
kWh energy charges into the proposed monthly Service Charge
and Basic Load Capacity Charge. Thus, the customers who
benefit most have high enough usage that the savings from
the favorable energy rates offset the increase to the
Service Charge and Basj-c Load Capacity Charge. Second, the
Company proposes that excess net energy be forfeited each
December. Consequently, the customers who benefit most
either do not, generate excess net energy, or have very
little remaining at the end of December. For example, if a
Schedule l- customer with average demand uses 4000 kWh per
month, but installs a single 255 watt PV panel to qualify
for net metering, f estimate they would save approximat,ely
CASE NO. IPC-E-1,2-27
0s/a0/a3
ELAM, M. (Di) 76
STAFF
347
1
2
3
4
5
5
7
8
9
10
11
L2
l_3
L4
15
15
t7
l_8
t9
20
2L
22
23
24
25
$1,1-00 per year. It is impossible to det,ermine how many of
t,hese high-usage customers will realize that by purchasing
one solar panel and paying t.he $l-00 application fee, they
will save on their energy bill by becoming a net metering
customer.
O. Did the Company include tariff language that would
prevent high-usage cusLomers from installing a minimal
amount of generation to simply qualify for lower energy
rates as a net metering customer?
A. No. The Company could have included language
specifying t,hat customers install a certaj-n amount of
generation relative to historj-ca1 average annual demand or
usage, but it did not.
V. CogE-of-Service
O. Please explain how the Company used its cost-of-
service study to design its proposed net metering rates.
A. The rate design was determined using the cost-of-
service study results from Case No. IPC-E-L1-08, but, because
the general rate case settlement stipulation resulted in a
uniform percentage increase to all rate classes, the class
cost-of-service totals did not, sum to the Commission's final
approved revenue requirement amount. To reconcile the
difference, the Company adjusEed its study to match the
final approved revenue requirement from Order No. 32426, and
then developed rates given the additional revenue
CASE NO. IPC-E-L2-27
os/Lo/13 ELAM, M. (Di) 17
STAFF
348
L
2
3
4
5
5
7
8
9
10
11
t2
13
l4
15
L6
1,7
18
t-9
20
21,
22
23
24
25
requirement from the Langley Gulch generation plant'. Order
No. 32585.
O. Does Staff agree with the Company uslng the cost-
of-service study from Case No. IPC-E-11--08 to adjust base
rates?
A. No. Even though it is the best information the
Company currently has, it is not reasonable to use the cost-
of-service study for an entire class to adjust base rates
for a smal1 subset of customers within that rate class.
Further, oB page 4 of Order No. 32426, the signing
parties agreed that the annual revenue requirement be
recovered by increasing the rates "by a unj-form percentage
j-nstead of using the Company's originally-proposed cost-of-
service study. " The signing parties further agreed only
that "Idaho Power's proposed cost-of-service study will be
used to determine fixed cost,s for purposes of the fixed-cost
adjustment (FCA) mechanism until such tj-me as the Commission
approves a different cost-of-service study." P. 4, Order
No. 32425. Nothing suggests that the signing parties
intended that the Company use the cost-of-servj-ce study to
redesign base rates for any Idaho Power customers before t,he
next general rate case.
O. Does Staff believe the Company's class cost-of-
service study accurately reflects the costs to serve net
metering customers?
cAsE NO. rPC-E-1,2-27
0s/1-o/!3
ELAM, M. (Di) 18
STAFF
349
l-
2
3
4
5
6
7
I
9
10
11
l2
13
L4
15
16
77
l_8
L9
20
2t
22
23
24
25
A. No. By using the class cost-of-service study to
develop its base rate proposal, the Company assumes its
costs to serve net metering customers and standard service
customers are the same. In reality, the cost to serve net
metering customers depends on weather conditions, the type
of generation customers have, and their overall usage
characteristj-cs. So, net metering customers may use less
energy durlng high priced periods and may contribute less to
peak than the Company's standard service customers. The
Company cannot adequately justify net meterlng customers
having different rates from the rest of the class unless the
Company more specifically evaluates the costs to serve net
metering customers. The Company cannot s j-mpIy use the cost.-
of-service study for the entire residential c1ass.
O. Please summarize Staff 's opposition to t,he
Company's proposed base rate change for net metering
customers.
A. Staff opposes the base rate change for the
following reasons:
o The proposal singles out a smalI group of
customers when the same problem exists for a much
larger group within the c1ass.
o The potential impact of net metering on the rest
of customers within the class is de minimis, and
cAsE NO. rPC-E-1-2-27
05 / 1-o /1-3
ELAM, M. (Oi1 t9
STAFF
350
L
2
3
4
5
5
7
I
9
L0
L1
L2
l-3
L4
15
L6
L7
t_8
t-9
20
2t
22
23
24
25
may be less than a rounding error given the $409
million revenue requirement of the residential
c1ass.
o Contrary to Mat,t Larkin's testimony, the proposal
does not impact, standard service customers, and
consequently does nothing to address the potential
ineguity between net metering customers and
standard servi-ce customers.
o The proposal improperly causes large standard
service customers to inappropriately migrate to
the new net metering schedules.
o The cost-of-service study used to develop rates
was not approved and does not represent the net
metering group whose rates the Company proposes to
change.
VI. Progran Cap
A. Why does the Company stil1 believe it needs a
program cap for its net meteri-ng program?
A. The Company believes "it is important to maintain
a capacity limit to al1ow the Company and other stakeholders
to evaluate this service as it expands." P. 13, Larkin
testimony.
O. Does Staff belj-eve it is necessary to have a
Program Cap?
A. Yes. Even though the Company ls free to file an
cAsE NO. IPC-E-12-27
os / 1,0 /L3
ELAM, M. (Di) 20
STAFF
351
1
2
3
4
5
6
7
I
9
l_0
Ll_
L2
13
1,4
15
L6
L7
l_8
L9
20
21,
22
23
24
25
application to change the program anytime, it is in
everyone's interest to establish a check point to reevaluate
the program.
A. Why does Staff believe a cap is in the interest, of
everyone involved with net metering?
A. Similar to the reason DSM Programs are regularly
evaluated, the cap simply allows the Company an opport,unity
to evaluate impacts to its system, review rates, review
program costs and benefits, and provides an opportunlty to
evaluate the impact of net metering generation on non-
particlpants. Both the Company and the Commission are
interested in ensuring that utility programs do not harm
non-participating customers,' theref ore Staf f supports the
Company's proposed 5.8 MW cap. Staff believes a reasonable
cap is even more important given the program's exponential
growth shown on the graph below:
CASE NO. IPC-E-L2-270s/to/13 Er3M, M. (Di) 2L
STAFF
352
1
2
3
4
5
5
7
8
9
10
l- l_
t2
t_3
a4
L5
L6
1-7
18
19
20
2L
22
23
24
25
Cumulative lnstalled Net Metering Capacity
Rr, 0.9751
3000
2500
2000
3 lsoox
1 000
500
0
,"&".e ".""""t" r"t"r$ ".&""e r*" "d)rdl
It is impossible to predict how quickly the program will
grow moving forward, but Staff believes the proposed cap
aIlows room for growth. Assuming all new net metering
cusEomers were 7 kW in size, which is the average generation
capacity of current residential and sma11 general service
customers, the Company's proposed 5.8 MW cap would allow an
extra 4l-4 customers to participate. ff new customers under
Schedule 84 were 100 kW in size, the cap would a1Iow an
exLra 29 customers to participate.
O. Has Staff looked into the program caps offered by
utilities in other states?
A. Yes. But it is difficult to compare Ehe program
caps for utilities j-n other states to Idaho Power's program.
Each utility may have unique eligibllity reguirements, ways
of defining "avoided cost, " approaches to determining cost-
Ilnstalled Capacity
-
Expon. (tnstalled capacity)
ELAM, M. (Di) 22
STAFF
CASE NO. IPC-E-12-27
os/1"o/t3
353
L
2
3
4
5
6
7
8
9
10
1L
L2
13
t4
l_5
t5
'J,7
L8
1,9
20
2t
22
23
24
25
of-service, and goals for designing rates. In addition,
some states may not have options other than net metering to
allow customer-owned generation to be sold to the utility.
Idaho, for example, has other options such as PURPA and
Schedule 85 (energy sales at market-based tariff rates) thaE
may not exist in other states.
O. Did Staff consider the impact of a cap on future
net metering customers, and the installers of self-
generation equipment?
A. Yes. Staff understands that certainty is
something net meterj-ng customers' value when evaluating the
economics of their installaEion, and Staff also understands
that it is import,ant to process cases associated with the
program cap quickly to eliminate uncertainty around
installers' businesses. However, a cap would not
necessarily limit the demand for new net metering
installations, or cause uncertainty around j.nstallers'
businesses. Potentj-a1 net metering customers will evaluate
the economics of their investments gj-ven the best
information available at the time, similar to someone
deciding whether to upgrade their furnace or install a
tankless water heater. It is also unlikely the cap creates
a 1eve1 of uncertainty that will halt the number of
inst,allations. For example, in this case, the Company took
into accounE "pending applications and the 1evel of growt,h
CASE NO. IPC-E-L2-27
05/Lo/13
ELAM, M. (Di) 23
STAFF
354
L
2
3
4
5
6
7
I
9
10
l-L
1,2
t_3
t4
L5
L6
L7
t_8
t9
20
2t
22
23
24
25
the Company has experj-enced over the last two years," and
filed its Application six months before it expected to reach
the 2.9 MW capacity limit. P. 1-2, Larkin testimony.
Furthermore, in order to prevent refusal of new applications
for net metering service while this case is processed, the
Commission issued a t,emporary waiver on the limit of the net
metering capacity until a final Order is lssued in the
proceeding. P. 4-5, Order No. 327L5.
VII. Exceas Net Energy
O. Please explain how the Excess Net Energy credit is
currently calculated.
A. Excess net energy is credited the same way as
consumption, according to t,he seasonal tiered billing
structure of the rate schedule. Consider, for example, a
residential customer who generates 2500 kWh more than what
they consume in .fu1y. The financial credit would be based
on the followi-ng calculation:
800 kWh at $.029+28 = i 62.74
1200 kWh at $.095788 = $114.95s00 kwh at $.l-15L56 = $ 57.58Total Financial Credit = $235.27
O. Does Staff support t.he Company's proposed
treatment of excess net energy?
A. No. The Company proposes two major changes.
First, it proposes makj-ng the excess net energy doIlar
credit a kWh carryover instead of a financial carryover
CASE NO. IPC-E-L2-27os/Lo/t3 EI,AM, M. (Di) 24
STAFF
35s
1
2
'3
4
5
6
7
8
9
L0
11
1"2
13
t4
15
t6
l7
18
19
20
2t
22
23
24
25
based on retail rates. Second, the Company proposes that
the accrued kWh excess net energy be forfeited each
December.
O. Why does the Company propose making the Excess Net
Energy credlt a kWh credit instead of a fj-nancial credit?
A. According to the Company, its proposed treatment
of excess net energy resolves a FERC compliance issue
associated with issuing financial payments.
O. Does Staff believe there is another way to address
the Company' s concerns?
A. Yes. Staff believes the Company can continue
crediting cusLomers on a financj-al basis without ever
issuing checks. It appears that utilities in other states
have a similar approach.
0. Does Staff believe 1t would be administratively
burdensome for the Company to keep track of financial
credits instead of kWh credits?
A. No. The Company already calculates a financial
credit under j-ts current practice. The Company only issues
a check if the customer requests it and the credit is over
$20; otherwise the Company calculates a fj-nancial credit to
carry forward. Therefore, from an administratj-ve
standpoint, it is reasonable for the Company to continue
tracking fj-nancial credits, the only difference being that
cAsE NO. rPC-E-12-2"1os/to/t3 ELAM, M. (Di) 25
STAFF
356
1
2
3
4
5
6
7
8
9
10
11
t2
13
L4
L5
16
t7
18
t_9
20
21,
22
23
24
25
it will no longer lssue checks upon a customer's reguest if
the credit is over $20.
O. Does the Company's proposal to make excess net
energy a kWh carryover insEead of a financial carryover
differentiate the seasonal value of excess net energy?
A. No. The Company's proposal treat,s every kWh
generated the same, regardless of the season when it was
generated. Even though Ehe summer rates for residential
customers are higher than the non-summer rates, all excess
net energy is treated eguaIIy.
O. Does the Company design its retaj-l rates to
reflecE the seasonal differences in providing service?
A. Yes. When the Company designed its rates j-n the
last general rate case, Case No. IPC-E-l-1-08, it clearly
identified the seasonal differences in providing service.
The same principles should be applied when assi-gnj-ng value
to excess net energy for net meterj-ng customers.
O. Does a fj-nancial carryover based on retail rates
capture the seasonal differences in t,he value of excess net
energy?
A. Yes. For example, customers who generate excess
neE energy during the summer will receive a larger fj,nancial
credit than those who generate an equal amount of excess net
energy during the non-summer.
CASE NO. IPC-E-L2.27
os/to /L3
ELAM, M. (Di) 26
STAFF
357
l-
2
3
4
5
6
7
8
9
l-0
Ll_
t2
13
L4
l-5
l-5
17
18
l_9
20
2t
22
23
24
25
O. Are there import.ant obj ectives achieved by
capturing the seasonal differences in the rate paid for
excess net energy?
A. Yes. Two important price signals are sent if the
value of excess net energy reflects the seasonaL differences
in rates. Flrst, it improves the economics for facilit,ies
that generate during the summer months when rates are
higher, conseqluently encouraging new net metering customers
to invest in resources that generate when it costs the
utility more to provide service. Second, it encourages
customers to reduce usage during the summer months when
excess net energy is valued at the higher price,
conseqfuently increasing the potentj-aI credit used to offset
consumption during perlods of Iow generatj-on. Both of these
objectives a11ow the Company to use more of its current
resources to meet future summer load growth.
0. How does Staff propose the Company treat excess
generation moving forward?
A. Similar to the current, program, Staff proposes
customers be credited at the retail rate and allowed to
accumulate the credits from excess net energy indefinitely.
But Idaho Power should never reconcile the excess net energy
balance with payments.
CASE NO. IPC-E-l.2-27os/to/13 ELAM, M. (Di) 27
STAFF
3sB
1
2
3
4
5
6
7
8
9
l_0
l_1
t2
13
1,4
15
l_5
L7
L8
19
20
21,
22
23
24
25
O. When the customer discontinues service, does Staff
propose any remaining balance of excess net energy be
forfeited?
A. Yes.
O. P1ease explaj-n Schedule 84 and how Staff proposes
to value net, excess energy?
A. Schedule 84, Customer Energy Production Net
MeE,ering, is designed for net metering cusEomers who are not
served under Schedules 1, 4, 5 and 7. Similar to Schedules
1 and 7, Staff proposes excess net energy be credited at the
retaj-I energy rates and that the credit be allowed to
accumulate indefinit,ely. This approach is easy for
customers to understand, and is reasonable for the Company
since it will never reconcile the excess net energy credj-t.s
with payments.
O. Does Staff believe it is necessary to limit the
benefits of the accrued credi-ts to a certain timeframe from
the date it, was generated?
A. No. Because the purpose of neE metering is to
aIlow customers to offset their usage, net metering
customers should theoretically not accrue substantial
credits over t,he long term. Customers who do accumulate
substantial credj-ts should arguably not be on the net
met,ering tariff but should instead be on Schedule 86,
Cogeneration and Sma11 Power Production Non-Firm Energy,
CASE NO. IPC-E-L2-270s/to/L3 ELAM, M. (Di) 28
STAFF
3s9
1
2
3
4
5
6
7
I
9
10
11
1,2
13
l4
15
16
l7
18
19
20
2L
22
23
24
25
which is the tariff established for non-firm generation.
Under Schedule 85, customers are paid for all of their
generation on a monthly basis.
O. Does the Company's proposal that, excess net energy
be forfeited each December accommodate all tlnpes of
generation?
A. No. Depending on the ty;le of self -generat,ion, the
amount of excess net energy available from season to season
varies by generation t)pe. For example, customers with
solar generation may be impacted the most by the Company's
proposal since excess net energy is typically generated in
the summer and the credi.ts used in the late fa11 and wlnter
when solar generation is lower.
O. Are there other potential benefits to customers by
allowing credits to be ro1Ied over from year to year?
A. Yes. Customers are better able to use their
credits to ac'commodat,e variations in usage and changes in
weather conditions or maintenance that might impact their
generation from year to year.
A. Does Staff believe there are reasonable approaches
using a forfeit period, but sti11 allowing customers
flexibility in the way Excess Net Energy credits are used
from year to year?
A. Yes. But regardless of how many years a customer
has before their credits might be forfej-ted, each customer
cAsE NO. IPC-E-1,2-27
0s/ao/13 ELAM, M. (Dl) 29
STAFF
360
t-
2
3
4
5
6
7
8
9
10
11
12
13
L4
15
1,5
L7
l-8
19
20
2L
22
23
24
25
should have the opportunity to select their anniversary
period given their generation tlrpe and usage
characteristics .
O. Does Staff believe the Company needs to encourage
customers to right-size net metering systems?
A. Yes. After reviewing net metering customers'
generation data, it appears as though t,here are a handful of
customers who may be using the net metering tariff as an
avenue to receive more favorable rates for their generat,ion
when compared to Schedule 86, Cogeneration and Sma11 Power
Productj"on Non-Firm Energy. Looking at the resj-dential net
metering customers who generated enough annual excess net
energy to offset their consumption for the year, I
discovered one customer who made up 54* of the remaining
excess net energy for the year, and five customers who made
up 76* of the annual excess net energy remaining for the
year. Similarly, I dj-scovered three net metering customers
who made up 85? of the sma1I general service excess net
energy remaining at the end of the year.
A. Do you believe Staff's proposal encourages
customers to right,-size their net metering systems?
A. Yes. Since the Company never reconcj-les the
excess
excess
energy balance with payments and any balance of
energy is forfeited when the customer
net
net
CASE NO. IPC-E-1,2-27
os/Lo/L3 ELAM, M. (Di) 30
STAFF
t_
2
3
4
5
5
7
I
9
10
11
t2
13
'J,4
15
15
L7
18
1"9
20
2L
22
23
24
25
discontinues servj-ce, Staff's proposal discourages customers
f rom generat j-ng more than what they may use.
O. Does Staff 's proposal impact net met,ering
customers who select Idaho Power's Budget Pay option?
A. Yes. If net metering customers on Budget Pay have
a credit remaini-ng at the end of their anniversary period,
they will no longer be able to request, a check. Instead the
Company would re-estimate the customer's monthly bill and
the credit would be carried forward.
O. How many net metering customers have currently
selected the Budget Pay opt,ion?
A. According to the Company's response to Staff,s
Production Request No. 14, there are currently six
residentj-a1 net metering customers enrolled. Two of these
customers have been enrolled for less than l-2 months and
there are no non-resldential customers currently enro11ed.
A. Does this conclude your direct testimony in this
proceeding?
A. Yes, it does.
cAsE NO. rPC-E-t2-2705/to/13 ELAM, M. (Di) 31
STAFF
362
(The foll-owing proceedings were had in
open hearing. )
MR. KLEIN: Thank you. Nothing else.
COMMISSIONER SMITH: Thank you.
Mr. Hammond, do you have questi-ons?
MR. HAMMOND: I do not, Madam Chair.
COMMISSIONER SMITH: Mr. Mi]Ier.
MR. D. MILLER: .fust a few.
CROSS-EXAM]NATION
BY MR. D. MILLER:
O. Good afternoon, Mr. El-am.
A. Good afternoon.
O. I just have one bone to pick with you: On
page 20 through 27 of your testi-mony, you support the Company's
proposal for a system-wide cap on net metering generation.
There may be others, but as I understand it, two main concerns
that Staff might want to look at woul-d be the effect of net
metering on nonparticipants, and the possibility of some effect
on electric system reliability?
A. WeII, I think on page 27, that l-ast paragraph
there, I kind of state what the issues are. But I think
primarily the issue, dt least the issue that Staff is trying to
address, is just an opportunity to basically reevaluate the
363
2
3
4
5
6
1
I
9
10
11
L2
13
L4
15
!6
t1
18
19
20
2t
22
23
24
25
HEDRICK COURT REPORT]NGP. O. BOX 518, BOTSE, rD
ELAM (X)
Staff83701
1
2
3
4
5
6
1
B
9
10
11
t2
13
L4
15
L6
L7
18
19
20
2t
22
23
24
25
HEDRTCK COURT REPORTING
P. O. BOX 5'18 , BOTSE, f D
ELAM (X)
Staff
whole net metering program, both what types of generation
sources are currentl-y participating, what the l-oads l-ook 1ike,
and of course the impact on nonpartici-pants.
0. WeIl, oh the questJ-on of the effect on
nonpartj-cipants, oD page 1 of your testimony, do you cal-cuLate
the potential inequities that might exist at the 5. B megawatt
cap level-?
A. f do. On lines 15 through 79, f say: If the
program cap were increased to 5. B megawatts as Idaho Power
proposes, the additional potential- inequity caused by
unrecovered distribution and customer-related costs may double,
or be approximately $1631 000 for the residential- cfass on an
annual- basis.
O. If you have already calcu1ated the effect at 5.8
and have already concluded that it's insignificant, do you see
a need for a cap to again do these calculations?
A. We11, I think the program can change over time,
and I think that's really the reason that that estimate could
be off in the future.
O. At 5.8 megawatts, what, ds a percentage of Idaho
Power system peak generation, woul-d net metering be?
A. Subject to check, I bel-ieve it's just over one
percent.
O. Say it again.
A. Subject to check, I bel-ieve it's just over one
364
83701
1
2
3
4
5
6
7
I
9
10
11
L2
13
L4
15
L6
!1
18
t9
20
27
22
23
24
25
HEDRICK COURT REPORTTNG
P. O. BOX 578, BOTSE, rD
ELAM (x)
Staff
percent.
a. Just over one percent?
A. Correct.
A. Is there any reason to think that net metering
systems comprising about one percent of total- system generation
woul-d be large enough to raise any issues of system
rel-iability?
A. You know, f 'm not an engineer
O. Sure.
A. so I don't think I can rea11y answer that.
0. Intuitively, one would doubt it, wouldn't you?
A. Like I said, I'm not an engineer, so I canrt
answer that.
O. Wel-l-, I don't mean to be critical here, Mr. Elam.
I don't mean to be suggesting that the Commission should not
monitor programs that it authorized.
A. Sure.
O. But as you're thinking about a monitoring
program, would it be sensibl-e to devise a monitoring program
that is proportional- to the size of the potentj-al- problems
you're monitoring?
A. We1l, I thlnk with, for example, DSM programs,
regardless of how smal-l the program is, the Company submits an
annual DSM report, and I think on the supply slde we review the
Company's supply side resources every two years. So I think
365
83701
1
2
3
4
tr
6
7
B
9
10
11
L2
13
74
15
16
l7
1B
1,9
20
2t
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 5'78, BOTSE, rD
ELAM (X)
Staff
this net metering program kind of falls in l-ine with those
reports and filings.
O. Should the, do you think, the level- of monitoring
take into account the cost that it i-mposes on al-l- of the
parties that are affected?
A. You know, I think that it's our job here at the
Commission to evaluate the costs cost to customers
regardless of how sma11.
O. Without going into detail-, would you agree it's
fairly obvious that the cost of this cap proceeding has been
significant to many parties?
A. Sure.
A. Do you think there are other means by which the
Commj-ssion cou1d fulfi11 its monitorj-ng duties, such as
requiring the filing of annual reports?
A. WeII, I think the Commission certainly could do
that if they thought that they could get the information that
they needed out of that report.
O. So that woul-d be one way to ful-fil-l- the
Commission's monitoring function without the necessity of a
cap.
Could the Commission direct that as a perhaps
indirect way of monitoring the net metering program, that the
parties who participate in the IRP proceeding consider the net
metering program in that context?
366
83701
1
2
3
4
5
6
7
I
9
10
11
t2
13
1,4
15
t6
77
1B
t9
20
2t
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, ID
ELAM (x)
Staff
A. I'm sorry, wj-ll you restate the question?
O. Sure. As another way of fulfiJ-Iing your
monitoring rol-e, could the Commj-ssj,on, do you think, suggest
that the partj-es who participate in the IRP process follow and
monitor the net metering program inside of that process?
A. I think that it can certainly be eval-uated in the
IRP process, but I think that it's j-mportant that all parties
be abl-e to see the results of any kind of report or
cost-effectj-veness study that would be rel-ated to the cap. And
I know that there are only certain participants in the IRP
process and to the extent someone is not al-l-owed to necessarily
have a say in the IRP process, they may want a say in the net
metering program in the way that it moves forward.
0. Al-1 right. But you would agree that at the
Commission's discretion, it could fulfill- its monitoring rol-es
in ways that didn't invol-ve a cap. Right?
A. Potentially.
O. A11 right.
MR. D. MILLER: Thank you, Madam Chairman.
COMMISSIONER SMITH: Thank you, Mr. Miller.
Mr. Richardson.
MR. RICHARDSON: I have no questions, Madam
Chair.
COMMTSSIONER SMITH: Mr. Otto.
MR. OTTO: I do have a few questions.
361
83701
CROSS-EXAMINATION
BY MR. OTTO:
O. Mr. E1am, wou1d you agree that net metering is
real-Iy about customers offsetting their own loads and not
selling excess energy to the Company -- or t selling generation
to the Company?
A. I woul-d agree that that's the purpose of net
metering.
O. And wou1d you agree that the Company and the
Commlssion has a method for val-uing the offsetting of
customerst own l-oads?
A. Are you talking about Schedule 85?
0. Wel-l-r no, because that refers to people selling
generation into the system. I'm talking about how do you value
a customer reducj-ng their own consumpti-on? fs there a method
for that?
A. Like demand response, is that what you're talking
about r or energy efficiency? There woul-d be a method for that
in DSM programs.
0. You also state on page l-etrs see, page lL,
it's lines 14 through L6, that this idea of net generation is
provided by customers to Idaho Power on a nonfirm basis. But
earl-ier in your testimony, on page 8, you cal-cul-ate that only
maybe tA percent of customers actually provide net generation.
368
3
4
tr
6
7
I
9
10
11
1,2
13
!4
15
L6
l7
1B
1,9
20
2L
22
z5
24
25
HEDRICK COURT
P. O. BOX 578,
REPORT]NG
BOISE, ID
ELAM (X)
Staff83701
1
2
3
4
R
6
1
B
9
10
11
72
13
L4
15
t6
L7
1B
19
20
27
22
23
24
25
HEDRTCK COURT REPORTING
P. O. BOX 578, BOTSE, rD
ELAM (X)
Staff
Is that
A. Yeah, only 74 percent based on the Production
Requests ex, the Responses to the Production Requests from
the Company for actual 2012 l-oads, only 1,4 percent offset thei-r
annual usage.
O. So when we're talking about net metering, isn't
it more accurate to really focus on how it impacts how a
customer draws from the system, not necessarily how they push
power into the system?
A. WeI1, I think it's important to focus on both.
O. Sure. But the majority of participants never
actually push power into the system and the whole point of net
metering is about customers offsetting their own loads, so the
primary focus, would you agree, should be how a customer draws
from the system?
A. Yes, f wou1d agree with that, with the caveat
that you know that that 14 percent coul-d change over time.
O. Sure. And wou1d you agree that customer loads
are not firm, they can change due to weather, lifestyle,
products; and that customers have no obligation to purchase
some firm amount of power from the Company?
A. Customers do not have an obligation to purchase
power from the Company, no.
O. So the idea of firmness isn't control-l-ing?
MR. KLEIN: Objectj-on: Vague.
369
83701
1
2
3
4
5
6
7
B
9
10
11
t2
13
l4
15
t6
77
1B
79
20
27
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 518, BOTSE, ID
ELAM (X)
Staff
O. BY MR. OTTO: When considering net fair
enough.
COMMISSIONER SMITH: I'm sorry, Mr. K1eln, I
didn't understand your objection.
MR. KLEIN: I said objection: Vague.
COMMISSIONER SMITH: Vague. Vague, Mr. Otto.
What do you say?
MR. OTTO: An interesting objectJ-on, but I will-
reform the question.
COMMISSIONER SMITH: Thank you.
O. BY MR. OTTO: When considering net metering
A. Sure.
O. And we have agreed that, A, customers don't have
an obligation, you know, to purchase some firm amount of power.
So in looklng at net metering, this idea of fj-rmness is not the
controlli-ng characteristic?
A. I think firm, you know, Greg Said kind of defines
it in his rebuttal testj-mony, but in my mind, firm is something
that the Company can rely on. And sj-nce usage changes on a
regular basis, usage by net meterj-ng customers will change
given weather and several other factors, and generation can
change, you know, I woul-d consider net metering not firm, if
thatrs the question that you're getting at.
O. ft's not the question I'm getting at but it is an
answer to the question I asked, so let me ask it this way:
370
83701
1
2
3
4
trJ
6
1
10
11
1,2
13
74
15
76
71
1B
19
20
2t
22
23
24
25
HEDRICK COURT
P. O. BOX 518,
REPORTING
BOISE, ID
ELAM (X)
Staff
So if net metering is about customers reducing
their own consumption, what we're realIy talking about is how
net metering impacts the Ioad forecast, not necessarily the
need for the Company to go out and acquire new generation?
A. Is that a question? Can you restate it?
O. Sure. If net metering is about customers
offsettj-ng their own consumption, does that impact the
Company' s l-oad f orecast ?
A. I would think that in a Company's l-oad forecast
that, yes, they need to anticipate how much power is
potentially generated from net metering customers.
0. Would they not also have to anticipate how much
power is not demanded from those customers because they are
se1 f- supplying ?
A. Yes, but to the extent that they're not
generating, the Company still- has to meet their load. So, y€sr
the Company would have to make some estj-mate as to whether or
not some estimate of What that net metering customer's peak
demand is.
0. Can you point to anything in the record that
shows that a net metering customer's consumptj-on or production
wildly fl-uctuates throughout the year r or year to year?
A. WeI1, I think it depends on the resource.
Certainly, different resources tend to produce during different
times or generate during different times of the year, so to the
371
83701
1
2
3
4
q
6
7
B
9
10
11
t2
13
t4
15
16
L7
1B
19
20
27
22
23
24
25
HEDRICK COURT REPORTINGP. O. BOX 578, BOISE, rD
ELAM (X)
Staff
extent a customer has or, net metering customers have used
different resources to generate, you're going to see the excess
generation occur during different peri-ods depending on those
same customerst usage patterns.
O. Sure. But would you agree an individual- customer
doesn't have a wide variatlon in their annual- consumption year
to year, an indj-vldual net metering customer?
A. I think --
O. Let me ask it this way to be clear: Is there
anythi-ng in the record that shows an individual net metering
customer has a wide variatj-on in their consumption or
generation year to year?
A. Yes, I think there were some Responses to
Production Requests asked of the Company that woul-d show that
customers with different generation types certaj-nly have
different profiles throughout the year.
0. Sure. We agree that the types are di-fferent.
I'm just aski-ng about an indivi-dual customer regardless of
type.
A. Are you talking only their usage?
O. Usage and generation, both.
A. Usage and generatj-on, both.
O. The balance, the net.
A. I would say that the net would vary by individual
customer.
372
83701
1
2
3
4
5
6
1
B
9
10
11
t2
13
L4
15
T6
l7
18
t9
20
2L
22
23
24
25
HEDRICK COURT
P. O. BOX 518,
REPORTING
BOISE, ID
ELAM (X)
Staff
O. That's interesting. One l-ast question: You
stated on page 23, l-ines 15 through 18, that you don't believe
that a cap wouJ-d cause any uncertainty in the lnstal-Ier
business. Did you actually tal-k to any install-ers before
actually making that statement?
A. Are you what line and page are you referring
to?
O. Page 23.
A. Okay.
0. It's l-ines 15 through 18. You have a sentence
there.
A. So the way that sentence reads 1s: However, a
cap would not necessarily limit the demand for new net metering
instal-lations r ox cause uncertainty around install-ers'
businesses.
O. And my question to you is
A. So, no
O. did you tal-k to any instal-Iers before you made
that statement?
A. No, f didnrt. That statement is just basically
saying that if the Company comes in before it meets the cap as
it did j-n this case, I believe that it wouldn't necessarJ-Iy
limit the demand for new net metering instal-latlons.
O. Have you ever worked for a net metering
installing company?
373
83701
1
2
3
4
5
6
1
B
9
10
11
L2
13
t4
15
L6
L1
1B
79
20
21_
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 5'7I , BOTSE, f D
ELAM (X)
Staff
A. I haven't.
0. And you didn't talk to any before making that
statement ?
A. No.
MR. OTTO: That's all I have.
COMMISSIONER SMITH: Mister oh, the Company.
CROSS-EXAMINATION
BY MS. HILTON:
O. Mr. EIam, are you familiar with the position that
Staff took in the IPC-E-01-39 net metering case?
A. I am.
A. And that position is that if and when there's 2.9
megawatts of net metering on Idaho Power's system, a more
accurate cost-based rate shoul-d be establ-ished. Is that
correct?
A. Is that the position that we took in that case?
Yes.
O. Yes. And isn't that what the Company's proposal
does ?
A. Yeah. I thi-nk in that case the concern was fixed
cost recovery, and I think since then we've implemented the
fixed cost adjustment mechanj-sm, which f think col-lects some of
those fixed costs that were a concern in that case.
374
83701
1
2
3
4
5
6
7
B
9
10
11
t2
13
l4
15
16
t1
1B
IY
20
2t
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, rD
ELAM (X)
Staff
And in that case there were al-so only a few net
metering customers, and since then the program has grown and
we've had a chance to eval-uate kind of how customers use energy
and how they generate energy, or the net of the two.
O. So you, on page 4 of your testimony, you state
that net metering customers are similarly situated to other
customers wj-thin the smal-l- general service and residential
cl-asses. Is that correct?
A. Thatfs correct.
O. So then wou.l-d it be fair to say that a class of
customers contain similarly-situated customers?
A. The residentj-al class, yeah, does contain
simj-l-arl-y-situated customers as the net meterj-ng customer.
O. So do other customers wj-thin those cl-asses
produce power, offset their power usage, or requj-re backup
service ?
A. WeIl, they certainly invest in energy effj-ciency
j-nvestments that woul-d reduce their energy consumption, and as
I said earlier in regards to I think it was Ben Otto's
question, only L4 percent of the customers are offsetting their
annual excess ot r thej-r annua1 usage.
O. But the way the system is used is different. fs
that correct?
A. I think that that a customer that has a cabin
or second home is using the system in a same way as a net
375
83701
1
2
3
4
5
6
'7
I
9
10
11
t2
13
74
15
t6
t1
1B
!9
20
21
22
23
24
25
HEDR]CK COURT REPORT]NG
P. O. BOX 518, BOTSE, fD
ELAM (X)
Staff
metering customer. If they don't consume energy throughout the
year, they will- not cover their fixed costs and will- pay the
minimum amount each month, similar to a net metering customer
not recovering not covering their fixed costs.
O. So it sounds, to me, like that focuses on the end
result, and the questJ-on that I'm asking is is the use of the
system throughout the month different?
A. WeI1, I think at times a net meterj-ng customer
would help the Util-ity by generating electrj-ci-ty and
potentially contributing energy to what would be a more costly
period for the Utility to provide service.
a. So turning to page 7 of your testj-mony, you
testify that the dollar impact of this is insignificant. So
how does this reasoning
And you identify it as an identified inequlty.
Is that correct?
A. Which l-ines are you referring to?
O. Irm looking at l-ine 19 and 20.
A. What was the questlon one more time?
O. So you talk about this identified inequity.
Thatrs correct. So how does the reasoning of only addressing
problems with, you know, larger monetary impacts al-l-ow for a
service that's sustainable as it grows?
A. We1I, I don't think I'm necessarily qualifying
this proposal because it doesnrt have a big impact, but I think
316
83701
o 1
2
3
4
5
6
7
B
9
10
11
t2
13
l4
15
76
l7
18
L9
20
2t
22
23
24
25
HEDRICK COURTP. O. BOX 578,
REPORTING
BOISE, ID
ELAM (Com)
Staff
the customer certainl-y has other simil-arIy-situated customers
that don't cover more of their fixed costs than what the
Company has identified as the impact in this case to standard
service customers.
O. It just seems, to me, that it's advocati-ng
inaccuracy because the J-mpacts are small now and that that
doesn't provide for growth, but am I understanding your
testimony correctly?
A. I mean, the impact is certainly small-, but that's
not the only reason that Staff adopted the approach that it did
in this case.
MS. HfLTON: f have no further questions. Thank
you.
COMMISSIONER SMITH: Thank you.
Do we have questions from the Commission?
COMMISSIONER REDFORD: No.
COMM]SSIONER KJELLANDER: NO.
COMMISSIONER SMfTH: Oh, good. It's my turn.
EXAMINATION
BY COMMISSIONER SMITH:
O. Mr. EIam, I always l-ike to take these
opportunities because I think it's useful to step back and
thing about policy when 1t, you know, kind of stares you in the
371
83701
1
2
3
4
5
6
1
I
9
10
11
L2
13
74
15
t6
l1
1B
1,9
20
21
22
23
24
25
HEDRICK COURT
P. O. BOX 578,
REPORT]NG
BOISE, ID
ELAM (Com)
Staff
f ace. And, ordinari-ly, this whol-e discussion of the recovery
of fixed cost comes up in rate design where we're trying to
split the recovery of an amount of revenue between customer
charges and commodity charges and -- you know, and it's quite a
debate and a struggle because there is one theory that says al-l-
fixed costs shoul-d be recovered in a fixed charge, and of
course customers don't like customer charges because they
bel-ieve they don't see what they're paying for. You know,
the l-j-ne is already there; why should I keep paying for it?
So I guess do you think that, you know, this
proceeding has exposed that issue again, and are we to a point
where, you know, we need to think about it again in terms of
everyone's rates? If the proportion of the fixed costs that
are being recovered in the commodity is distorting the cost
recovery and impeding the deployment of resources that would be
beneficial, is now the time to open this Pandora's box?
A.think that it's definitely worth looking at the
in combination with al-l- of the other charges in
meanr ds you know, historically, a lower
has kind of encouraged energy efficiency
those fixed costs are coll-ected in the energy
customer charge
a rate case. I
customer charge
because more of
component of rates, and I think it's definitely an issue that
you need to l-ook at when you're designing rates as to how high
that customer charge needs to be and by how much you want to
incent customers to lower their usage.
378
83701
1
2
3
4
5
6
7
B
9
10
11
t2
13
L4
15
t6
77
1B
79
20
2t
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 5'78, BOTSE, rD
ELAM (Com)
Staff
O. So and of course then an unanswerabl-e question
is would a commj-ssion that actually implemented that kind of
policy survive?
VOICES: (Laughter. )
O. BY COMMISSIONER SMITH: You donrt
And to the extent that we're already allowing
meters to run backwards, which in my mind is the same thing as
paying the retail- rate, it's just making the problem worse
because they're not paying just the price of the energy,
they're afso getting back -- I mean, it's just exacerbating the
cross-subsidy. Do you agree?
A. To a yes. I mean, to a certain extent I
agree, but I think at the same tj-me itrs important to keep in
perspective that the Company al-so pays ot r customers al-so
pay for the Company to implement energy efficiency programs at
the tune of $2 mil-l-ion in 20L2, accordj-ng to the annual- DSM
report. I think it's important to also keep that in mind when
we're thinking about the net metering program.
O. Okay. That's fair.
COMMISSIONER SMITH: Redirect, Mr. Klein.
MR. KLEfN: Thank you.
319
83701
REDIRECT EXAMINATION
BY MR. KLEIN:
O. Foll-owing up on Commj-ssioner Smithts questioning,
Mr. E1am, do you think it's appropriate to address thls issue
in this case for only 385 net metering customers?
A. No, I don't.
O. And why is that?
A. You know, as I said earJ-ler, I just think there
are other similarl-y-situated customers withj-n the residential
class that the Company doesnrt recover its fixed cost from, and
I think that if you are going to isolate this subset of net
metering customers and say that standard service customers are
subsidizing them, I think that there are a lot of other
subsidies that go on within the residential- cl-ass that are
going unaddressed that may be -- may have a higher dol-l-ar
impact than what's been incl-uded in this filing.
COMMISSfONER SMfTH: And that's why we cal-I them
cross-subsidies.
THE WITNESS: Cross-subsidies. Exactly.
MR. KLEIN: Thank you.
COMMISSIONER SMITH: Thank you for your he1p,
Mr. Elam.
(The witness left the stand. )
COMMISSIONER SMITH : Well, l-et ' s take a
380
2
3
4
5
6
1
B
9
10
l-1
72
13
t4
15
t6
t7
1B
!9
20
2t
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, fD
ELAM (Di)
Staff83701
1
2
3
4
5
6
7
I
9
10
11
L2
13
t4
15
1,6
L7
18
19
20
2t
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
GASSNER (Di)
City of Boj-se
ten-minute break, and if Mr. Hammond's witness isn't back we're
going to start with oh, she's here. Okay. Then let's take
her and then we'll take our break.
MR. HAMMOND: Thatrs fine with me. The City
would call Cece Gassner.
CECE GASSNER,
produced as a witness at the instance of the City of Boise,
being first duly sworn, was examined and testified as follows:
DIRECT EXAM]NATION
BY MR. HAMMOND:
0. Can you please state your name and spe11 your
l-ast name for the record?
A. Cece Gassner, G-A-S-S-N-E-R.
O. Can you please tel-l- us where you're employed and
in what capacity?
A. f'm employed by the Clty of Boise as the
assistant to the mayor for economic development.
O. Did you cause to be filed in this case prefiled
direct testimony on behal-f of the City of Boise?
A. r did.
O. Do you have any changes or correctj-ons to that
A. I do not.
381
83701
1
2
?
4
5
6
7
B
9
10
11
1,2
13
t4
15
L6
t7
18
19
20
2L
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 5'78, BOTSE, rD
GASSNER (Di)
City of Boise
O. testimony?
If you were asked those same questions today that
are contained in your prefiled testimony, would the answers to
those questions be the same?
A. Yes.
O. And they are true and correct, to the best of
your knowledge?
A. Yes.
MR. HAMMOND: There are no exhibits to Cece
Gassner's testimony. We'd ask if the testimony could be spread
upon the record as if read, and open up the witness for cross.
COMMISSIONER SMITH: Okay. Seeing no objection,
the prefi1ed testimony will be spread across the record as if
read.
(The following prefiled direct testimony
of Ms. Gassner is spread upon the record.)
382
83701
1 Q: Please state your name and business address.
2 A: My name is Cece Gassner, and my business address is 150 N. Capitol Blvd.,
3 Boise, Idaho 83702.
4 Q: On whose behalf are you submitting this pre-filed direct testimony?
5 A: I am submitting this on behalf of the City of Boise (the "City").
6 Q: By whom are you employed and in what capacity?
7 A: I am employed by the City of Boise, and my title is Assistant to the Mayor for
8 Economic Development. I have served in this capacity for nearly five years. My duties
9 include business retention and expansion within the City, as well as business attraction to
10 the City of Boise.
11 Q: Please describe your educational background.
t2 A: I have a Bachelor's of Science degree in biomedical engineering from Duke
13 University, Durham, North Carolina. I also have a Judicial Doctorate degree from
L4 Boston University, Boston, Massachusetts.
15 Q: Have you previously testilied in front of the Idaho Public Utilities
16 Commission (66PUC" or "(-'ommission")?
17 A: No, I have not. I clid serve as a deputy attorney general representing the
18 Commission from 2005 to 2007, but have not previously testified in a proceeding before
19 the Commission.
20 Q: What is the purpose of your testimony?
21. A: I am testifying to provide information related to the City of Boise's economic
22 development efforts, specifically as they relate to renewable errergy companies, and the
383
Gassner, Di I
City of lloise
t
2
3
4
5
6
7
8
9
10
11
12
13
L4
15
15
17
18
19
20
21
22
23
effects the changes to the net metering tariff, as proposed in the Application submitted by
Idaho Power Conrpany ("lPCo"), would likely have on those efforts.
Q:How does the renewable energy industry fit into the City's economic
development efforts?
A: The City considers the renewable energy industry to be important in its
economic development portfolio. For example, Southwest ldaho is an excellent location
for the use of solar photovoltaic cells for energy generation, and thus a great market for
those involved in the installation, repair and monitoring of solar panel arrays. In
addition, researchers at Boise State University and the Idaho National Laboratory are
actively studying a variety of renewable energy technologies and platforms. It would be
only natural for the research coming out of those institutions to be prototyped and
commercialized in and around Boise.
In fact, in September 2010, the City, working with Boise State University and
the Small Business Development Center, opened up an incubator housed in a City-owned
building - the Greenhouse - that has a preference for "green" and renewable energy
companies. We wanted to scnd a clear message that we believe this industry is a goocl fit
for our city, with our abundance ol- natural resources and strong commitment to
sustainability.
We were also very pleased to welcome Enphase Energy to Boise. They are
based in northern Calilbrnia, but needed a location for their customer service center and
chose Boise. This center provides highly technical customer support for their products,
which inclu<Jes the micro-inverters on solar panels for arrays on residential ancl
comnrercial bui ldings.
(iassner, Di 2
City of lloise
384
1 Q: What effect do you believe the proposal from IPCo in this matter would
2 have on economic development in the City?
3 A: I believe the proposal would have a deleterious effect on the City's economic
4 development, both in essentially shutting the doors of the businesses already housed in
5 Boise, as well as sending a negative message to businesses that are looking to expand to
6 new locations. In fact, we are already hearing from companies that install solar panel
7 systems that their business decreased dramatically almost immediately after the filing of
8 this Application.
9 As in just about any industry, when companies are looking for a location for an
10 expansion or relocation, they often are looking for a community that would serve as a
11 market for their products and/or services; that is, they want a place where the citizens
72 would also be customers. The rate design proposed in this Application would essentially
13 eliminate the development of solar energy generation through IPCo customers becoming
74 net metering customers. The market would likely hold at current levels (assuming those
15 customers maintain their systems) with no grouh.
16 Q: llave comp:rnies in the renewable energy intlrrstry consiclercd l]oise as a
L7 location option and decided not to loc:rte a facility here?
18 A: Yes. Solar City, one of the largest solar panel system installation companies in
19 the country, had Boise on its "short list" of places for a facility, which would have
20 brought approximately 400 jobs to Boise. During Solar City's site visit to Boise, the
2L representatives made close observation of the number of panels they saw on homes. In
22 the end, Solar City chose to locate that facility in [,as Vegas, Nevada, citing the larger
(iassner, l)i J
City of lloisc
38s
1 workforce available there, as well as the perception of a lack of a market in Boise for
2 their product.
3 Q: When did Solar City make their decision about the location of their
a facility?
5 A: While I cannot say exactly on which date the company made that decision, it
5 communicated that decision and their reasons therefore on or about January 15, 2013, to
7 the City's partners at the Boise Valley Economic Partnership, about six weeks after this
8 Application was filed.
9 Q: Is there anything else you would like to add?
10 A: The City of Boise believes that renewable energy sources are going to be the
11 main drivers of power in the future and we need to start preparing for that future today.
12 Our renewable energy industries were starting to show signs of promise and demonstrate
13 how they could be value added to our city's and our state's economy. Other states and
74 other countries are actively promoting this industry as what will help get our economy
L5 moving again, and are implementing smart policies and programs to help those industries
L6 grow rather than cut them off at the knees. We believe it would be a shame to adopt a
17 policy that would, in eff'ect, concede this industry not just to other states, but to other
18 countries.
19 Q: Does this conclude your testimony?
20 A: Yes, it does.
(iassner, Di 4
City of Boise
386
1
2
3
4
5
6
1
B
9
10
11
t2
13
T4
15
1,6
t7
1B
19
20
2L
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 5'7 B , BOTSE, rD
GASSNER (Di)
City of Boise
(The following proceedings were had in
open hearing. )
COMMISSIONER SMITH: Do you have questi-ons,
Mr. Mil-l-er?
MR. D. MILLER: No, I don't, thank you.
COMMISSIONER SMITH: Mr. Richardson.
MR. RICHARDSON: I have no questions,
Madam Chair.
COMMISSIONER SMITH: Mr. Otto.
MR. OTTO: No questions.
COMMISSIONER SMITH: Mr. Kl-ein.
MR. KLEfN: None.
COMMISSIONER SMITH: The Company.
MS. NORDSTROM: No questions.
COMMISSIONER SMITH: How about from the
Commissioners ?
COMMISSIONER KJELLANDER: NO.
COMMISSIONER REDFORD: No.
COMMISSIONER SMITH: Thank you.
MR. HAMMOND: You know, now is your chance with a
former PUC employeer so you've got to take it.
COMMTSSIONER SMITH: I ' l-l- pass .
(The witness l-eft the stand. )
COMMISSIONER SMITH: Does that concl-ude your
wJ-tnesses, Mr . Hammond?
387
83701
1
2
3
4
5
6
7
I
9
10
11
L2
13
t4
15
1,6
77
1B
19
20
2t
22
23
24
25
HEDRICK COURT REPORTTNG
P. O. BOX 578, BOTSE, rD
GASSNER (Di)
City of Boise
MR. HAMMOND: Yes, the City of Boise rests.
Thank you.
COMMISSIONER SMITH: Al-l- right. We are going to
take a break for ten minutes and then we'l-l come back. Thank
you.
(Recess. )
COMMISSIONER SMITH: The hearing wil-l- come to
order. We'l-I go back to the I assume the last witness left
i-s Mr. Said.
MS. NORDSTROM: Yes.
COMMISSIONER SMfTH: No one is disagreeing with
me. Yes, Ms. Nordstrom.
MS. NORDSTROM: Before Jul-ia calJ-s hj-m, mister
Commissioner Kjellander had asked for a net metering
installation numbers by residentlal and commercial- classes, and
we have prepared that data if you would like it.
COMMISSIONER SMITH: Al-l- right. We'11 be at ease
whil-e this gets passed out.
(Idaho Power Exhibit No. 9 was marked for
identification. )
COMMISSIONER SMITH: A11 right, Ms. Hilton.
MS. HILTON: Idaho Power calls Greg Said as its
next witness.
3BB
83701
1
2
3
4
5
6
1
8
9
10
11
72
13
l4
15
76
1_1
1B
L9
20
2t
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, rD
SAID (Di-Reb)
Idaho Power
GREGORY W. SAID,
produced as a rebuttal witness at the instance of Idaho Power
Company, being first duly sworn, was examined and testified as
follows:
DIRECT EXAMINATION
BY MS. H]LTON:
O. Pl-ease state your name and spe1l your l-ast name
for the record.
A. Gregory W. Said, S-A-I-D.
O. By whom are you employed and in what capacity?
A. I'm employed by Idaho Power Company as the vice
president of regulatory affairs.
O. Are you the same Greg Said that filed rebutta1
testimony on May 31, 2073?
A. Yes.
O. And do you have any corrections or changes to
your testimony?
A. I do: On page 14, Iine B -- again, page 74,
l-ine 8 -- there's a phrase "to non-Qualified." That should
read "from non-Qualifying. "
On l-ine 23 of the same page L4, "Qual-if j-ed"
should be "Qua1j-fying. "
On page 18, lj-ne Ll , the statement "differences
389
83701
1
2
3
4
5
6
1
I
9
10
11
L2
13
!4
15
76
t7
18
79
20
27
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
SAID (Di-Reb)
Idaho Power
and conditions" shoul-d read "di-fference" "differences in
conditions. " So, "and" shoul-d be "in. "
And on l-ine 18, the "nature pattern" -- "and
pattern of use" shoul-d read "nature and pattern of the use."
So those are those two corrections correct the
quote.
The cj-tatj-on or Eootnote 5 references it says
"at 335. " That shoul-d read "at 355. "
O. Okay. So with those corrections, if I were to
ask you the same questions set out in your prefiled testimony,
would your answers be the same today?
A. Yes.
MS. HILTON: I move that the prefiled rebuttal
testimony of Greg Said be spread upon the record as if read.
COMMISSIONER SMITH: Seeing no objection, j-t is
so ordered.
(The fol-lowing prefiled rebuttal testimony
of Mr. Said is spread upon the record. )
390
83701
1
2
3
4
5
6
7
B
9
10
L1
L2
13
T4
15
L6
77
1B
19
20
27
22
23
24
25
O.
A.
0.
A.
O. Please state your name and business address.
A. My name is Gregory W. Said and my business
address is L22l West Idaho Street, Boise,
By whom are you employed and
I am employed by Idaho Power
Idaho.
in what
Company
of the
capacity?
( " Idaho
Power" or "Company") as the Vice President
Regulatory Affairs Department.
Please describe your educational background.
In May of 1,915, T received a Bachelor of
Science Degree in Mathematics with honors from Boise State
Universi-ty. In 1-999, I attended the Public Utility
Executives Course at the University of fdaho and am now on
the faculty of that program covering "Regulation and
Ratemakiag." I have attended numerous additional-
educational conferences throughout my career at ldaho Power
and am an active member of the Edison Electric Institute's
Rates and Regulatory Affairs Committee.
o.
Idaho Power.
P1ease describe your work experience with
A. I became employed by Idaho Power in 1980 as an
analyst in the Resource Planning Department. In 1985, the
Company applied for a general revenue reguirement increase.
f was the Company witness addressj-ng power supply expenses.
fn August of 1989, after nj-ne years in the Resource
Planning Department, I was offered and I accepted a
SAID, REB 1
Idaho Power Company
391
1 position in the Company's Rate Department. With the
2 Company's application for a temporary rate increase in
3 1992, my responsibi-Ii.ties as a witness were expanded.
4 While I continued to be the Company witness concerning
5 power supply expenses, I also sponsored the Company's rate
6 computations and proposed tariff schedules in that case.
Because of my combined Resource Planning and Rate
8 Department experience, I was asked to design a Power Cost
9 Adjustment ('PCA") which would impact customers' rates
10 based upon changes in the Company's net power supply
11 expenses. I presented my recommendations t.o the Idaho
12 PubIi-c Utilities Commission ("Commission") in 1992, dt
13 which time the Commission established the PCA as an annual
L4 adjustment to the Company's rates. I sponsored the
15 Company's annual PCA adjustment in each of the years L996
16 through 2003.
L1 In 1996, I was promoted to Director of Revenue
18 Requirement. I have overseen the preparation of revenue
19 requirement information for regul-atory proceedings since
20 that time.
2T In 2008, I was promoted to Director of State
22 Regulation, adding the area of Rate DesiQn to my oversight
23 responsibilities.
24
25
392 SAID, REB 2
Idaho Power Company
1 In 2070, I was promoted to General Manager of the
2 Regulatory Affairs Department and in 201,1, I was promoted
3 to Vice President of Regulatory Affairs.
4 As the Vice President of Regulatory Affairs, I
5 oversee and direct the activities of the Regulatory Affairs
6 Department. These activities include the development of
1 )urisdictional revenue requirements, the oversight of the
B Company's rate adjustment mechanisms, the preparation of
9 cost-of-service studies, the preparation of rate design
10 analyses, and the administration of tariffs and customer
11 contracts. I also have the primary responsibil-ity for
L2 corporate policy regarding matters related to the economic
13 regulation of Idaho Power. I have testified before the
L4 Idaho Public Utilitles Commission and the Public Utility
15 Commission of Oregon on numerous occasions.
16 a. What is the purpose of your rebuttal testj-mony
77 in this matter?
18 A. The purpose of my rebuttal testimony is to
19 respond to a number of reconrmendations regarding the
20 Company's net metering service and its purpose that have
27 been presented by the Commission Staff ("Staff"), Idaho
22 Clean Energy Association (*ICEA"), the City of Boise,
23 Pioneer Power, LLC ("Pioneer Power"), and the Idaho
24 Conservation League ("fCL"). There are fj-ve major issues
25 that I wish to respond to: (1) the purpose of the Company's
SA]D, REB 3
Idaho Power Company
393
1
2
3
4
5
6
7
8
9
t0
11
t2
13
1.4
15
16
l1
1B
19
20
2L
22
23
24
25
filing, (2) the intent of net meterj-ng service, (3) the
proper treatment of excess net energy, (4) rate certainty
and the importance of a capacity cap, and (5) the Company's
position on the future of net metering servj-ce.
I. PURPOSE OE. TIIE I'ILING
0. The City of Boise's witness, Mr. Rick Gilliam
states on pages 3 and 4 of his testimony that "[t]he
actions and changes proposed by fPCo in this case are
individually and collectively designed to make customer on-
site generation more difficult to instaLl and more
expensive to utilize, or both." Is thj-s true?
A. No, that was certainl-y not fdaho Power's
intent. The Company's filing is intended to expand the
availability of net metering service under a design that. is
both scalable and sustainable into the future-
o.
A.
Please explain.
As Idaho Power considered expanding the
availability of net meterj-ng service, the Company
recognized that its traditional busj.ness model- and rate
design were not developed to address the unique
characteristics of customers with distributed generation
("DG") resources or the transactions that net metering
service is intended to facilitate. Up until recently,
Idaho Power's business model had been to generate (or
purchase) power at Iocations some distance from customers
SAID, REB 4
Idaho Power Company
394
1 and transport it through the transmissj-on and distribution
2 systems to customers, dt the times and quantities needed to
3 supply energy to meet customer demand. The introduction of
4 DG systems has changed this model by allowing customers to
5 generate a portion of their energy needs local1y. These
6 customers can also export any excess production to the
7 Company. Under this arrangement, customers expect that
8 fdaho Power wil-l- provide backup and reliability services to
9 ensure that they have power whenever they need it, whether
10 their DG systems are generating or not.
11 Resldential customers with DG systems are similar to
12 other residential customers in that they use power for
13 residential purposes. However, residential customers with
L4 DG systems are dissimilar to other residential customers in
15 that they produce power, can offset their usage of power,
16 use the transmission and distribution services in a
77 different manner, and require backup services.
18 As customer characteristics change, it is important
19 to al-ign prices with the products and services that
20 customers utilize. This wilI position ldaho Power to
2l effectj-vely respond to changing customer needs. Because
22 Idaho Power has historically provided a ful1y bundled set
23 of services that incl-uded generation, transmission,
24 distributj-on and customer service, rates were designed to
25 recover these costs in a similarly bundl-ed fashion.
SATD, REB 5
Idaho Power Company
395
1 However, with increased adoption of DG systems, fewer
2 customers, particularly those with residential end-uses,
3 will require the full bundle of services provided to
4 traditional customers. The unique nature of DG requires an
5 effective unbundl-ing of rellability, standby, and power
6 quality services from traditionally bundled utility
7 services. Corresponding changes need to occur in the
B Company's rate structure to ensure that DG customers are
9 paying for services they receive.
10 0. Please expand upon why the Company feels that
11 it is important to modify the rate structure for net
t2 metering service?
13 A. Tn general, fdaho Power's rates are designed
14 to recover the costs of all of the serv.tees provided
15 through bot.h fixed and variable (or volumetric) charges.
16 However, i.n most instances, particular:J y with regard to the
l'l residential class, almost all of the Company, s costs are
1B recovered through volumetric (per kilowatt-hour (*kWh"1 1
19 charges, including the Company's fixed distribution costs,
20 as well as other fixed administrative costs. Currently,
27 residential and small general service customers with DG
22 systems are able to avoid paying for the fixed costs for
23 distribution and administrative services even though they
24 conti-nue to utilize them.
25
396 SAID, REB 6
Idaho Power Company
1
2
3
4
5
6
7
I
9
10
l-1
t2
13
t4
15
L6
l1
1B
L9
20
2t
22
23
24
25
The Company's proposal recognizes that residential
and smalI general service customers with DG systems are
dissimilar from traditional residential and small- general
service customers. The proposal- to create new Schedul-es 6
and B addresses this dissimilarity by removing the recovery
of fixed distribution and administrative costs from the
energy charge for this unique set of customers and instead
recoveri-ng those costs through the proposed Service Charge
and Basic Load Capacity charge. This change better aligns
cost recovery with cost causation for residential and smal-1
general servj-ce customers with DG systems.
II. INTENT OE' IIET METERING SERVICE
0.Several witnesses representing parties in this
proceeding suggest that net metering service should
encourage the insta.l-l-ation of DG, particularly solar
generation. fs that the intent of net metering service?
A.No. Net meterlng servj-ce is a tariff service
availabl-e to customers who choose to instal-] DG at their
homes or businesses and wish to i-nterconnect to the
Company's electrical system. This service provides for
transfer of electricity to the Company through customer-
owned generation faciliti-es with the intent of offsetting
all or a portion of a customer's energy usage. Under this
service, customers are able to offset their individual
energy needs directly by their own generation, and export
SAID, REB 1
Idaho Power Company
391
1 any excess production to the Company. Hewever, the Company
2 continues to provide backup, reliability, and cusLomer
3 services to these customers to ensure that they have power
4 whenever t.hey need it.
5 Q. The City of Boise's witnesses Mr. Paul R.
6 lrloods and Ms. Cece Gassner recommend that the Commission
7 reject the Company's application with regard to net
B metering service modifications because they believe that
9 the proposed modifications do not align with the City of
10 Boise's goals with regard to sustainability and economic
11 growth. fs the intent of net metering service to further
12 the sustainability and economic goals of the City of Boise?
13 A. No. While Idaho Power does not oppose t,he
14 City of Eloj.se's goaLs in the areas of sustainability and
15 economj-c development, retaining inappropriate net metering
1,6 rates and service provisions is not the appropriate vehicle
L'l for furthering those goals. The continued use of sLandard
18 residential and smal-1 'general service rates for customers
19 with DG installations via current net metering service
20 provisions wil-I not necessarily promote a sustainable
2I growth of solar and other renewable energy systems. A
22 growing net metering customer base results in a shrinking
23 pool of standard service customers who must pay for the
24 unrecovered fixed cosLs of the customers who are able and
25 willing to make DG investrnents.
SAID, REB B
Idaho Power Company
398
1 Q. Mr. R. Thomas Beach's entire testimony is
2 dedicated to quantifying the va1ue that DG provides in the
3 form of avoided costs. Is the intent of net metering
4 service to facilitate a transaction whereby the customer is
5 compensated for their on-site generation based on the value
6 of the energy produced?
1 A. No. The purpose of net metering service is to
8 provide customers an option to offset their own energy
9 consumption with on-site DG. Staff wj-tness Mr. Matt EIam
10 affirms this on pages 28 and 29 of his testimony. Mr. EIam
11 also notes that the Company has an option for customers who
12 wish to be compensated for the non-firm energy produced by
13 their on-site DG. That option is Schedule 86, Coqeneration
14 and Small Power Production Non-Firm Energy ("Schedule 86') .
15 O. On page 14 of Mr. Beach's testimony, he
16 suggests that energy produced by solar photovoltaic net
L1 metering systems should be consj-dered "firm" energy from an
18 energy valuation perspective. Do you agree with this
19 suggestion?
20 A. No. The U.S. Energy Information
2l Administration (*EIA") defines "fj-rm power" to be "power or
22 power-producing capacity, i-ntended to be available at all
23 times during the period covered by a guaranteed commitment
24 to del-iver, even under adverse conditions."l EIA defines
tL.-!.p:.1lryvL:-9-19*,.99y&e-eL"/9lo-s-9.{lv-lt-n-4el:
399
cfm?id=F
SAID, REB 9
Idaho Power Company
1
2
3
4
5
6
7
8
9
10
11
L2
13
t4
15
16
17
18
19
20
2t
22
23
24
"non-firm power" to be "power or power-producing capacity
supplied or available under a commitment having Iimited or
no assured availability."' By definition, the excess
generation output of DG systems taking net metering service
clearly represents a non-firm power or energy product.
This arrangement is unlike a PubIic Utility Regulatory
Policy Act of 1978 (*PURPA") contract because there are no
performance reguirements and there is no obl-igation to
generate.
a.Mr. Beach proposes a nev, method of valuing the
energy produced by net metering. Is this method consistent
with the Commissi-on's currently approved method for valuing
non-fj-rm ehergy produced by renewable energy resources?
A.No. The Commission-approved method for
determining the value of non-firm generation such as that
produced by net metering systems is set fort.h in Schedul-e
86. According to Schedule 86, the avoided energy cost
value for non-firm energy products is equal to 85 percent
of the weighted average daily on-peak and off-peak Dow
Jones Mid-CoIumbia Electricity Price fndex prices for non-
firm energy published in the Wall Street JournaL. Over the
past year thj.s price has ranged from approximately $0,005
per kWh to $0.019 per kt^lh.
'\t.pp:-t-/.ytip:-e-.Lg:.99--yl.!-"--o]:/-g],.9*sg.qLty-1.+.{tsLe.l,g,Ir-:ii.d=:N
4OO SAID, REB 10
Idaho Power Company
1 Q. What can be concluded by the analysis
2 presented by Mr. Beach?
3 A. Because Mr. Beach's energy valuation analysis
4 is incorrectly premised on the belief that DG systems
5 taking net metering service provide a "firm" energy
6 product, the conclusions reached by the analysis are not
7 relevant with regard to net metering service. Therefore,
B the Commission should disregard the entire analysis.
9 It should also be noted that the Commission, the
10 Company, and numerous other stakeholders recently dedicated
l-1 a significant amount of resources and regulatory process
L2 toward the development of a methodology for determining the
13 value of firm energy produced by cogeneration and small-
14 scal-e power production in Case No. GNR-E-11-03. Even if
15 one agreed that DG systems provide firm power, Mr. Beach's
15 proposed energy valuation methodology does not align with
11 the Commission's recently approved methodology for valuing
18 flrm energy contracts and therefore should be rejected.
19 O. fCEA witness, Ms. Courtney White, states on
20 page B of her testimony that the Company's filing is
2l inconsj-stent with fdaho state policy. She notes that the
22 Idaho State Legislature's directive included in the 2012
23 Idaho Energy PIan states that "the Idaho PUC should
24 continue to administer its responsibilities under the
25 Publ-ic Utitity Regulatory Act in a way that encourages the
SAID, REB 11
Idaho Power Company
401
1 cost-effective development of customer-owned renewable
2 generation and combined heat and power facilities." Is
3 there a regulatory process in place to identify cost-
4 effective resources to be considered for future
5 development?
A. Yes. The Commission has relied upon the
7 Company's fntegrated Resource Planning ('fRP") process to
8 determine the economic viability and risk profile of alI
9 potential resources including renewable generation and
10 energy efficiency.
1t 0- Has the Company analyzed Solar DG as part of
12 its IRP process?
13 A. Yes. The Company has analyzed SoLar DG as
L4 part. of its 2013 IRP process. In the Company's "Risk
15 Analysis on Resource Al-ternatives, "3 solar DG was determined
1,6 to not be cost-effective as compared to other available
L1 resource alternatives and therefore has not been included
18 in the Company's preferred portfolio of resources.
19 O. Is the Company opposed to the Commission
20 taking action to encourage the cost-effective development
2l of customer-owned renewable generation?
22
23
!:-!!.p: l./.wnlr,,i9sh-qp*o,r.er:-een-/-p-#-e /-Lb--o-e!.9-e,/-.p-L-e-rrri,-g-{er-q'u!.e!-e 1-*p/..?9!}-1-Ye.[-c-h
y!.gyn!._e+_e-],:1-Be.-s-_o_u!.c-941-!-9-rte*!Iv__e_iiB.+nLp9"f,
402 SAfD, REB L2
Idaho Power Company
1
2
3
4
5
6
1
B
9
10
11
1,2
13
1,4
15
76
l7
18
19
20
2t
22
23
24
25
A.Absolutely not. However, the Company believes
that the Commissj-on should continue to rely on the
Company's fRP process to identify cost-effective resources.
o.Why should the Commission not utilize net
metering service provisions to encourage the development of
customer-owned renewabl-e resources?
A.The current net metering rates provide
indirect incentives to customers with DG systems, which is
problematic because those indirect incentives lack
transparency. Rather than providing an incentive
specifi-ca1Iy designed to meet a desired objective, the
indirect incentives that net metering customers recej-ve
today from traditional energy pricing originate from the
ability of customers with DG systems to obtain free use of
equipment and services. Consequently, there is potential
for customers with DG installations to pay less than their
cost of service in a manner that is disconnected from any
underlying rate design policy goa1s. This approach brings
with it the rj-sk of providing indirect incentives that are
greater than necessary to accomplish desired renewable
energy development goaIs.
III. PROPER TREJATMENT OE. EXCESS NET ENERGY
0. The ICEA and Pioneer Power recommend that the
Commissj-on authorize financial compensatlon of excess net
generation based on the Company's avoided cost of energy at
SATD, REB 13
Idaho Power Company
403
1 any time, or at the time a net metering customer's service
2 is disconnected, respectively. Does Idaho Power support
3 prospectively offering a financial payment for excess net
4 metering generation in either circumstance?
A.No. As explained in greater detail on pages
5 and B of the Company's Application, the Eederal Energy
7 Regulatory Commission (*FERC") maintains that aIl power
B purchases made by utilities to non-QuaLified Facilities
9 under PURPA are wholesal-e transactions under the FERC's
10 jurj-sdj-ction not retail transactions to be regulated at
11 the state level. As I understand it, to recei-ve financial
L2 compensation for a neL excess power sale as recommended by
13 ICEA and Pioneer Power, the net metering customer would be
14
15
16
71
required to comply with either the requi.rements of the
FERC-administered Federal Power Act or Idaho's
implementation of PURPA.
To ensure t-hat its net metering servj-ce can be fully
18 administered at the state level and comply with federal
19 Iaw, Idaho Power cannot continue providing financial
20 compensation for net saLes of excess net metered
2l generation. Customers that wish to continue sell-ing net
22 generation to fdaho Power for financial payment may do so
23 as a PURPA Qualif ied Facility by procuring a sa.Les
24 agreement through Schedule B6
25
SAID, REB L4
Idaho Power Company
404
1
2
3
4
5
6
1
B
9
10
11
72
13
t4
15
16
t7
18
19
20
21,
22
23
24
25
0.Serreral parties discuss the disparate impact-s
the December expiration date would have on net metering
customers due to varying generation and consumption
patterns. How do you respond to these concerns?
A.In light of the concerns regardJ-ng the
proposed December expiration date, the Company is willing
to revise its original proposal regarding the excess net
energy credit system as described in its application. The
Company would accept an excess net energy credit system
that would al1ow customers to self-select the annual
expiration date of unused kWh credits. However, for
reasons previously stated, the Company maintalns that a kwh
credit system shoul-d be implemented in lieu of the existing
financial credit system, and that only per-kWh energy
charges should be eligible for offset. I have asked Mr.
Matt Larkin to detail this proposal and its underlying
rationale in his testimony.
rV. RATE CERTATNTY AND IIIE IMPORTA}iICE OE. A CAPACITY CAP
O. Witnesses White and Dunay suggest that the
Company's proposal in this case has introduced uncertainty
and fj-nancial risk that is negatively impacting the local
sol-ar industry and future solar installations. To your
knowledge, has the Commission or the Company ever suggested
that net metering rates provlde certainty for customers?
sArD, REB 15
Idaho Power Company
405
NoA.Quite to
s t a tement
the contrary,
on page 7 of
the Commission
made
Case
t.he following Order No. 30221,
No. IPC-E-06-11:
[W] e must note that the net metering
program price is a tariff rate. It is
not a contract rate. As a tariff rate,
it is subject to change. An impetus
for future change is recognition that
in addition to the customer charge, the
Company recovers some of its fixed
costs for serving customers in its
energy charge. A persuasive argument
could be made that net metering
customers are being subsidized by other
customers.Indeed in our Order
approving net meterJ.ng we recognized
that the ful-l- cost of the prograrn may
not be borne by participants. Order
No. 28951.The Company pursuant to
Commission direction continues tom6nitor net metering program costs,
cost recovery and reLated issues gf
subsidization.Customers therefore
shou.l,d nqt rely on conL,inuation of the
tariff rate in cost effecti-veness
cal culations to justify net metering
equipment investment decisions.
with the Commission's v-iew, the company's
4
5
6
7
B
9
10
L1
7.2
13
L4
15
16
l1
1B
19
20
2l
??
23
24
25
26
27
2829 Consistent
30 practice has been to remind customers who are considering
31 net metering service that there is not a contract
36
32
33
34
35
Given the testimony filed in opposition to the
associated with the service and therefore rates are subject
to change.
o.
proposed net
continue to
rnet.ering capacity cap, does the Company
support the implementation of a capacity cap at
sArD, nee 76
Idaho Power Company
31 5.8 megawatts?
406
1
2
3
4
A.Yes. The Company is in agreement with the
Staff on this issue. The capacity cap provides an
opportunity for periodic review of the net metering service
provisions and pricing. Eurther, the cap provides the
inequities that will continue to grow.
0.Does the existence of the proposed capacity
does not change this fact, it simply puts in place a known
trigger for review.
V. FUTI'RE OF NET METERING SERVTCE
o.Several witnesses representing other parties
in this proceeding claim that fdaho Power's proposal to
SAID, REB 17
Idaho Power Company
5 Company with an opportunity to assess the impacts that DG
6 may have on the reliable operation of its electrical
system. To date, the most important aspect of the cap has
B been to limit the potential- cost assignment inequities that
9 exist as a result of applying traditional- bundled rate
10 design f or net meterj-ng service. If the Commj-ssion
11 declines to implement the Company's net metering rate
12 design proposal, there will be a greater need to have j-n
13 place a capacity cap to l-imit the potential cost assignment
16 cap introduce any additional rate uncertainty other than
Ll what would exist without a capacity cap?
1B A.No. As pointed out by the Commission in Order
19 No. 30227, the net metering price "is not a contract rate.
20 As a tariff rate, it is subject to change." A capacity cap
t4
15
27
22
23
24
25
401
1 create new rate classes that distinguish between standard
2 and net metering customers j-s discriminatory. Do you
3 agree?
4
5
6
7
B
9
10
11
12
13
1,4
15
A.No. f am familiar with Idaho Code S 61-315,
which prohibits any public utility from offering
preferential or discriminatory rates or services to
customers, or to establish any unreasonable difference
between classes of service. The ldaho Supreme Court
interpreted fdaho Code S 51-315 in the ldaho State
Homebui.lders v. Washington water Power ("Homebuilders"
case,a which I have also read. The Homebui-lders Court
observed t-hat not all differences in a uti-lity's raLes
between different customers constitute unlawfu]
discrimination or preference under Tdaho Code S 61-315
AS
UEah-Idaho Sugar Co. v.P. 2d at 809-810 (1981)
16 be justified by factors such as "cost of service, quantity
The Court explained that the setting of different rates may
of electricity used, differences and conditions of service,
or the time, nature and pattern of use."5 The Honebuilders
Court also stated the Commission may consider other
o rdrho sEace Homebui-lders v. Washington WaCer Power, 107 Idaho 415,5e0 P.2d 350 (1984).
s rd. at 420, 690 P2.d ar 33s, ciringfntermouncain Gas Co.,100 Idaho 368, 597
408 SAID, REB ].8
Idaho Power Company
77
t8
19
1 criteria for establi"shing dj.fferent ::ates including energy
2 conservation, optj-mum use, and resource allocation.6
Although I do not practice law, based on my reading
4 of Homebuilders as a lay person, I believe that Idaho
5 Power's proposal to create ScheduLes 6 and B meets the non-
6 discriminatory standard set by the Idaho Supreme Court. As
7 described earli-er in my testimony, net metering customers
B utilize on-site generation that causes them to use fdaho
9 Power's distribution system i-n a fundamentally different
10 fashion than standard service customers.
11 In effect, net metering customers require Idaho
L2 Power to provide "standby service" much like industrial
O 13 customers with cogeneration -- a service which is
14 separately tariffed under Schedule 54 -
15 O. If the Commission declines to lmplement the
16 Company's net metering rate design proposal, should the
11 Commi-ssion still- establ-ish'tariff Schedul-es 6 and B?
18 A. Yes. Even if it declines to implement the
19 Company's net metering rate design proposal, the Commission
20 should stil1 establish tariff Schedul-es 6 and 8. By
2L implementing Schedules 6 and 8, the Commission will send a
22 clear message to the Company and its customers that it
23 recognizes net metering service as a substantially
6 ld. Citing Grindstone Bucte MutuaT Canal Co. v. Idaho PublicUtilities Cotwnission, L02 fdaho at l-80-181, 627 P. 2d aE 809-810(1e81).
409 SAID, REB L9
Idaho Power Company
1
2
3
4
5
6
1
B
9
10
11
72
13
l4
15
16
77
1B
19
20
21
22
23
24
25
different type of service as compared to standard
residential and smal-1 general service. By establishing
Schedu.l-es 6 and B, the Commission will aLso make it clear
that when the Company files its next general rate case, the
costs to provide net metering service and future pricing
structures wiIl be specificalJ-y tail-ored to the unigue
services that net metering customers desire.
0.On page 10 and 11 of his testimony, Staff
witness Matt Elam likens the service taken by a net
metering eustomer to that of a customer wiLh a vacation
home to support his argument that net metering customers
should not be treated differently from other residential
cust,omers. Do you agree that this is a valid comparison?
No- While I would agree bhat a net metering
customer and a custorner wit,h a vacanl. vacation home have
Lhe poLenb,ial for similar net usage on a monthly basis, the
similarity ends there. The way in which these two types of
customers utilize the electrical sysLem on a daily or
hourly basis may dif fer dramatically. ['lhen a vacation home
has zero energy consumption over a month, it is because the
customer did not take any energy during the month and
therefore did not utilize the Company's system during that
month. On the other hand, when a net metering customer has
net zero consumption for the month, it is likely that the
net metering customer took energy during some hours of the
SAID, REB 20
Idaho Power Company
A.
410
1 month which was ultimately offset by on-site generation.
2 In hours when a net metering customer is generati-ng energy
3 in excess of consumption to achieve net zero consumption,
4 that customer is also using the Company's distribution
5 system at no cost.
In the case of a vacation home, traditional bundled
7 residential rate design has carried with it an implied
B policy of customers being required to pay when they use the
9 system. Under the traditional bundled residential- rate
10 design approach, this "pay-for-use" policy cannot be
11 consistently applied for net metering service customers
12 because a net meteri-ng customer has the unique ability to
O 13 utilize the Company's distributj-on system at no cost.
L4 0. Several witnesses in this case suggest that
15 because any inequities that currently exist regarding net
16 metering service are relatively sma11, the Commission
t7 should not take any action now. Do you agree with this
18 recommendation?
19 A. No. Several witnesses in this case also point
20 out that there is potential for solar DG to grow rapidly in
21 the near future. The Company's filing is intended to
22 expand the availability of net metering service under a
23 design that is both scalable and sustainable into the
24 future. The current net metering rate design and servj-ce
25 provlsions are neither scalable nor sustainabl-e. The
4tL sArD, REB 2l
Idaho Power Company
1
2
3
4
5
6
7
Commission has an opportunity now to fix t.he flaws in the
current net metering service while t.he service is stiII
rel-atively small in scale. If the Commission declines to
make necessary changes now, the financial uncertainty
described by Ms. White in her testimony will continue and
the number of customers with DG installations ultimately
impacted by future net metering rate design modifications
I wiII mu1tiply.
9
10
11
13
t4
15
16
L7
18
19
20
2t
22
23
24
25
o.On page 28 of his direct testimony,
GiIliam recommends that any rate changes adopted
proceedj-ng "should be gradual and applied only to
Mr.
in this
new
12 customers. " Do you agree?
A.No. Although Idaho Power does not object to
gradually moving customers with net metering service closer
to their cost of service, the Company does not agree that
any rate changes resulting from this proceeding should be
applied only to new customers. As the Commission noted in
Order No. 22489, *this Commission has never 'vintaged'
utility conditions at the time a customer beglns service or
expands service for the benefit of that customer."
Although the Commission in 1989 was speaking to special
contracts for large industrial customers, I believe it to
be an accurate st-atement about services provided to
customers generally. The Commission also indicated on page
6 of thaE Order that "special contract customers coming on
SAID, REB 22
Idaho Power Company
4I2
O 1 in this tj.me of surp-Ius have no rights to continuation of
2 their 'good deal-s' beyond the time of surplus." I
3 similarly believe that existing net metering service
4 customers have no right to continue indefinitely under the
5 existing tariff at a promotional full retail rate that does
6 not adequately recover the utility's cost to provide
7 electric service. Although this may alter the period over
B which net metering customers recover the cost of their
9 respective investments, builders of electric generatj-on are
10 not guaranteed a return on their investment.
11 Ir'IhiIe ICEA's recommendation to grandfather the fulI
1,2 retail rate to existing net metering customers would be
13 extremely difficult for the Company to administer, the
t4 primary reason fdaho Power opposes the reconrmendation for
15 grandfathering is because it is not 1ike1y permissible
16 under Idaho l-aw. My understanding is that the intent of
l7 ldaho Code S 61-315 and the Idaho Supreme Court's
18 Homebuifders decision is to prevent similarly situated
79 customers from being treated differently from one another
20 based solely on when they began taking service.
27 O. Does that conclude your testimony?
22 A. Yes, it does.
23
24
25
26 413 SAID, REB 23
fdaho Power Company
1
2
3
4
tr
6
7
B
9
10
11
!2
13
t4
15
t6
t1
1B
!9
20
2L
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 5'78, BOTSE, rD
SAID (x-Reb)
Idaho Power
(The following proceedings were had in
open hearing. )
MS. HILTON: The witness is available for cross.
COMMISSIONER SMITH: Thank you.
Where to begin. Mr. Richardson, do you have
questi-ons ?
MR. RICHARDSON: Thank you, Madam Chair. I do.
CROSS-EXAMINATTON
BY MR. RICHARDSON:
O. Good afternoon, Mr. Said.
A. Good afternoon.
O. On page 4 of your rebuttal- testimony, you state
that it was certainly not Idaho Power's intent to make on-site
generati-on more difficult to install or more expensive.
Correct ?
A. The line number again, please?
O. That woul-d be page 4, I have line L2.
COMMISSIONER SMITH: ft's actually ten.
O. BY MR. RICHARDSON: It's a questi-on you're asked:
The City of Boise's witness, Mr. Rick Gilliam, states that the
Company's actions and changes proposed by ldaho Power in this
case are individually and col-l-ectively designed to make
customer on-site generatj-on more difficul-t to install and more
4L4
83701
1
2
3
4
5
6
1
B
9
10
11
t2
13
L4
15
1,6
11
1B
19
20
2L
22
23
24
25
HEDRICK COURT
P. O. BOX 578,
REPORTING
BOISE, ID
SAID (x-Reb)
Idaho Power
expensi-ve to utilize, or both. End quote.
And then you're asked: Is this true?
And you say: No, that was certainly not Idaho
Power's intent.
A. That's that's my answer, y€s.
O. And then over on page 7, you state that it's not
the intent of net metering service to encourage the
install-ation excuse me, the generation.
Do you see that, in question starting on l-ine 13?
A. Yes.
a. So is it fair to say that the Company's intent is
neither to encourage nor to discourage net metering?
A. I think the intent that f 'm referrj-ng to j-sn't
necessarily the Company's intent. The intent I am referring to
is the intent of net metering services that can be provided to
customers, and for perspective of my testimony, that's the
intent that I'm primarily speaking to.
O. Is it fair to say that Idaho Power j-s indifferent
to whether net metering projects are developed?
A. I think that's true.
O. On page 4, you state that the Company has
recognj-zed that 1ts traditional business model was not
developed to address the unique characteristlcs of net
metering. Do you recaI1 that?
A. Yes.
415
83701
1
2
3
4
5
6
7
I
9
10
11
L2
13
14
15
76
17
18
t9
20
27
22
23
24
25
HEDRICK COURT REPORT]NG
P. O. BOX 578, BOTSE, rD
SAID (x-Reb)
Idaho Power
0. Woul-d you generally agree with the
characterization of net metering as a disruptive force to the
traditional utility mode1?
A. I don't know that I would use the word
"disruptive." It's certainl-y a different set of circumstances
for that particular service.
O. Would you agree that net metering with the
characterization that net metering has serious long-term
implications for traditional utility investors?
A. That probably varies utility by utility. I
don't I don't know that I believe that j-t ' s currently a
Iong-term concern of Idaho Power Company.
O. Are you familiar with a report published by the
Edison Electric Institute entit1ed Disruptive Challenges:
Financial Implications and Strategic Responses to a Changing
Retail El-ectric Business?
A. Irm aware that that document exists, y€s.
O. Have you seen that document?
A. I have.
MR. RICHARDSON: May I approach the witness,
Madam Chair?
COMMISSIONER SMITH: You may.
MR. RICHARDSON: Madam Chair, I'm handing out a
document with the titl-e that f 've just read, whj-ch I'l-l- ask to
be marked as Exhibit 403.
41,6
83701
1
2
3
4
5
6
1
B
9
10
11
t2
13
74
15
L6
71
18
1,9
20
2t
22
23
24
25
HEDRICK COURT REPORT]NG
P. O. BOX 578, BOTSE, rD
SAID (x-Reb)
Idaho Power
(Pioneer Power Exhibit No. 403 was marked
for identification. )
a. BY MR. RICHARDSON: fs that the document you were
referring to when you said that you had seen that document,
Exhibit 403?
A. Yes.
O. Sorry?
A. Yes.
O. Is Idaho Power a member of the Edison Electric
Insti-tute?
A. It is.
O. Woul-d you please turn to page 1,7 of Exhibit 403
and read for the record the paragraph beginning with the words
"the threats posed"?
A. The threats posed to the el-ectric utility
industry from disruptive forces, particularly dj-stributed
resources, have serious long-term implications for the
traditional el-ectric utility business model and investor
opportunities. While the potential- for significant
i-ndependent excuse me, immedj-ate business lmpact is
currentfy low, due to load DER participation to date, the
lndustry and its stakeholders must begin to seriously address
these chal-Ienges in order to mitigate the potential impact of
disruptive forces given the perspecti-ves or r given the
prospects for significant DER participation in the future.
4!7
83701
1
2
3
4
5
6
7
I
9
10
11
72
13
14
15
1"6
L1
1B
19
20
2L
22
23
24
25
HEDRICK COURT REPORT]NG
P. O. BOX 578, BOTSE, rD
SAID (x-Reb)
Idaho Power
O. Do you agree with that?
A. Again, from my perspectlve, I don't know that the
dj-sruptive forces that are talked about in this document would
be the same for al-I util-ities. This is speaking for a much
wj-der from a much wider perspective than Idaho Powerr so it
may be more of a concern for some util-ities than others.
O. So it's not a concern of yours?
A. ft's not it is a concern, but I don't know
that it's a huge concern at this point in time.
O. Could we say that this docket was borne out of
that concern?
A. This docket or oh, this, today's hearing?
O. Right, this case.
A. No, I don't think that this docket has anything
to do with the document that you've provJ-ded to me. Rather,
our filing is responsive to the Order issued by the Commission
in a previous Idaho case that instructed the Company to make a
filing at the time that we approached the 2.9 megawatt cap and
address appropriate pricing at the time that we reached that
cap.
O. On page 5 of your rebuttal- testimony, you state,
quote: As customer characteristics change, it is important to
align prices with the products and services that customers
utifi ze .
Do you recall that?
418
83701
1
2
?
4
5
6
1
B
9
10
11
L2
13
L4
15
t6
77
18
t9
20
2t
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 518, BOTSE, rD
SAID (X-Reb)
fdaho Power
A. Yes.
O. Then you go on in the ensuing paragraphs to
discuss how net metering customers are utilizing different
services from a standard residential- customer. Correct?
A. Using perhaps the same services but j-n a
different manner, y€s.
0. Wel-1, and you note that net metering customers
are taking an unbundled product, on page 6, l-ine 5?
A. I think our proposal is one that recognizes an
unbundl-ed approach to pricing, whereas currently net metering
customers receive the same bundling treatment that traditional
customers recei-ve.
O. It is true, isn't it, that your cost to serve a
standard residential customer and a net metered residential
customer are the same?
A. There's been some discussion as to that this
morning. I think that Mr. Larkin explained that, from the
Company's perspective, the cost of servj-ce components rel-ated
to customer-rel-ated costs and distribution-related costs are
viewed as being very simi-lar for standard servi-ce residential
and small general service customers.
As Mr. Otto el-icited through Mr. Larkj-n's
testimony, when it comes to generatlon and transmission costs
that are borne by the Company, that an al-l-ocation of those
costs if there were separate cl-asses established for net
479
83701
1
2
3
4
5
6
1
B
9
10
11
t2
13
1,4
15
76
L1
18
l9
20
2t
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 5'l B , BOTSE, rD
SAID (x-Reb)
Idaho Power
meterJ-ng services for residential- and small general service
customers, that those costs might actually be different based
upon coincident and noncoincident peak use of the generation
and transmissj-on system of the Company. But those are not
aspects of the unbundl-ing of rate cost drivers that the Company
has proposed in this case.
O. And I think we've established that the Company
hasn't done a separate cost of servj-ce study specific to the
net metering classr ds you call it?
A. No. The Company believes that the
customer-rel-ated costs and the distribution-related costs as
identified for standard service residential customers and small
general service customers in its l-ast general rate case are
appropriate for consideration of those same costs for net
metering service customers j-n this case.
O. Over on page 8 of your rebuttal testimony, you
state that it is not the intent of net metering service to
further the sustainability goals of the City of Boj-se.
Do you know whether Idaho Power has been granted
a franchise by the City of Bolse to use its streets and a11eys
for the provision of el-ectric service?
A. We have.
O. And have you reviewed Idaho Power's obligations
under that franchise agreement to see what, tf anything, Idaho
Power j-s obligated to do in the arena of furthering the City's
420
83701
1
)
3
4
5
6
1
I
9
10
11
t2
13
l4
15
t6
l1
18
19
20
27
22
23
24
25
HEDR]CK COURT REPORTING
P. O. BOX 578, BOTSE, rD
SAID (x-Reb)
Idaho Power
energy-related policies?
A. I have not.
O. Then over on page L2, you were asked whether
there is a regulatory process in place to identify
cost-effective resources to be considered for future
deveJ-opment. Correct?
A. I'm sorry, coul-d you point me to a line?
O. Certainly. Over on page 12, yeah, at the top of
page 12, you're asked: Is there a regulatory process in place
to identify cost-effective resources to be considered for
future development?
That's Iines 2 through 5.
A. Yes, I'm with you now.
0. And in response, you answer: Yes. The
Commissj-on has rel-j-ed upon the Company's integrated resource
planning process to determine the economj-c viabil-ity and risk
profile of all- potential resources, i-ncluding renewable
generation and energy efficiency.
Do you see that answer?
A. Yes, I do.
O. Now, when you say the Commission relies on the
IRP to determine the economic viabil-ity of all potential
resources, you're not saying that the Commission relj-es on the
IRP to set rates, are you?
A. Not directly. There are avoided costs that are
421
83701
1
2
3
4
5
6
7
I
9
10
11
t2
13
l4
15
L6
L7
18
l9
20
2L
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
SAID (x-Reb)
Idaho Power
subject to the determination of the Commission that result from
power supply runs that are based upon the preferred resource
portfolio identified in the integrated resource p1an. So
that's about as direct a ti-e there is for the IRP to specific
pricing.
O. Have you ever read any of the Commission's Orders
in response to an Idaho Power integrated resource planning
filing?
A. I have.
O. And wou1d you accept that in al-I of those Orders
appears this language, quote: Based on our review, we find it
reasonabl-e to accept the Company' s electrj-c integrated resource
pIan. Our acceptance of the fRP should not be interpreted as
an endorsement of any particular element of the pIan, nor does
it constitute approval of any resource acquisi-tion or proposed
action j-n the p1an.
Do you recall that language appearing in the IRP
Orders you read?
A. I do.
O. So with that language in mind, does it really
sound, to you, l-ike the Commissj-on is relying on the IRP to
determine economic viabil-ity of all potential- resources?
A. Wel-l-, when I mentioned that the Commission uses
power supply runs to establ-ish avoided costs that woul-d be paid
to PURPA projects, those runs are a direct result or output
422
83701
1
2
3
4
5
6
7
I
9
10
11
t2
13
t4
15
t6
t7
18
19
20
2t
22
23
24
25
HEDRICK COURT
P. O. BOX 578,
REPORTING
BOISE, ID
SAID (x-Reb)
Idaho Power
from the IRP process. So while the IRP acknowledgment case is
not a rate setting case, results of the anal-yses that are
lncluded in the IRP process become the foundati-on of rates that
are establ-ished by the Commission.
O. In this case, you're asking the Commission to
rely on the 20!3 IRP process to support your conclusion that
sofar is not a cost-effective resource. Correct?
I would refer you to page L2, beginning at line
13.
A. I'm asking that the Commission rely on my
characterizati-on of the analysis that has been performed to
date that has not been made public as part of the IRP process,
but f'm conveying, ds a witness, that I know that the analysJ-s
has occurred that would show that these resources, such
resources, are not cost effective, yes.
O. And to put it succJ-nct1y from your quote J-n your
testimony, you state: The Company believes that the Commj-ssion
should continue to rely on the Company's fRP process to
identify cost-effective resources.
Correct ?
A. I bel-i-eve that's the appropriate forum to l-ook at
that, y€s.
0. We've already establ-ished that the Commission
does not approve the IRP. Correct?
A. Technically, they acknowledge the IRP, which has
423
83701
I
2
3
4
5
6
1
B
9
10
11
72
13
74
15
76
l1
1B
l9
20
27
22
23
24
25
HEDRICK COURT
P. O. BOX 578,
REPORTING
BOISE, ID
SAID (x-Reb)
Idaho Power
caused some vagaries in the past in terms of action plans that
resul-t from the integrated resource plan. Typically, that plan
woul-d identify a portfolio of resources that the Company woul-d
intend to pursue j-n the future.
There's an additional- step beyond the IRP process
that typically requires the Company to fil-e for a certificate
of public convenience and necessity to the CommJ-ssion, at which
time those plants that woul-d be acquired are fu11y justified
and the costs are demonstrated, commitment estj-mates are
revj-ewed, and the like.
O. At the end of the d.y, Idaho Power gets to decide
what's in the IRP. Correct?
A. It is an Idaho Power document. However, there j-s
an integrated resource planning advisory council that is able
to present input to the process, question the reasoning, and
potent j-a11y shape the resul-ts of that document.
MR. RICHARDSON: Madam Chair, frdy I approach the
witness ?
COMMISSIONER SMITH: You may.
MR. RICHARDSON: Thank you.
O. BY MR. RICHARDSON: Do you recognize that
document, Mr. Said?
A. It's identified as pages 2 and 3 from the 201,1
integrated resource plan of Idaho Power Company.
O. Woul-d you please read the highlighted sentence
424
83701
1
2
3
5
6
7
B
9
10
11
1,2
13
L4
15
16
77
18
19
20
21,
22
23
24
25
HEDRICK COURT REPORTTNG
P. O. BOX 578, BOTSE, rD
SAID (x-Reb)
Idaho Power
from the pages 2 and 3 of Idaho Power's 201,7 integrated
resource plan?
A. "Idaho Power and the members of the IRPAC
recognize that outsj-de perspective is valuabl-e, but al-so
recogni-ze that the final decisions on the IRP are made by Idaho
Power. tt
O. And earlier, you referenced that the IRP advisory
group assists in drafting the document. Do you recal-I that?
A. I don't know that I said "assists in drafting."
I think most of the drafting is done by the Company. However,
the document is reviewed by the participants and they are
provj-ded an opportunity to comment.
a. And Idaho Power picks who's going to be on that
advisory group. Correct?
A. That's true.
O. And what happens to IRP members who fall- out of
favor with the Power Company, do they get kicked off?
A. I don't know what "fall- out of favor" implies.
O. How about the Snake River Al-liance?
A. The Snake River Al-l-iance was asked to not be a
member on a going-forward basis.
O. Let's go to we're stil-I on page 12, I guess,
where you say: The Company has analyzed sofar DG as part of
its 2013 IRP process. In the Company's risk analysis on
resource al-ternatives, solar DG was determj-ned to not be cost
425
83701
1
2
3
4
5
6
1
I
9
10
11
72
13
L4
15
t6
L7
18
19
20
2L
22
23
24
25
HEDRICK COURT
P. O. BOX 578,
REPORTING
BOISE, ID
SAID (x-Reb)
Idaho Power
effective as compared to other available resource al-ternatives,
and therefore has not been included in the Company's preferred
portfol-io resources.
Do you see that?
A. I do.
O. And there's a footnote there. What's that
footnote referencing?
A. It's referencing a Web site that contains that
document.
MR. RICHARDSON: May I approach the witness,
Madam Chair?
COMMISSIONER SMITH: You wil-l- y€s, certaj-nly,
Mr. Richardson, but I have to just say that I have some
questi-on in my mind how Idaho Power's analysis to determine its
resource stack is relevant.
MR. RfCHARDSON: WelI, I'd be happy to move to
strike his testimony on the subject.
COMMISSIONER SMITH: Just conti-nue ahead.
MR. RICHARDSON: Madam Chair, I'm handing out
what's entitl-ed Risk Analysis on Resource Al-ternatives, which
I wil-l represent was copied from the Web site that was
footnoted in Mr. Said's testimony. I'l-I ask that it be marked
as Exhibit 404.
(Pioneer Power Exhibit No. 404 was marked
for identification. )
426
83701
1
2
3
4
5
6
1
8
9
10
11
L2
13
L4
15
L6
l't
1B
19
20
2t
22
23
24
25
HEDRICK COURT
P. O . BOX 5'18 ,
REPORTING
BOTSE, rD
SAID (x-Reb)
Idaho Power
O. BY MR. RICHARDSON: Do you recognj-ze thi-s
document, Mr. Said?
A. It appears to be the first four pages of the
11--page document that is referenced at the footnote.
O. So is this the document the first four pages
of the document that you relied on when you stated that solar
is not cost effective?
A. Thatrs correct.
O. If you would turn to page 3 of the document,
Exhibit 404, and i-f we l-ook at that, what does that reflect?
A. Wel-I, my understanding of this page is that it
looks like one, two, three, four eight resource alternatives
were evaluated and that they are ranked based upon their costs
rel-ative to one another, and that the Utj-1ity solar
photovoltaic and the distributed solar photovoltaic options are
the two highest-cost alternatives of the eight scenarios
analyzed.
O. And were you at the fRP meeting when this
document was presented by fdaho Power to the IRP advisory group
back in March?
A. I was not.
O. Look at column five entitled Fixed Costs. In
your mj-nd, does that represent the cost to the Company of
building the varj-ous potential resources?
A. I can't speak to whether or not that statement
421
83701
1
2
3
4
5
6
7
B
9
10
11
L2
13
t4
15
1,6
L7
18
t9
20
2t
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 5'7I , BOTSE, rD
SAID (x-Reb)
fdaho Power
was accurate or not. I know that there has been some
discussion amongst the parties as to whether or not the the
Company cost should be represented or the total resource cost
should be represented in the numbers, and I believe, based upon
that conversation, that this may be the total costs of the
project rather than the costs borne solely by the Company.
O. But it's entitled Flxed Costs, pIant,
transmission, fixed O&M, and rate of return. And so it looks
like the costs to the Company of building a distributed solar
PV or whatever resource is on which l-ine?
A. I don't know the answer to that.
O. But you're relylng on this document for your
concl-usion?
A. I've tal-ked to the peop.l-e who prepared the
document, and the numbers that they focused on were the far
right-hand corner or the, far, far right-hand column that
shows the rankj-ng of total- costs by resource alternative
portf oIi-o.
O. Under a net metering program, Idaho Power doesn't
pay for the solar project, does it?
A. Under net metering, the customer pays the cost of
their install-ation.
O. So i-f thi-s distributed sofar PV resource were
identified as a net metering resource, wouldn't the line for
distributed sofar read zero instead of 1r388,597 r000?
428
83701
1
2
3
4
5
6
7
B
9
10
11
L2
13
L4
15
16
t7
18
19
20
2t
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, ID
SAID (x-Reb)
Idaho Power
A. No. My understanding is that at the IRP meeting
that I did not attend, that that was an area of debate where
ultimately some representatives on the IRPAC had disagreement
with the position of the Company. But as you have noted, at
the end of the day it's a Company document, and so whiLe there
was a difference of opinion, the Company adhered to j-ts
methodol-ogy.
O. Would it surprise you to learn that Mr. Stokes at
that meeting responded to a question to the effect that
distributed sol-ar PV wou1d be the Companyrs least-cost resource
if it were acquj-red at no cost through a net metering program?
A. I don't know if he said that or not.
O. Wel-l-, if you took this 1,,338,000,000 number and
subtracted it f rom the total j-n Col-umn 8, it woul-d be the
cheapest resource?
A. If you assume that a resource has no cost, then
it' s probably going to be cheaper than an al-ternat j-ve.
O. And it's a fact, isn't it, that net metering
sol-ar has no cost to Idaho Power?
A. That that is true; however
O. It's not an assumption,' it I s a fact?
A. However, that -- whether or not that's the
appropriate approach to comparing the costs of resources is the
issue that was at debate.
O. Let's swj-tch gears just a bit and tal-k about your
429
83701
1
2
3
4
(
6
1
B
9
10
11
72
13
L4
15
t6
71
1B
79
20
2t
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
SAID (x-Reb)
Idaho Power
proposed treatment of excess net energy. You state thatr ds I
understand it page 14, line 11: As I understand it, to
receive financial compensation for a net excess power safe as
reconrmended by ICEA and Pioneer Power, the net metering
customer woul-d be required to comply wlth either the
requirements of the FERC-administered Federal Power Act or
Idaho Power's implementation of PURPA.
Do you see that?
A. Yes.
O. Now, would it surprise you to learn that al-l- of
the net metering customers on Idaho Power's system are
qualifying facilities, or QFs, under PURPA?
A. !{e11, I think that's an issue that's to the heart
of the subject thatrs being discussed today. I attended a
conference l-ast week with a couple of the Commissj-oners and
there was a representati-ve from -- at the national level- who
suggested --
COMMISSIONER SMITH: Mr. Said, you need to
cJ-arify what Commissioners you're talking about.
O. BY MR. RICHARDSON: Yeah, that would be helpful.
A. With Commi-ssioner Smith and Commissioner Redford.
It was the Western Conference of Public Service Commissioners.
And at one of the meetings, the person speaking
said that at any time the Company acquires generation from a
net metering or distributed generation source, that there was
430
83701
1
2
3
4
5
6
7
B
9
10
11
t2
13
74
15
L6
77
1B
19
20
27
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
SAID (x-Reb)
Idaho Power
an opinion that existed that that transition was subject to
FERC jurisdictional- review
The Company perspective on the lssue is that net
metering services is appropriately dealt wj-th at the State
jurisdictional- level- rather than the FERC jurisdictional- 1eve1,
and a way to preserve the State jurisdictional- review rights is
to eliminate the financj-al- settlement of net generation on an
annual- basis and move to an expiration and credits that are
based on ki1owatt hours rather than a financial payment.
0. So as a QF with a sol-ar panel on my roof, I could
choose to se11 power to you under your State implementation of
PURPA through Schedule 86. Correct?
A.
O.
on my house,
A.
That's correct.
And as a residential- customer with a solar panel
I can al-so choose to net meter under Schedu]e 84?
That I s correct.
O. And under Schedul-e 86, am I not entitled to
determine when, where, and if I will sell- power to you?
A. Thatrs correct. There's a contract between the
Company and the producer of power that woul-d spell out when the
provision would occur.
a.Wel-l-, it's not actually in the contract, is it?
I want to sel-l- el-ectricity to youI get to decide if tomorrow
under Schedul-e 86 or not?
A.And receive nonfirm rates,that's correct.
437
83701
1
2
3
4
5
6
1
B
9
10
11
t2
13
74
15
76
t7
1B
L9
20
2t
22
23
24
25
HEDRICK COURT REPORT]NG
P. O. BOX 5'7I , BOTSE, rD
SAID (x-Reb)
Idaho Power
O. Itrs not a contractuaf obligation?
A. That's correct. That's the third option, excuse
me.
O. So there's nothing to prevent mer ds a
residential customer with a solar panel on my house, to net
meter under Schedul-e 84 and sell the excess to you under
Schedul-e 86. Correct?
A. You could do that. As pointed out by
Commj-ssioner Smith, the rate that you would recei-ve would be
subject to the provisions under Schedu1e 86, which are based
upon nonfirm prices, ds opposed to a credit at the ful-l- retail
rate.
O. Correct. But there is a vehicl-e for me to sell
my excess generation?
A. That's correct.
O. Okay.
MR. RICHARDSON: Thatrs a1l- I have, Madam Chair.
COMMISSIONER SMfTH: Thank you.
Mr. Miller.
MR. D. MILLER: Give me just one moment, if you
wouldn't mind.
COMMISSIONER SMITH: Take al-l- the time you
need.
MR. D. MILLER: Madam Chairman, my impression
from participating in the hearJ-ngs today is that the Commission
432
83701
1
2
3
4
5
6
7
B
9
10
11
12
13
t4
15
!6
t7
18
1,9
20
2t
22
23
24
25
HEDRICK COURT
P. O. BOX 578,
REPORTING
BOISE, ID
SAID (X-Reb)
Idaho Power
has a good grasp of al-l- of the issues that are before you, so
I'm going to skip a large number of my intended regular sharp
questions and just touch on a few matters if I might.
COMMISSIONER SMITH: Wel-I, it ' s kj-nd of
disappointing, Mr. Mil-l-er. I mean, werve got until seven.
MR. D. MILLER: I know my cross-examination j-s
always entertaining, but
COMMISSIONER SMITH: Yes, and we've got until
seven.
MR. D. MILLER: -- f won't belabor you today.
CROSS-EXAMINATTON
BY MR. D. M]LLER:
O. .fust a couple, Mr. Said good afternoon. Just
a couple of preliminary clarifying things.
You indicated earlier in your testimony that the
Company bel-ieves that it made this filing because it was
directed to make a filing when the current cap was approached.
Is that correct?
A. Yes.
O. And is that directive contained in Order 29094,
to your knowledge?
A. I bel-ieve that's correct.
O. And if we actually l-ook at the language of the
433
83701
1
2
3
4
5
6
7
8
9
10
11
L2
13
l4
15
16
l1
1B
T9
20
2t
22
23
24
25
HEDRTCK COURT REPORT]NGP. O. BOX 518, BOTSE, rD
SAID (x-Reb)
Idaho Power
Order, first, the Commission says: We apprise Idaho Power that
when the cap is reached, the Company is to immediately notify
the Commission in writing that it is in a position of having to
refuse further applicat j-ons.
And the Commission says: At this point, the
Commission will look agaj-n at the cap again to determine
whether it continues to be reasonable or if there is a better
measure of what's appropriate or if there is, indeed, a need
for a cap.
Perhaps this can be read in different ways, but
in the most l-iteral sense, the Commissj-on said make a filing
when you're at the cap and we will l-ook at the cap. The
Commission dj-dn't say make a filing that proposes drastic
restructuring of the program. Would that be a fair reading of
what the Commission said?
A. That woul-d be a readj-ng of what the Commission
said, yes.
O. Thank you. Then, finally, or one last
cl-arification: At some point in your testimony on page 23 and
perhaps earl-ier, you reference ICA's reconrmendation to
grandfather existing customers, and I'd just like to clarify
with you I'm not sure where you got that, but that ICA has not
recommended grandfatheri-ng of exj-sting customers in its
testimony.
A. Are you aski-ng me if that's what they testify?
434
83701
1
2
3
4
5
6
7
B
9
10
11
72
13
L4
15
16
t7
18
t-9
20
2L
22
23
24
25
HEDR]CK COURT REPORTING
P. O. BOX 5'7I , BOTSE, rD
SAID (x-Reb)
Idaho Power
O. I guess I could put a question mark at the end of
that, but do you know of anyplace in the ICA testimony where
the Assocj-ation recommends grandfathering?
A. The word "grandfathering" may not have been used,
but my recolfection of the testimony was that there be
vintaging of customers such that the changed rates apply only
to new instal-Iations as opposed to existing installat j-ons.
O. WeIl Irm not sure where that comes from, but just
for the record, 1t's the ICA position that the, quote, proposed
rate design is flawed i-n many respects, ds outlined by
Ms. Whlte, but we did not recommend that there be different
treatment for existing and prospective customers. We just
reconrmend that the whol-e thing be rejected.
A. I apologize if f've referenced the wrong witness.
O. Then I was looking for a source that would tel-l-
me the give me the number for Idaho Power Company's retail
system load generation peak and I found a Web site published by
Idaho Power cal-l-ed "Facts about Idaho Powerr" and there I found
a number that the Idaho Power system retail generation peak
l-ast year occurred in July and was 3,245 megawatts. Does that
number seem right to you?
A. It sounds correct. The characterizati-on sounds a
I j-ttle odd to me. Does i-t say "generation peak" or does it say
"Ioad peak"?
O. Oh, I'm sorry, the system l-oad peak.
435
83701
1
2
3
4
5
6
1
B
9
10
11
72
13
74
15
1,6
L1
1B
79
20
2L
22
23
24
25
HEDRICK COURT REPORT]NG
P. O. BOX 578, BOTSE, rD
SAID (x-Reb)
Idaho Power
A. You said "l-oad generation peak, " which was
confusing to me because
O. My apologies.
A. "peaks" refer to loads, and that does sound
Iike the correct peak l-oad.
O. And the current net metering megawatt production
on the Idaho Power system is approximately in the neighborhood
of three megawatts?
A. I think that's a rounded-up number.
O. Rounded-up number?
A. My understanding is that the 2.9 megawatt cap was
originally established based on one-tenth of one percent of the
annual system peak number, so if you were to use that same
criteria based on a 3,200 and whatever number you said peak,
then you would be talking about three three point something
as your new cap. The Company didn't propose the same
methodology for establ-ishing a cap; rather, proposed a
doubling.
0. So just in round numbers, the total of net meter
generation woul-d be approximately one percent of the system
retail l-oad peak?
A. It's probably closer to one tenth of one percent.
O. That's right, one-tenth of one percent?
A. That's corrected.
O. I notj-ced that your formal training was in
436
83701
1
2
3
4
5
6
7
B
9
10
11
t2
13
t4
l-5
16
L7
1B
t9
20
27
22
23
24
25
HEDRICK COURT REPORTTNGP. O. BOX 578, BOTSE, rD
SAID (x-Reb)
Idaho Power
mathematics. Mj-ne wasn't, so thank you.
Wel-l-, in that same Idaho Power document, therers
also a statement: In addition, every kilowatt saved is one we
don't have to generate, reducing the number of additional- new
resources required and the need to purchase power on the open
market, often at a premium.
And this caused me to want to ask is every
kilowatt generated by a net metering customer one that you
don't have to generate, reducing the number of new resources
required and needed to purchase power on the open market, often
at a premium?
A. Yes, especj-aIIy when you look at generation- and
transmission-rel-ated costs .
O. Right.
A. When you l-ook at distribution and customer costs,
those are not reduced.
O. And we I think in perhaps glossed over the
fact that the Idaho Power system retail- l-oad occurred in JuIy
of last year?
A. Yes. Often our system peak occurs either at the
end of June or early in July, so early July l-ast year makes
sense.
O. And based on this statement, woul-d you agree that
ki-l-owatt hours produced by net meter customers have va1ue,
without this moment trying to having a debate about it, how to
437
83701
1
2
3
4
5
6
7
I
9
10
11
t2
13
t4
15
76
L7
18
19
20
27
22
23
24
25
HEDRICK COURT REPORT]NG
P. O. BOX 578, BOTSE, rD
SAID (x-Reb)
Idaho Power
quantify a value?
A. They do have vaLue, y€s.
O. And, yet, even though they have value and even
though they were produced by net meter customers, it's your
proposal to confiscate those kil-owatt hours at the end of a
12-month period. Is that correct?
A. No, that's not correct.
O. Is it your proposal the net metered customer
would forfeit those?
A. If they want to be a net metering service
customer, then I'm suggesting that that's part of that's
consistent with the intent that they utilize their
self-generation for their own purposes rather than havj-ng
annual surplus; and that if they want to instead be a provj-der
of power to the Utility over time, that the more appropriate
approach to that end is to be subject to Schedule 86.
O. Wel-l-, dt this point I don't want to really get
into the issue of whether the credits carried forward are just
an indef- oL, a rolling forward of credits or whether there
j-s an actua1 payment, because your proposal is that at the end
of a 12-month cycIe, the net metered customer loses those
kiLowatt hours. Right?
A. That's correct. Al-thou9h, we have amended our
proposal such that the
O. It's a self -sel-ect?
438
83701
1
2
3
4
5
6
7
8
9
10
11
t2
13
t4
15
1,6
l7
18
19
20
2t
22
23
24
25
HEDRTCK COURTP. O. BOX 578,
REPORTING
BOISE, ID
SAID (x-Reb)
Idaho Power
A. It's a sel-f-sel-ection as to the expiration date.
O. At one point in your testimony, you describe net
meter customers as obtaining free use of the Company facilities
and equipment. I'm not sure quite where that phrase occurs,
but it's somewhere. Right?
A. You're cIose. I think my testimony is that they
have the ability to avoid those costs and, therefore, the
potential- to receive those services for free.
O. I think werve agreed that a kilowatt hour has
val-ue. And i-n order for a kilowatt hour to come into
existence, someone has to j-nvest in facilities that are of such
a nature that can produce the kilowatt hour. Correct?
A. True.
O. fsnrt your proposal to give the Company the free
use of the facilities that generated that kilowatt hour?
A. Again, based upon the intent of net metering
services, and I think thatrs to the heart of the Company's
filing. The intent of net metering services is that a customer
has the ability to offset their use through their own
generation source, and the i-ntent of net metering is not for
customers to be net sel-Iers to the Utility; therefore, any
customers who end up in that mode I would contend are not
consj-stent with the intent of net metering services.
O. A11 right.
MR. D. MILLER: That's al-I those are all the
439
83701
1
2
3
4
5
6
1
B
9
10
11
I2
13
L4
15
t6
I7
18
L9
20
2L
22
23
24
25
HEDRTCK COURT REPORTING
P. O. BOX 578, BOTSE, rD
SAID (X-Reb)
Idaho Power
questions f had.
COMMISSIONER SMITH: Thank you, Mr. Miller.
Mr. Otto, do you have questions?
MR. OTTO: I have two questions.
CROSS-EXAMINAT]ON
BY MR. OTTO:
a. Mr. Said, you just described the intent of net
metering is for customers to offset their own l-oad. Is that
correct?
A. Yes.
O. And wou1d you agree that reducing individual
customer loads can potentially benefj-t all- ratepayers?
A. It depends on what aspects of costs might be
reduced. I think you had some discussions with Mr. Larkin this
morning rel-ated to generation and maybe transmj-ssj-on in terms
of does a two-megawatt reductj-on in net load suggest a
difference in a resource portfolio or a long-term avoided cost
or maybe even current rates, and there are small impacts
associated with a five-, six-megawatt reduction in overall
l-oad.
O. And would you agree that the demand-side
management alternate costs and the cost benefit tests that
those are used for are a reasonabl-e method to determi-ne whether
440
83701
t_
2
3
4
5
6
7
B
9
10
11
72
13
t4
15
1,6
t7
1B
79
20
2l
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 518, BOTSE, rD
SAID (x-Reb)
Idaho Power
al-l- ratepayers benefit from an indivj-dual- customer reducing
thei-r load?
A. No, I don't think I woul-d agree with that. I
think there is a distinctlon between demand-sj-de management
programs and service provisions under under tariff service.
Typj-ca11y, tariffed service rates are based upon cost of
service methodologies, which are separate and distinct from the
cost benefit analyses that are performed for demand-side
management programs.
O. But what we just agreed to is that net metering
is about a customer reducj-ng their own l-oad. That sounds like
the same thing as whether the retail rate makes sense.
Sorry, that was an inaccurate questi-on.
COMMISSIONER SMITH: And it wasn't a questi-on.
MR. OTTO: And j-t wasn't a question. Good point.
O. BY MR. OTTO: Let me ask it this way: Has the
Company done any analysis of the val-ue of a net metering
customer reducing thej-r own consumption to the Company -- the
va1ue to the Company?
A. No. Agai-n, based upon the intent of net metering
services as a tariffed service, I think the value proposition
is not part of of the the nature of net metering
services. Real-l-y what we're looking at is providing rate
determinants that would al-l-ow for col-l-ection of unbundl-ed
components of rates at l-east in the Company' s proposal. So j-n
44r
83701
1
2
3
4
5
6
7
8
9
10
11
!2
13
1_4
15
t6
L7
1B
1,9
20
27
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
SAID (x-Reb)
Idaho Power
terms of the credits that are allowed to come back against the
customer bi11, it's the Company's position that those credits
shoul-d be based on energy-related components, generation and
transmission incl-uded in that potential- reduction of credit,
rather than a val-uat j-on that's based on a methodology similar
to demand response programs or avoided costs or a dj-fferent
methodology. I think it's the distj-nction between tariff
servj-ces and demand-side management programs. I think there's
just a different approach to how the energy j-s val-ued.
O. So a customer offsetting their l-oad through their
own qeneration is fundamentally different than a customer
offsetting their own load through energy efficiency?
A. I think historically they have been treated
differently. And what the Company proposal suggests is an
approach that is more consistent with what the past practice
has been than an approach that you're suggesting.
MR. OTTO: Thatrs all f have.
COMMISSIONER SMITH: Thank you.
Mr. Hammond, do you have questions?
MR. HAMMOND: Just a couple orr I shouldnrt
say a couple. More than a couple, but I hope to be brief.
442
83701
1
2
3
4
5
6
7
B
9
10
11
L2
13
t4
15
76
L1
1B
19
20
27
22
23
24
25
HEDRICK COURT REPORTINGP. O. BOX 578, BOTSE, rD
SAID (x-Reb)
Idaho Power
CROSS-EXAMINATION
BY MR. HAMMOND:
O. This exhibit, I think it was 403, thls Disruptive
Challenges I think itrs 403, the EEI paper
I notice on page 1 of your testimony you state
that you're an active member of Edison Electric Instituters
Rates and Regulatory Affairs Committee. Is that correct?
A. Thatrs correct.
O. As part of that committee, did you in any way or
did that group participate in the production of this r or
sol-icj-tation to produce this paper, I guess?
A. f can't speak for al-l of the members of that
committee, so I don't know if any of them were involved or
not.
O. I guess the better question is were you invol-ved?
A. No.
A. Okay. Thank you. As far as the excess energy
issue, are you aware of other states that potentially pay
customers avoided cost rates for their excess net metering
generation?
A. I be1ieve there are different approaches in a
number of states. They may be differently situated than Idaho
Power, some of the directives of the state may be different,
and so their approaches may be different.
443
83701
1
2
3
4
5
R
7
B
Y
10
11
72
13
L4
15
16
l7
1B
t9
20
27
22
23
24
25
HEDRICK COURT REPORTTNG
P. O. BOX 518, BOTSE, rD
SAID (x-Reb)
Idaho Power
Agaj-n, one of my concerns i-s the jurisdictional
issue rel-ated to carryover, and that's the one of the
primary concerns that I have.
0. Do you know, from your experience or maybe your
discussions with other util-ities that have net meteri-ng, where
a case where FERC has asserted jurisdiction over any net
metering transaction or
A. f 'm not aware of any. I'm just aware of the
comment that I heard l-ast week that suggested that the FERC is
escalating or their bel-ief that they have jurisdiction over
such transactions.
O. And can you identify maybe who made that comment?
A. I wish I could remember her name. She was an
advisor to a gentleman named Chu, I bel-ieve.
COMMISSIONER SMITH: Oh. Lauren?
THE WITNESS: Was that her name?
COMMISSIONER SMITH: Yeah.
THE WITNESS: She was the lunchtime speaker on
Wednesday. I'm sorry.
O. BY MR. HAMMOND: That's a bad spot to be in.
Does anybody listen to the l-unchtime speaker?
A. I listened, but I just can't remember her name.
COMMISSIONER SMITH: Her name is Lauren Azar, and
she was an advisor to Secretary Chu.
MR. HAMMOND: Secretary Chu. Thank you.
444
83701
1
2
3
4
q
6
1
B
9
10
11
t2
13
L4
15
16
L7
1B
19
20
2L
22
z5
24
25
HEDR]CK COURT REPORT]NG
P. O. BOX 578, BOTSE, fD
SAID (x-Reb)
Idaho Power
THE WITNESS: Thank you.
BY MR. HAMMOND: .Tust, you know, you make some
reference to some FERC authorj-ties. Based on your knowledge,
not as an attorney but just in your profession, are you aware
at all- of an Opinion or a Decl-aratory Order issued by FERC
regarding SunEdison, LLC, that deal-s with sort of this issue of
excess generation potentially and avoided -- payment of avoided
cost rates?
O.
A.
0.
I'm sorry, Irm not.
Okay. Thank you. Where did we qo?
Going to the capacity cap, the 5.8 megawatts,
we've had a l-ot of discussi-on about that. Without that 5. B
megawatt cdp, is the Company unable to assess the impacts?
You're saying you can't assess the impacts and come back and
address them without that 5.8 megawatt cap?
A. No, I'm not saying that at all. And I think the
discussions this morning continually suggested that the 5.8
megawatt cap is reaIly for the convenj-ence of the Company.
My belief is that the cap is for the convenience
of the Commj-ssj-on. When they establ-ished the 2.9 megawatt cdp,
I think it I bel-ieve it was with the i-ntent that when we've
reached that point in time, that some of the concerns about
pricing that had been established long ago cou1d be reviewed
and updated and deal-t with by the Commissi-on. So I see the cap
as more of a convenience for the Commissioners more so than a
445
83701
1
2
3
4
5
6
1
B
9
10
11
t2
13
t4
15
L6
t7
1B
19
20
2l
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, fD
SAID (x-Reb)
Idaho Power
need of the Company.
a. Would you
were to decide that the
20 megawatts?
have any objection if the Commission
cap should be higher: Ten megawatts or
A. I think that the Commission has quite a bit of
discretlon in this area. With regard to the issues that we
have pointed out to the Commissioners as part of our filing,
part of their review wj-11- be to make a determination as to how
critical those issues are today and whether or not changes are
warranted today, and if not, then what time frame woul-d they
like to establish for review of those same factors in the
future. We bel-ieve that the issues that we've pointed out
speak to the concerns that were addressed a number of years ago
and haven't been addressed since that point of time. And so
there is discretion on the part of the Commission with regard
to the cap and how how soon that woul-d suggest that they
review these issues once aqain.
O.But would the Company --not the Commission, but
cap that's higher thanthe Company -- have any objection to a
5.8: Ten megawatts , 20 megawatts?
A. The Companyrs opi-nion on that is that absent any
other change, that a cap a l-ower cap that woul-d suggest
review i-n a quj-cker time frame would be more appropriate. If
some of the other issues that we've raj-sed are addressed today
as part of the Commission Decj-sion on the filing, that that
446
83701
1_
2
3
4
5
6
'7
I
9
10
11
L2
13
L4
15
16
l7
1B
l9
20
27
22
23
24
25
HEDRICK COURT REPORT]NG
P. O. BOX 5'18, BOTSE, fD
SAID (x-Reb)
Idaho Power
time frame for further revj-ew may be pushed out in time and
therefore a higher cap might be appropriate. So it rea1Iy
depends upon the Decisions that the Commission makes rel-ated to
each of the topics raised in the Company's filing, rather than
a determj-nation that 5. B is the appropriate level- regardless of
their determi-nation of other issues in thi-s case.
o.Okay. Last set of questions:
I think in your testlmony on page 20 L9 and
20, at the top of the page of 20 and then beginning with the
questj-on on page 19, line 18, I think -- and correct me if f 'm
wrong if the Commission were to deny establishing a new rate
cl-ass or a new rate structure for these customers, the Company
woul-d still like a rate schedule specifical-Iy for these net
metering customers, residential and small- net metering
customers. Is that correct?
A. I may not have understood your question
correctly, so I'11 paraphrase it and hopefully get it right.
I bel-ieve your question is if the Commission
decides not to change the rate design for net servj-ce net
metering service customers, do I stil-l- be1ieve that it's
appropriate for them to establish rate Schedule 6 and B. And,
y€s, that is my testi-mony, that the Commission coul-d determine
that the rate the billing determinants that are used for
Schedules 1 and 7 could be establ-ished for Schedules B or r 6
and B. I woul-d suggest that if they were to do that, that they
447
83701
1
2
3
4
5
6
7
B
9
10
11
t2
13
1,4
15
t6
L1
1B
19
20
2t
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
SAID (x-Reb)
Idaho Power
include a basj-c load charge that could put that billing
determinant rate at zero if they so desired, and so in essence
you would end up with identical bilLing determj-nants that you
currently have for Schedules 1 and 7 and effectively see no
change for those customers. But at the same time, you would,
1n making that decj-sion, let net l-et net metering service
customers know that in the future, when the Company comes in
for a general rate change in a rate case, that it should expect
that those bilJ-ing determinants woul-d be part of a cost of
service for those new rate cl-asses as part of that filing.
O. I guess that's my question: Then why didn't you
do it in this case?
A. Why didn't we propose that?
O. In this case. Why do you have to wait for the
Commission to tel-l- you to do that? Why coufdn't you have come
in, done that cost of service for the net metering customers at
this point, rather than relying on a cost of servj-ce study for
the entire cl-ass?
A. As I've mentioned earl-ier today and Mr. Larkin
mentioned when he was on the stand, we believe that the cost of
service components related to customer-rel-ated costs and
distribution-related costs for the two studies that you're
suggesting the existing study for residential- customers and
a new cost of service study for specj-fj-caIly these rate
classes our belief is that those cost components woul-d be
448
83701
1
2
3
4
5
6
7
B
9
10
11
t2
13
L4
15
16
11
18
19
20
27
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 5'7 B , BOTSE, rD
SAID (X-Reb)
Idaho Power
very similar; that the only cost components that potentialJ-y
woul-d have some differences would be on the generation and
transmj-ssion side, which are not part of the proposal, and,
therefore, a new cost of service study isn't required to make
determinations related to customer-related costs and
distributlon-rel-ated costs .
MR. HAMMOND: I have nothing further. Thank you.
COMMISSIONER SMITH: Thank you.
Mr. K1ei-n.
MR. KLEIN: Thanks.
CROSS_EXAM]NATION
BY MR. KLEIN:
A. Earl-ier today when I was asking Mr. Larkin some
questions he deferred the response to you, so I I 11 try and ask
those again.
Does the Company believe that if the Commission
adopts the Company's proposal to reso1ve the perceived
cross-subsidization problem for the net metering customers, the
Commission shoul-d later implement the proposed rate for aIl-
residential customers ?
A. I think, as just discussed wi-th Mr. Hammond,
we the Company does believe that at least for the
customer-related and distribution-rel-ated costs, that the
449
83701
1
2
3
4
5
6
7
8
9
10
11
1,2
13
t4
15
1,6
t7
1B
19
20
2t
22
23
24
25
HEDRICK COURT
P. O. BOX 578,
REPORTING
BOTSE, rD
SAID (X-Reb)
Idaho Power
current cost of service is appropriate for establishing those
billing determinants that could -- wou1d not potentially be
avoided by net meterJ-ng servj-ce customers. However, the
billing determinants associated with generation- and
transmj-ssion-related costs might be slightly different.
It has al-so been discussed that hj-storically for
Schedul-es 1 and 7, residential and small general service, that
the Company has consistently requested a move from exj-sting
billing determinants to billing determinants that are more
representative of cost of service, and that that has taken
place over time.
Commissioner Smith has pointed out that there has
been significant di-scussion as to whether or not recovery of
fixed costs through volumetric use is appropriate for
establ-j-shing incentives for customers to utilize l-ess of the
Company's product.
And so those I imagine that those issues wil-l
continue to persj-st. However, dt the end of the day when you
look at the bil-ling determinants that Mr. Larkin has presented
to the Commissj-on, I do bel-ieve that those are representative
or fairJ-y closely representative to the same bitling
determinants that ultimately you woul-d say would be appropriate
for Schedules 1 and 'l .
So that's kind of a long answer, but I can't teII
you today that the Company would propose a fu1l move from
450
83701
1
2
3
4
5
6
7
B
9
10
11
L2
13
t4
15
76
77
18
19
20
21
22
23
24
25
HEDRICK COURT
P. O. BOX 518,
REPORTING
BOISE, ID
SAID (x-Reb)
Idaho Power
current rates to full- cost of service for Schedules 1 and 7,
but if
COMMISSIONER SMITH: They couldn't survive it
either.
THE WITNESS: But if that were to occur, then the
issues that are related to net metering servj-ce customers woul-d
be greatly reduced.
O. BY MR. KLEIN: So the answer is y€s, perhaps.
Is there a reasonable rationale for the
Commj-ssion to maintaj-n current rates even though a perceived
cross-subsidy exists?
A. WeI1, I think there's been a lot of discussion as
to the magnitude of the change associated with the number of
customers that are impacted, and as I lj-stened to that, I agree
that the number of impacted lndividual-s 1s f airly small-. But I
do disagree with Mr. El-am with regard to his characterization
that net meter services customers are similar to other
resj-dential- customers, and I think the dissimilarities suggest
that now would be an appropriate time to address at l-east this
current cross-subsidy issue now rather than pushing it off to a
later point in time.
As I l-isten to the discussions, I come to the
conclusion that there is an opinion that if you can't correct
al-1 problems with rate desj-gn, then you shouldnrt correct doy,
and I don't align with that. I think when you identify an
451
83701
1
2
3
4
trJ
6
7
I
9
10
11
t2
13
L4
15
1,6
t1
1B
19
20
2t
22
23
24
25
HEDRICK COURT REPORTTNG
P. O. BOX 578, BOTSE, fD
SAID (x-Reb)
Idaho Power
issue that can be addressed, that you shoul-d probably address
ir.
O. Is it inappropriate to use different rate designs
for net metering customers and standard residential customers
if the cost of service for those groups is the same?
A. ft's again a matter of whether or not you address
an identified inequity. There are certainly rate desi-gn
inequities within classes in that it's very difficult to come
up with a rate design that woul-d perfectly recover each
indi-vidual customer within the class thei-r cost of service.
The fundamental- difference between a net metering
servi-ce customer and a residential a standard residential
customer or standard smal-l- general service customer reaI1y
focuses on the fact that they use the distribution system in a
different manner. At some time the net metering customer wil-l-
use less of the Company's product while they are generating,
and at other times they wil-l- use the same amount that they have
usedi however, they have the ability to credit against that use
to the extent that they may have generated more than their need
at a different hour of the day or a different time time
period. That's a capability that a standard residential-
customer doesn't have the ability to do.
And so I think that that distinction justifies
the establ-ishment of a rate schedu1e specifically to address
the cost of service for the net metering service customer, and
452
83701
1
2
3
4
5
6
7
B
9
10
11
t2
13
L4
15
t6
L7
1B
19
20
21
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
SArD (Com-Reb)
Idaho Power
therefore what I have provided as a possibility for the
Commissj-on where they establish a different rate design for the
cl-asses, that woul-d be suggesting that they recognize that
there is a difference between net metering service customers
and standard service customers.
A. Thank you.
COMMISSIONER SMITH: Do we have questions from
the Commissi-on?
COMMISSIONER REDEORD: No.
COMMISS]ONER KJELLANDER: NO.
EXAM]NAT]ON
BY COMMISSIONER SM]TH:
O. Just one, Mr. Said: If I wrote it down
correctly, when you were being questioned by Mr. Richardson,
the thought was raised that a customer coul-d be both a Section
84 and Tariff 84 and 86 customer, and I'm just wondering,
administratively, how would that work? Do you see the
potenti-aI for that?
A. I hope I didn't convey that.
O. No, Do, no. It was a questj-on which seemed to be
a possibility.
A. I guess the possibility I don't think that
they can technically take service under Schedul-e 84 and 86 at
453
83701-
1
2
3
4
5
6
7
B
9
10
11
L2
13
L4
15
1,6
L7
18
79
20
27
22
23
24
25
HEDRICK COURT REPORTTNG
P. O. BOX 5'18, BOTSE, rD
SAID (Com-Reb)
ldaho Power
the same time. Whether or not they can migrate back and forth
would be problematic.
O. So that's what f wondered. So say f wanted to
put it on my roof and I wanted to reduce my bi11s and I
sel-f-selected my 12-month period, and then I got a contract
wj-th you that said -- ot, with the Company, sorry -- that at
the end of my 12 month, if there is any excess energy you wi-11
buy it at the avoided cost rate. Could that work?
A. I think typically the transfer of power and the
valuation under Schedule 86 occurs in real- time
a. Yeah.
A. rather than a designation that, qee, I have
accumulated so much to this point in time, now I want to
convert it.
O. Because there's no power at that time?
A. Potentially. Yeah, potentially.
O. And doing it on a daily basis would seem
admini strat ively burdensome ?
A. I agree.
O. A monthly basis?
A. I think that it woul-d be problematic to swj-tch
back and forth in general.
O. A quarterly basis?
A. If if one were to migrate I guess trying to
accommodate your
454
83701
1
2
3
4
5
6
1
B
9
10
11
L2
13
l4
15
76
t7
18
19
20
27
22
23
24
25
HEDRICK COURTP. O. BOX 578,
REPORTING
BOISE, ID
SAID (Com-Reb)
Idaho Power
0. ft's just a hypothetical-. I mean, I don't know
if it is. I just wondered.
A. I think you would need to migrate and look
towards the future rather than the past, So I don't think
you'd I donft think it wou1d be reasonable to accumulate and
then sdy, I'm enti-tled to the historic accumufation. I think
if you were to transfer from a net metering servj-ce to Schedule
86, that you would take that prospectively.
O. So if I had a year of experience and reafized
that f had a whol-e bunch of leftover that I hadn't consumed
with my own usage
A. That wou1d be the time to migrate.
O. then I woul-d say f or the coming year I need to
go to a contract
A. Correct.
O. so that they just pay me?
A. That would be a reasonable evaluation on the part
of the
O. The customer.
A. the customer.
O. Okay. Thank you.
COMMISSIONER SMITH: Do you have any redirect?
MS. HILTON: No.
COMMISSIONER SMITH: Thank you, Mr. Said.
THE WITNESS: Okay.
455
83701
1
2
3
4
5
6
7
8
9
10
11
L2
13
t4
15
1,6
77
18
79
20
2L
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 518, BOTSE, rD
(The wltness l-eft the stand.)
COMMISSIONER SMITH: WeII, according to my paper,
that leaves us to the end of the witnesses that had prefil-ed
testimony and were scheduled to be here today. Does anyone
have a different view?
Does anyone desire the opportunity to make a
closing statement?
MR. OTTO: Madam Commissioner.
COMMISSIONER SMITH: Yes, Mr. Otto.
MR. OTTO: Since there have been several i-ssues
raised in this docket and the Conservation League only reaIly
testified on one, if it woul-d be helpful for the Commission, we
coul-d give our kind of our posltions on the other i-ssues or
maybe a recap. If the Commission feels that's not necessary, I
totally I would understand.
COMMISSIONER SMITH: Are you
MR. OTTO: Maybe this might heIp.
COMMISSfONER SMITH: An in-person, l-ive recap
today, Mr. Ottor or some other
MR. OTTO: For j-nstance, the Conservation League
didn't take any position on the interconnection agreements.
COMMISSIONER SMITH: Wel-l, there' s no requj-rement
that you take any -- you know, a position on every issue.
MR. OTTO: I was just offering if it would be
helpfuI. If not, that's fine. The choice is it yours.
456
83701
COLLOQUY
COMMISSIONER SMITH:
to say anything else in the room.
I see no desire for anyone
MR. HAMMOND: Madam Chair, John Hammond here.
The only question I would have in this is that there seems to
be a 1egal i-ssue with regard to this excess credit and whether
the Company can pay an avoided cost rate at the end or not, and
to the extent the Company
further guidance on that,
oL, the Commisslon woul-d like
f'm certain the parties could brief
it. But I'm only suggesting that because it appears to have
been a 1egaI issue that's been raised by Idaho Power. I don't
know if that woul-d assist the Commission, but I just throw it
out there.
COMMISSIONER SMITH : WeJ-1, I think we ' re
perfectly capable of having our own analysis, and people are
capable of telling us that we are wrong and they do that with
Petitions for Reconsiderati-on.
Mr. Miller.
MR. D. MILLER: f was just going to sdy, Madam
Chairman, ds I mentioned earlier, I think the Commissj-on has a
good grasp of the issues. The most parties can expect is to
try and have the Commission as fu11y informed as possible
before you start your deliberations. If you feel the need for
further discussi-on, the parties I'm sure woul-d be happy to
provJ-de it, but in this case, given these circumstances, I
think it's up to you.
45'7
4
5
6
7
I
9
10
11
L2
13
74
15
L6
77
18
1,9
20
27
22
23
24
25
HEDRTCK COURT REPORTING
P. O. BOX 578, BOTSE, rD 83701
COLLOQUY
1
2
3
4
5
6
7
I
9
10
11
1,2
13
1,4
15
1,6
77
1B
t9
20
27
22
23
24
25
HEDRICK COURT REPORTING
P. O. BOX 578, BOISE, ID
COMMISSIONER SMITH:WeI1, I guess I don't think
the Commission needs further assistance or brj-efs, and I do
think that this has been very well- presented and litigated on
the part of all of the parties. And I appreciate the breadth
and participation that we did have in this case, because I
think it clearly outl-ined the j-ssues that each party percei-ved
and the solutions that some people saw and the probl-ems that
other people saw. So I think this has been an excel-l-ent
presentation of the issues that have come forward.
And I appreciate that the Company dj-d come
forward, because I think we've suffered in the past when the
Commlssion has fail-ed to pay close attention to what issues are
out there. So I know it was an expenditure of enormous time
and resources on the part of the parties, but I think it's very
beneficial to the Commission and hopefuJ-Iy will aid us in our
decj-sion process to come up with an appropriate way forward for
this kind of resource.
So, seeing nothing el-se to come before the
Commission now, we will- cl-ose this part of the hearing. We
have a public hearing tonight that we have invited people to
attend to hear in person or by telephone, and we'l-l- do our best
to manage that in a rational- manner so that al-l- people can be
heard.
I would point out that we have had many, many
written public comments and we do appreciate those. So people
458
83701
COLLOQUY
who come tonight, if they have already written in, wil-l- be
remj-nded that the Commission has their comments, w€ have read
them, they will- be considered; and if you've al-ready said it,
you don't need to repeat it. So we hopefully will get those
who haven't already expressed their opinion or who have a
different idea.
So, with that, we wish you all a good evening.
And for those of you who return later, we'1l see you at seven.
(Idaho Power Exhibit No. 9 and Pioneer
Power Exhibit Nos. 403 and 404 were admitted into evidence.)
(The hearing adjourned at 4:1-2 p.m. )
459
2
3
4
q
6
1
8
9
10
11_
t2
13
74
15
\6
t7
18
1,9
20
2!
22
23
24
25
HEDRICK COURTP. O. BOX 578,
REPORTING
BOISE, ID 83701
COLLOQUY