20150918Transcript Volume I.pdf

ORIGINAL
BEFORE THE IDAHO PUBLIC UTILITTES COMMISSTON
IN THE MATTER OE IDAHO POWER
COMPANYI S APPLICATION FOR
APPROVAL OE LONG-TERM
MAINTENANCE PROGRAM CONTRACT
WITH SIEMENS ENERGY, SALE OF SPARE
PARTS INVENTORY TO STEMENS ENERGY,
AND DEFERRAL OF ASSOCIATED COSTS.
Case No.
rPc-E-15-17
HEARING BEEORE
COMMISSIONER MARSHA H. SMITH (Presiding)
COMMISSIONER PAUL KJE],LANDER
COMMISSIONER KRISTINE RAPER
l
,'.''
=,.. (=!::- *PLACE: Commission Hearing Room t:, &472 Vflest Washington StreetBoise, Idaho
DATE: September 9, 20L5
VOLUMEI-Pagesl-38
POST OFFICE BOX 578
BOISE, IDAHO 83701
208..336-9208
HEDRIGK
COURT REPORTING
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HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD 83701
APPEARANCES
For the Staff: KARL T. KLEIN, Esq.
Deputy Attorney General
472 ['Iest Washi-ngtonBoise, Idaho 83702
For Idaho Power Company: LISA D. NORDSTROM, Esq.
Idaho Power Company
L22L West Idaho StreetBoise, Idaho 83702
Eor Industrial Customers of RICHARDSON ADAMS, PLLC
Idaho Power: by PETER ,I. RICHARDSON, Esq.
515 North Twenty-seventh Street
Boi-se, Idaho 83616
APPEARANCES
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INDEX
WITNESS EXAMINATION BY PAGE
Trevor Mahlum
(Idaho Power Company)
Courtney Waites
(Idaho Power Company)
Ms. Nordstrom (Direct)
Prefiled Direct
Commissioner Kj ellander
Ms. Nordstrom (Direct)Prefiled Direct
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EXHIBITS
NUMBER PAGE
For Idaho Power Company:
l_.Long Term Program Contract PremarkedAdmitted 37
HEDRICK COURT REPORTINGP. O. BOX 578, BOTSE, rD
rNDEX
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HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
BOISE, IDAHO, WEDNESDAY, 9EPTEMBER 9, 2015, 10:00 A.M.
COMMISSIONER SMITH: Good morning, ladies and
gentlemen. This is the time and place set for a hearlng before
the Idaho Publ-ic Util-ities Commj-ssj-on in Case No. IPC-E-15-17,
further identified as In the matter of the application of Idaho
Power Company for an order authorizinq the approval of a
long-term program contract with Siemens Energy, Inc., and
deferral of associated costs. That's quite a title.
We wil-I take the I notice that there is no
list of parties. I don't think there was a notice of
intervention. So we'11 just take the appearances of people who
are here today. Do you want to start, Ms. Nordstrom.
MS. NORDSTROM: Thank you. My name 1s Lisa
Nordstrom, and I am counsel for Idaho Power Company. I'm
joined today by Tim Tatum, Courtney Waites, and Trevor Mahlum,
who are also employees of the Company.
COMMISSIONER SMITH: Thank you.
Mr. Kl-ein.
MR. KLEIN: Thank you. f'm Karl K1ein, deputy
attorney general, representing the Commission Staff. And with
me is technical wj-tness for Staff, Terri Carlock, and also
another technical wi-tness, Rick Sterling.
COMMISSIONER SMITH: So we'}I get to that in a
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HEDRICK COURT REPORT]NG
P. O. BOX 5'18 , BOTSE, rD
minute.
Mr. Richardson.
MR. RICHARDSON: Thank you, Madam Chair.
Peter Richardson of the firm Richardson Adams, or behalf of the
Industri-al Customers of Idaho Power. And wj-th me this morning
j-s our expert witness, Dr. Don Reading.
COMMISSIONER SMfTH: Thank you. ft's my belief
and understandj-ng that we are having this hearing in compliance
with Idaho Code Section 6L-328 because we are asked to
authorize the transfer of some assets of Idaho Power Company,
and the only party I know of to file prefiled testimony is the
Company. Is that correct?
MS. NORDSTROM: That's correct.
COMMISSIONER SMITH: So it's my belief that that
wil-I be the only witnesses we hear today.
f know there is an issue with regard to the
carrying charge which has been fu11y vetted in written
comments, and I didn't anticipate that that wou1d be an issue
for today's hearing but woul-d rather be an j-ssue that the
Commission would decide based on the written comments.
Does anyone have a different understanding or
desire? Mr. Richardson.
MR. RICHARDSON: Thank you, Madam Chalr. In the
interest of time, the Industrial- Customers woul-d waive any
potential cross of Idaho Power's witnesses.
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HEDRICK COURT REPORTINGP. O. BOX 578, BOTSE, rD
MAHLUM (Di)
Idaho Power
COMMISSIONER SMITH: Okay. Thank you.
Ms. Nordstrom, I guess, unless other
Commissioners have comments or questions, wer11 turn to you.
MS. NORDSTROM: A11 right. Wel1, fdaho Power
caIls Trevor Mahlum as its first witness.
TREVOR MAHLUM,
produced as a witness at the instance of Idaho Power Company,
being flrst duJ-y sworn, was examined and testified as follows:
D]RECT EXAMINATION
BY MS. NORDSTROM:
O. Good morning.
A. Good morning.
O. Please state your name and spe1I your last name
for the record.
A. It's Trevor Mahlum, M-A-H-L-U-M.
A. By whom are you employed and in what capacity?
A. Employed by Idaho Power as the area maintenance
leader.
O. Are you the same Trevor Mahlum that filed direct
testimony on June 5, 2015?
A. T am.
O. Did you fil-e any exhJ-bits with your testimony?
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HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
MAHLUM (Di)
Idaho Power
A. I did not.
O. Do you have any corrections or changes to your
testimony?
A. I do.
A. And can you please describe them?
A. On page 6, beginning on page 6 of my testimony,
on line 20, "Dj-d the Company issue a request for proposal for
the services provj-ded for under the LTP contract?" under my
answer, I believe we had a written correction.
O. That's correct. And I bel-ieve that was prefiled,
so everyone shoul-d have a copy of it.
COMMISSIONER SMITH: Right, it has been prefiled,
so I'm assuming you've provided the court reporter with a
corrected copy.
MS. NORDSTROM: We did.
COMMISSIONER SMITH: Okay.
O. BY MS. NORDSTROM: Did you have any other
corrections ?
A. I had one other correction. It was on page 9.
On line 4, it references the new parts will eliminate the need
for two combustor inspections. Itrs actually three combustor
inspections that wil-1 be removed.
a. So that is on
A. Page 9, l-ine 4.
O. Page g, line 4.
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HEDRICK COURT
P. O. BOX 578,
REPORTING
BOISE, TD 83701
MAHLUM (Di)
Idaho Power
A. Am I on the wrong page?
O. Page 9. Is it line 11 you're referring to?
A. Mine may be off the previous
A. We have
A. The previous correction was not updated.
O. I see.
COMMISSIONER SMITH: So the word T-W-O on line 11
at page 9 shoul-d be "threer" T-H-R-E-E.
THE WITNESS: Correct.
O. BY MS. NORDSTROM: Do you have any other
corrections?
A. That's it.
O. Tf I were to ask you the questions set out in
your corrected prefiled testimony, would your answers be the
same today?
A. They woul-d.
MS. NORDSTROM: I would move that the prefiled
direct testimony of Trevor Mahl-um be spread upon the record as
if read, and we have no further questJ-ons so f will- make him
available for cross-examinati-on.
COMMISSIONER SMITH: Is there any objection to
the spreading of the prefiled testimony? ff not, it is so
ordered.
(The followj-ng prefiled testimony of
Mr. Mahlum is spread upon the record. )
1 Q. Please state your name and business address.
2 A. My name is Trevor Mahlum and my business
3 address is ]-22L West Idaho Street, Boise, Idaho 83102.
4 Q. By whom are you employed and in what capacity?
5 A. I am employed by Idaho Power Company ("Idaho
6 Power" or "Company") as a Power Plant Area Maintenance
7 Leader in the Power Supply Department.
8 Q. Please describe your educational background.
9 A. f graduated from the University of fdaho in
10 2004 with a Bachelor of Science degree in Mechanicai
11 Engineering. After receiving my degree, I began my career
1-2 working as an Experimental Power Reactor Operator at the
13 Idaho National Laboratory ("INL"). I spent approximately
L4 two and a half years at the INL working for Battelle Energy
15 before beginning work at Idaho Power.
15 O. Please describe your work experience with
L1 Idaho Power.
18 A. I joined Idaho Power in June of 2007 as an
19 Engineer I in the Power Production Engineering group. As a
20 mechanical engineer, I supported the gas turbine fleet
27 through construction, contracting, project modifications,
22 outages, and environmental reporting. Beginning in 2008, I
23 lead the effort to obtain a Permit to Construct through the
24 Idaho Department of Environmental Quality for the
25 construction of the Langley Gulch power plant ("Langley
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Idaho Power Company
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Gulch"). Erom 2009 through 20L3, I assisted with the
Langley Gulch constructj-on through contract support,
speclfications review, reporting, on-site construction
help, and plant commissioning. fn 20L3, T was promoted to
the position of Power Plant Area Maintenance Leader where
my current responsibilities include both maintenance and
project improvements at the Langley Gu1ch, Danskin, and
Bennett Mountain facilities. In addition, f am the lead
technical revj-ewer for the Long Term Program (*LTP")
Contract.
What i-s Idaho Power requesting in this case?
Idaho Power is requesting (1) approval of the
LTP Contract with Siemens Energy, fnc. ("Siemens"), (2)
approval of the transfer and sale of certain assets to
Siemens pursuant to ldaho Code S 6L-328, and (3) approval
of the Company's proposed accounting treatment of costs
associated with the LTP Contract.
0.
case?
What is the purpose of your testimony in this
A.My testimony in this case wiII describe Idaho
Power's current management of its gas plant maintenance
program and the benefits that would exist with gas plant
maintenance provided for under the LTP Contract with
Siemens. Company witness Courtney E. Waites will describe
Idaho Power's request for approval of the transfer and sale
REDACTED - MAHLUM, DI
Idaho Power Company
1 of certain assets to Siemens pursuant to ldaho Code
2 S 6L-328 and its reguest for approval of the Company's
3 proposed accounting treatment.
4 Q. Please describe the Company's gas fIeet.
5 A. Idaho Power owns and operates three natural
6 gas-fired facilities: the Langley Gulch combined cycle
7 combusti-on turbine (*CCCT"), the Danskin simple cycle
I combustion turbine ("SCCT"), and the Bennett Mountaj-n SCCT.
9 The Langley Gulch plant consists of one 180 megawatt ("MW")
10 Siemens STG-500084 combustion turbine and one 96 MW Siemens
11 SST-700/SST-900 reheat steam turbine and is located south
12 of New Plymouth in Payette County, Idaho. Located northwest
L3 of Mountain Home, Idaho, the Danskin facility consists of
L4 one 169 MW Siemens 50LF and two 44 MW Siemens-Westinghouse
15 W2518L2A combustion turbines. The Bennett Mountain plant
16 is located east of the Danskin plant in Mountain Home,
L7 Idaho, and consists of one L62 MW Siemens-Westinghouse 501F
18 SCCT.
19 O. How does Idaho Power currently maintain its
20 gas fleet?
2L A. At this time, Idaho Power self-manages its
22 natural gas fleet through a collaboratj.ve effort between
23 the Company and the original equipment manufacturer
24 (*OEM") . The Company's OEM for all its combustion turbines
25 is Siemens. Idaho Power's combustion turbines are subject
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fdaho Power Company
1 to required maintenance outages at OEM-recommended
2 intervals based upon each plant's primary mode of
3 operation. Based on Idaho Power's historical operating
4 profile, the Danskin and Bennett Mountain SCCTs have
5 maintenance intervals based on the number of plant start-
5 ups and Langley Gulch has a maintenance schedule based on
7 hours of operation.
8 Currently, each outage has been contracted to
9 Siemens for service on a case-by-case basis. The service
10 includes an outage field engineer that oversees the outage,
11 a service crew that performs the work, and the rental of
1,2 specialized tooling required for the removal and subsequent
13 installatj-on of the turbine components. Under the self-
L4 manage approach, Idaho Power's only option is to buy parts
15 at the manufacturer's fuII list prices. In addition to the
16 contract for OEM service, Idaho Power may be required to
L7 contract for ancillary services or equipment for each
18 outage, such as mobile cranes, insulation crews,
19 scaffolding crews, and sanitary facilities, depending on
20 the scope of each outage.
2L O. Does the Company's self-manaqement of its gas
22 plants include any other maj-ntenance requirements?
23 A. Yes. In addition to the OEM service, turbine
24 components (i.e., turbine blades, combustor baskets, and
25 fuel nozzles) need to be replaced at their respective
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Idaho Power Company
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individual service intervals. These turbine components are
costly, proprietary, and have lead times up to 48 weeks.
Idaho Power's current practice is to purchase the parts
from Siemens in advance of the outage, allowing adequate
time for delivery and possession of the parts prj-or to
commencement of the outage, and, upon receipt, are
capitalized. During the outage, the existing parts are
removed and the replacement parts are installed, resulting
in short outage windows and earlier plant availability.
o.What does fdaho Power do with the parts that
11 have been removed from the combustion turbines?
12 A.The removed parts are retired from Idaho
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are inspected and repaired. Once refurbished, the parts
are returned to the Company, capitalized, and ready for use
16 again.
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fdaho Power's gas fleet?
A.Yes. The maintenance of the Company's gas
fleet also requires various additional tasks to be
performed by both ldaho Power and contractor personnel.
Idaho Power completes pre- and post-inspection work while
also performing other facility maintenance and repairs
(i.e., exhaust repairs, fuel filter replacements, valve
repairs) during turbine outages to maximize the
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availability of the plant. Work on the turbine aIlows for
a complete combustion inspection, including, but not
limited to, the removal and reinstallation of new or
refurbished pilot nozzles, support housings, combustor
baskets, transition seals, ds well- as some consumable parts
like bolts, washers, and gaskets. Because these additional
tasks require scheduled outages, Siemens often performs
supplementary work as an adder to the base cost of an
inspection, typically at a discounted price.
o.What prompted Idaho Power to look at other gas
plant maintenance options?
A.fdaho Power began looki-ng at other maintenance
options for its gas fleet during construction of the
Langley Gulch plant. Langley Gulch is the Company's only
CCCT and uses some of the newest, most technologically
advanced parts on the market. fdaho Power recognized that
its employees do not have all of the necessary technical
skills to maj-ntain the plants to the level offered by
Siemens.
0.Did the Company issue a request for proposal
for the services provided for under the LTP Contract?
A.No. However, fdaho Power did contract with a
professional knowledgeable in long-term program contracts
who contacted multiple third-party providers of gas plant
maintenance as part of a formal request for information
neJ*crED - MAHLUM, Df
Idaho Power Company
REPORTER'S COPY
process. Those third-party proposals were analyzed by both
2 the Company and the contracted professional and it was
3 determined that there are currentl-y no other third-party
4 maintenance providers that could provide services
5 equivalent to those provided under the LTP Contract with
6 Siemens. Idaho Power did issue a request for proposal for
7 services for the Bennett Mountain and Danskin plants only
B to evaluate the possibility of a hybrid approach to
9 maintenance of the Company's gas plants through a
10 combination of a long-term service agreement as wel1 as
11 continued self-management of the Langley Gulch power plant.
12 The responses were evaluated and resulted in the
13 recommendation for the Company to proceed wj-th a long-term
14 maintenance contract with Siemens. Because Siemens is the
15 OEM for al-I of the Company's gas plants and is the industry
16 leader in gas plant maintenance, the only available
l7 alternative to the LTP Contract with Siemens would be the
l-8 continuation of a Company-managed maintenance program with
19 technical support and parts purchased from Siemens.
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o.Prior to the execution of this agreement, was
a LTP Contract with Siemens an option?
A.Yes. However, when fdaho Power operated only
the Danskin and Bennett Mountain plant SCCTs, an LTP
24 Contract was not an economical alternative because of the
25 l-imited frequency of maintenance outages for those plants
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Idaho Power Company
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SCCT outages are based on the number of start-ups so
multiple years exist between scheduled outages at the
Danskin and Bennett Mountain plants. Until- the addition of
the Langley Gulch CCCT, contracting for gas plant
maintenance servlces with Siemens at each outage interval
has been the most cost-effective approach. With the
construction of Langley Gulch, a baseload CCCT whose
maintenance is based upon run-time hours, the Company
anticipates more frequent gas plant maintenance activities
to exist going forward. With this in mind, Idaho Power
began evaluating and negotiating an agreement with Siemens
for a LTP.
o.Is there a difference in cost to Idaho Power
between the self-management option and a LTP Contract?
A.Yes. The LTP Contract will provide a lower
priced alternative to the maintenance of the Company's gas
plants; Idaho Power estimates the cost to continue with
sel-f-management would be approximately over
the life of the contract while the LTP Contract would cost
approximately over the comparable time
period, a savings of
agreement.
o.
is requesting
A.
over the life of the
Please describe the LTP Contract
approval of in this proceeding.
Under the LTP Contract, Siemens
the Company
will provide
turbines,scheduled maintenance on all three combustion
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including program parts or repairs, shipping, services,
l-abor, engineering services, and program management
servj-ces. Program parts consi-st of the major combustion
turbine parts provi-ded by Siemens, including the locking
hardware used to affix the parts, the parts installed in
the combusti-on turbine upon the effective date, all initial
spare parts, and alI parts changed during the length of the
contract ("Program Parts"). Some of these Proqram Parts
are the latest technology Idaho Power would not otherwise
have access to and their superiority eliminates the need
for two combustor inspection outages at Langley Gulch.
Moreover, they are available under the LTP Contract at a !
I discount from the List price.
Siemens will al-so perform unscheduled maintenance on
all three combustion turbines to the extent such work i-s
not covered by Siemens' other warranties under the
contract. Leveraging Siemens' pool of regional J-nventory,
outage resources, and technical expertise will result in
lower overall- costs to Idaho Power and its customers.
O. Aside from lower costs over the life of the
contract, how does the LTP Contract differ from the
Company's current self-managed maintenance practice?
A.The following chart provides a hiqh level
comparlson of Idaho Power's current maintenance practices
compared to offerings under the LTP Contract:
coRREcri6 *"rocrED - MAHLUM, Dr s
Idaho Power Company
Current Maintenance
Practice
Proposed LTP
Contract
Scope of Work As established in eachindividual purchase
order.
Scheduled and
uns cheduled maintenanceat a1l three gas
facilities.
Term As established in eachindividual purchase
orderi on a case-by-
case basis.
Up to 25 years
Warranties Equipment: the lesserof 18 months fromdelivery or 12 months
from installation.
Software: 12 months
from date of shipment.
Shop Repair/
Modernization: 12
months from shipment.Technical services: L2
months from completion.
Program Parts: duringthe term of the LTP
Contract.
Open/CIose Hardware
non-Program Parts:
I for Langley
cufcfr and up t" ffor Danskin
Bennett Mountain.Includes a post-termparts warranty after endof LTP Contract.
Scheduled outageduration guaranty.
Warranty response
guaranty.
Reliability guaranty.
and
up to
and
Limitation onLiability
In all- circumstances,
Siemens' liability islimited to the totalprice paid to Siemens
under the applicable
purchase order givingrise to the claim.
anyIimited
. Eurtherthere is a lifetime capequal to 100 percent ofalL amounts paid to
Siemens under the LTP
Contract.
TotaL aggregate
liability during
cal-endar year isto the greater of
Price As established in each
individual purchase
order.
Per unit initiation fees
combined with largre
milestone amounts due ator near actual outage
events.
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Idaho Power Company
1 As shown above, the LTP Contract will provide Idaho
2 Power with both scheduled and unscheduled maintenance
3 activities for an extended period of time while offering
4 enhanced price predictability. In addition, provisj-ons
5 with respect to performance obligations, guaranties,
6 warranties, liquidated damages, and Limitation on liability
7 will mitigate risk.
I Q. What is the length of the contract with
9 Siemens under the LTP Contract?
10 A. The contract term of the LTP Contract is the
11 time between the execution date and the earlier of the
12 performance end date for each combustion turbj-ne or 25
13 years. Because the performance end date is based on a
14 combination of the number of scheduled outages, equivalent
15 basel-oad hours or equivalent starts, the expiration of the
16 contract will vary for each combustion turbine; the
l7 estimated expiration date of the LTP Contract for each
LB combustion turbine ranges L8-22 years. When analyzing the
19 LTP Contract, the Company has assumed a contract term of 20
20 years.
2L O. What warranties are provided by Siemens under
22 the LTP Contract?
23 A. Under the LTP Contract, Siemens will warranty
24 all Program Parts during the term of the contract. fn
25 addition, Lf the LTP Contract is executed, Siemens will
MAHLUM, DI 11
Idaho Power Company
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warranty open and close hardware and non-Program Parts for
t.he Danskin and Bennett Mountain plants for up to I
and up t" I for the Langley Gulch ptant. After the
end of the contract term, generally
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from the date
of the last major outage, Siemens will provide limited
warranty coverage for aII new, repaired, ot refurbished
Program Parts, non-Program Parts, and open and close
hardware.
What is Siemens' commitment 1n handling
warranty claims?
A.
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0. What are the limitations of liability under
the LTP Contract with Siemens?
A.The contract contains market limitations on
certain consequential damages for long-term program
contracts for the benefit of both parties. f
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o.
A.
o.
Contract?
How j-s the pricing structured under the LTP
A. The pricing structure under the LTP Contract
involves per-uni-t initiation fees, combined with periodic
milestone amounts due at or near the actual outage events.
payments made to Siemens with the work Siemens will
perform, the parties negotiated a milestone-based fee
structure as explained above, incl-uding the per-unit
initiation f,ees. Because milestone work is expected to
occur every few years, resulting in peri-odi-c milestone-
based payments, Si-emens requires an initiation fee higher
than under a fixed annual, outage, and varlable fee-based
pricing structure as a prepayment toward services that will
be performed over the life of the agreement. The total
initiation fee is and is due upon execution of
the LTP Contract.
a. Please describe the milestone palrments.
A. The milestone payrnents are palrments due at or
near actual outage events. The payments include a
nsDLtrED - MAHLUM, Dr
What are the per-unit initiation fees?
fn an attempt to more appropriately match
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Combustor Inspection Milestone payment, a First Hot Gas
Path Milestone payment, and Major Inspection Milestone
payments, which is an inspection that encompasses the fu1I
scope of both the combustor inspection and the hot gas path
inspection as welI as a fuI1 compressor inspection.
Similar to the accounting for work performed by Siemens
under the current self-management of maintenance, a portion
of the milestone payments will be capitalized and a portion
will be operation and maintenance ("O&M") expense, which
has historj-cally been a capital and O&M split of 89 percent
and 11 percent, respectively.
plant maintenance through a collaborative effort between
the Company and Siemens, contracting for outage and
maj-ntenance services on a case-by-case basis. The
construction of the Langley Gulch plant employs some of the
most technologically advanced parts available, resulting in
third-party maintenance provisions offered only by Siemens.
Until now, individually contracting for maintenance
services for gas plant maintenance with Siemens has been
the most cost-effective approach. Execution of a LTP
Contract with Siemens will provide a lower-priced
alternative to self-managed maintenance of Idaho Power's
gas plants.
PIease summarize your testimony.
Idaho Power currently self-manages its gas
REDACIED - MAHLUM, DrL9 t4
Idaho Power Company
a. Does
A. Yes,
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this conclude
it does.
your testimony?
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MAHLUM, DI 15
fdaho Power Company
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HEDRICK COURT REPORTING
P. O. BOX 5'18 , BOTSE, rD
MAHLUM (Com)
Idaho Power
(The following proceedings were had in
open hearing. )
COMMISSIONER SMITH: And Mr. Mahl-um is available
for cross. Mr. Kl-ein, do you have questi-ons?
MR. KLEIN: No.
COMMISSIONER SMITH: Okay, Mr. Richardson has
already said no. Any from the Commissioners?
COMMISSIONER K,.TELLANDER: Just one.
COMMISSIONER SMITH: President Kjellander.
EXAMINATION
BY COMMISSIONER KJELLANDER:
O. Only because you've never been on the witness
stand before, and I'd hate to see you come here and not get
asked at least one question.
Do you have any idea how many Siemens employees
might actually be 1ocated out at the plant?
A. No Siemens employees will be permanently located
at a pIant.
O. None whatsoever?
A. That's correct.
O. okay.
A. They wil-l have a dedicated service manager and he
wil-I be our point of contact for outage support, for getting
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HEDRICK COURT REPORTING
P. O. BOX 518, BOTSE, rD
WAITES
Idaho
(Di )
Power
the schedules and everything Ii-ned up, but he is pri-marily
hosted by e-mai1 and tel-ephone ca1lsr €rs well as a once-a-year
in-person meet j-ng.
O. Okay. Thanks.
COMMISSIONER SMITH: No redirect?
MS. NORDSTROM: I do not have any redirect.
COMMISSIONER SMITH: Thank you for your he1p,
Mr. Mahlum.
THE WITNESS: Thank you.
(The wj-tness left the stand. )
MS. NORDSTROM: As its next witness, Idaho Power
call-s Courtney Waites.
COURTNEY WAITES,
produced as a witness at the instance of Idaho Power Company,
being first duly sworn, was examlned and testified as fol-lows:
DIRECT EXAMTNAT]ON
BY MS. NORDSTROM:
O. Good morning.
A. Good morning.
A. P1ease state your name and spe1I your last name
for the record.
A. Courtney Waites, W-A-I-T-E-S.
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HEDRICK COURTP. O. BOX 578,
REPORT]NG
BOTSE, rD 83701
WAITES (Di)
Idaho Power
a. By whom are you employed and in what capacity?
A. Idaho Power, senior regulatory analyst.
O. Are you the same Courtney V0aites that filed
direct testimony on June 5, 20L5?
A. I am.
O. And did you have any exhibits?
A. I did: one.
O. And do you have any changes or corrections to
your testimony or your one exhibit?
A. I do not.
O. If I were to ask you the questions set out in
your prefiled direct testimony, woul-d your answers be the same
today?
A. They woul-d.
MS. NORDSTROM: I woul-d move that the prefiled
direct testimony of Courtney Waites be spread upon the record
as if read, and that Exhibj-t 1 be marked for identification.
COMMISSIONER SMITH: If there's no objection, we
will spread the prefiled testimony of Ms. Waites upon the
record as if read, and admit Exhibit 1.
(The fol-l-owj-ng prefiled testimony of
Ms. Waites is spread upon the record.)
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O. Please state your name and business address.
A. My name is Courtney E. Waites and my business
'address is L22L hlest Idaho Street, Boise, Idaho 83702.
O. By whom are you employed and in what capacity?
A. f am employed by Idaho Power Company ("Idaho
Pohrer" or "Company") as a Senj-or Regulatory Analyst in the
Regulatory Affairs Department.
o.
A.
a.
Idaho Power.
Arts degree in Accounting from the University of AIaska in
Anchorage, Alaska. fn 2000, I earned a Master of Business
Administration degree from Alaska Pacific University. I
have attended New Mexico State University's Center for
PubIic Utilit.ies and the National Association of Regulatory
Utitity Commissioners "Practical SkiIls for the Changing
Electric Industry" conference, the Electric Utility
Consultants, fnc., "Introduction to Rate Design and Cost of
Service Concepts and Techniques for Electric Utiliti-es"
conference, Edison Electric Institute's "Introduction to
PubIic Utility Accounting" course, Edison Electric
Institute's Electrj-c Rates Advanced course, and SNL
Knowledge Center's "Essentials of Regulatory Finance"
course.
P1ease describe your educational background.
In December of 1998, I received a Bachelor of
Please describe your work experience with
nsDe8rEo - wArrES, Dr
Idaho Power Company
1 A. I began my employment with Idaho Power in
2 December 2004 in the Accounts Payable Department. In 2005,
3 I accepted a Regulatory Accountant positj-on in the Finance
4 Department where one of my tasks was to assist in
5 responding to regulatory data requests pertaining to
5 financial issues. In 2006, T accepted my current position,
7 Regulatory Analyst, in the Regulatory Affairs Department.
B My duties as a Regulatory Analyst include providing support
9 for the Company's various regulatory activities, including
10 tariff administration, regulatory ratemaking and compliance
11 filings, and the development of various pricing strategles
72 and policies.
13 O. What is Idaho Power requesting in this case?
1,4 A. Idaho Power is requesting (1) approval of a
15 Long Term Program ("LTP") Contract with Siemens Energy,
16 Inc. ("Siemens"), (2) approval of the transfer and sal-e of
1,7 certa j-n assets to Slemens pursuant to ldaho Code S 6l-328,
l-8 and (3) approval of the Company's proposed accounting
19 treatment of costs associated with the LTP Contract.
20 0. What is the purpose of your testimony in this
2L proceeding?
22 A. My testimony will describe Idaho Power's
23 request for approval of the transfer and sale of certain
24 assets to Siemens pursuant to ldaho Code S 6l-328 and its
25
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reguest for approval of the Company's proposed accounting
treatment of costs related to the LTP Contract.
I. ID;AEO CODE S 61-328
A. P1ease describe the Company's request for
approval of the transfer and sale of certain assets to
Siemens pursuant to ldaho Code S 6L-328.
A.As mentioned in the testj-mony of Mr.,Mahlum,
Idaho Power currently has capitalized spare parts on hand
in anticipation of maintenance outages. With a LTP
Contract, the Company has no need for its current inventory
of spare parts; Siemens will provide all parts necessary
for maintenance and repair of Idaho Power's gas fleet.
Under the terms of the LTP Contract, Siemens will take
ownership of Idaho Power's inventory of initial spare parts
for each combustion turbine ("initial spare parts"), as
listed in Exhibit G to the LTP Contract provided as
confidential Attachment 1 to the Application, and is
expected to remove them from Idaho Power's facilities soon
after the approval of the LTP Contract. In consideration
of the transfer of the initial spare parts to Siemens, the
contract price reflects a discount based on fdaho Power, s
net book value of the initial spare parts.
o.Pursuant to ldaho Code S 61,-328, an electric
utility must obtain approval from the Idaho Public
Utilities Commission ("Comrnission") before it sel1s or
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transfers ownership in any generation, transmission, or
distribution p1ant. Further, Idaho Code S 6L-328 states
the Commission must find that the transaction is consistent
with the public interest prior to authorization of the
transaction. Is the transfer and sale of Idaho Power's
initial spare parts to Siemens in the public interest?
A.Yes. In addition to the financial benefit of
reduced contract costs over the life of the agreement, the
transfer and sale of the initial spare parts will al1ow for
the return of spare parts fdaho Power would otherwise no
longer use. The demand for these specific spare parts j-s
limited as the parts are no longer the latest technology
and have a limited buyer poo1, limiting its market va1ue.
The transfer and sale of the initial- spare parts to Siemens
provides significant value to Idaho Power customers in the
form of reduced LTP Contract pricing.
o.hlhat is the net book value of the initial
spare parts that wilI be transferred to Siemens?
A.As of December 31, 2014, the net book value of
the assets that would be transferred to Siemens is
approximately $21.9 million on an Idaho jurisdictj-ona1
basis.
O. Is the net book value of $21.9 million in
initial spare parts part of the Company's approved rate
base?
- WAITES, DI 4
Idaho Power Company
**3{"o,
L A. Approximately $19.1- million of the initial
2 spare parts Idaho Power is proposing to transfer to Siemens
3 is included in the Company's ldaho rate base approved under
4 Order Nos. 32426 and 32585, fdaho Power's last general rate
5 case (Case No. IPC-E-I-1-08) and Idaho Power's request for
6 inclusion of the Langley Gu1ch power plant in rates (Case
7 No. IPC-E-LZ-LA). The remaining 52.9 million in initial
B spare parts are located at the Bennett Mountain and Danskin
9 plants with vintage years of 2072 and 20L3, havl-ng been
10 placed in-servj-ce after the Company's last general rate
11 case.
12 O. How will Idaho Power's customers benefit from
13 the transfer and sal-e of the initial spare parts to
L4 Siemens?
15 A. The transfer and sale of the initial spare
16 parts to Siemens wiII result in lower overall costs during
L1 the life of the LTP Contract. As discussed in Mr. Mahlum's
18 testimony, Siemens will install parts and equipment under
19 the LTP Contract that are the latest and most advanced
20 technology available on the market today. With this in
2L mind, fdaho Power identified the lnitial spare parts as
22 those parts the Company currently owns that would not be
23 used or instaJ.Ied as part of a LTP Contract. During
24 negotiations with Siemens regarding the LTP Contract
25 pricing, Siemens agreed to take ownership of the initial
28REDACIED - WAITES, Dr 5
Idaho Power Company
1 spare parts i-n exchange for reduced contract pricing based
2 on the net book value of those parts. Therefore, over the
3 life of the LTP Contract, Idaho Power and its customers
4 will pay a lower cost and receive more technologically
5 advanced equipment than would exist under a Company-managed
6 maintenance program.
7 Q. Do you believe the transfer of ownership in
8 the initial spare parts to Siemens complj-es with ldaho Code
9 S 6L-328?
10 A. Yes. The transfer and sale of the initial
11 spare parts to Siemens is consistent with the public
12 j-nterest, will result in lower overall costs to Idaho Power
13 and j-ts customers, and Siemens has the bona fide intent and
L4 financial ability to operate and maintaj-n the initial spare
15 parts in the public service.
16 II. PROPOSED ACCOI'N':TI}TG TRE]LTIIEIII
L7 O. It'Ihat is Idaho Power's proposed accounting
18 treatment for the costs associated with the LTP Contract?
19 A. Idaho Power requests approval of (1) the
20 deferral of the initiation fees to a regulatory asset, (2)
2l the transfer of the net book value of the initial spare
22 parts and associated net tax expense to the regulatory
23 asset, and (3) a carrying charge on a portion of the
24 regulatory asset balance.
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29REDfICTED - WAITES, Dr 6
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o.Why does the Company seek to defer the
initiation fees?
A.V[hi1e the LTP Contract provides significant
benefj-ts to customers over the Iife of the contract, absent
the requested accounting treatment, the financial j.mpact to
the Company in the first few years is considerable,
primarily attributable to the initiation fees and net tax
expense. As mentioned in the testimony of Mr. Mahlum, the
initiation fees serve as a prepayment toward services that
will be performed by Siemens over the life of the
agreement. Because the expense is for work performed
throughout the duratj.on of the contract, Idaho Power is
proposing to establish the initiation fees, $
14 on an fdaho jurisdictional basis, ds a regulatory asset.
15 The Company is proposing to amortize that balance, on a
16 straight-line basis, over the length of the contract,
1,7 commencing on payment of the initiation fee to Siemens.
L8 The deferral and subsequent amortization of initiation fees
19 will more closely match the expense recognition with the
20 work being performed.
21,o.What is the length of the amortization period
22 the Company is requesting?
23 A.Idaho Power is requesting an amortization
24 period of 20 years. As explained in the testj-mony of Mr.
25 Mahlum, the estimated expiration date of the LTP Contract
30
REDACTED - WAITES, DT 7
Idaho Power Company
1 varies by combustion turbine but ranges 18-22 years. Using
2 a 2}-year period will align the length of the amortization
3 with the range of the estimated contract duration.
4 Q. What is Idaho Power's proposed accounting for
5 the deferral and amortization of the initiation fees in a
6 regulatory asset?
'l A. Idaho Power proposes to record the deferred
8 initiation fee amounts to Federal Energy Regulatory
9 Commlssion (*FERC") Account 182.3, Other Regulatory Assets.
10 The Company will record amortization of the deferred
1l- amounts to FERC Account 401.3, Regulatory Debits.
L2 O. If approved, how would the Company transfer
13 the net book value of the initial spare parts to a
L4 regulatory asset?
15 A. If approved, the LTP Contract will provide for
16 the transfer and sale of the initial spare parts to Siemens
L7 which, in turn, provides customers the benefit of lower
18 contract costs over the life of the LTP Contract. The
19 Company is requesting to transfer the unrecovered portion,
20 or net book value, of the initial spare parts, $2L.9
2L million on an Idaho jurisdictional basis subject to true-
22 up, at closing. The Company also proposes to amortize the
23 amounts on a straight-line basis over the estimated life of
24 the LTP Contract, oE 20 years, corlmencing on the execution
25 of the LTP Contract. The deferral and subsequent
31REDACIED - WAITES, Dr 8
Idaho Power Company
1 amortization of the unrecovered portion of the initial
2 spare parts over the contract life wiII more closely align
3 the benefits received from the LTP Contract with the costs
4 associ"ated with transfer and sale of the assets.
5 Q. How does the amortization peri-od of 20 years
6 compare to the current depreciable life of the initial
7 spare parts?
8 A. The initial spare parts have a remaining
9 depreciable life of 30 years so a 20-year amortization
10 period is an acceleration of the remaining depreciable life
11 of the initial spare parts.
12 O. t'lhat is Idaho Power's proposed accounting for
l-3 the deferral to and amortization of the unrecovered amounts
L4 of the initial spare parts in a regulatory asset?
15 A. Idaho Power proposes to record the deferral of
16 unrecovered initial spare parts to FERC Account L82.3,
L7 Other Regulatory Assets, and record amortization of the
l-8 deferred amounts to FERC Account 407.3, Regulatory Debits.
19 O. WilI deferred taxes result from the transfer
20 and sale of the initial spare parts to Siemens?
2L A. Yes. The transfer and sale of the initial
22 spare parts to Siemens will create a net tax expense of
23 approximately $1.8 m11lion on an Idaho jurisdictional
24 basis. Similar to the transfer of the unrecovered portions
25 of the initial spare parts, because the tax expense is a
32REDACTED - WAITES, DI 9
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result of the transaction that will provide customers
benefits over the life of the LTP Contract, the Company is
proposing to (1) record the net tax expense to FERC Account
282, Accumulated Deferred fncome Taxes (debit Account 282,
Accumul-ated Deferred Income Taxes, and credit Account
4l-0.1, Deferred Income Tax Expense) and (2) amortize the
amounts on a straight-l-ine basis over the estimated life of
the LTP Contractr ot 20 years (debit Account 470.L,
Deferred fncome Tax Expense, and credit Account 282,
Accumul-ated Deferred fncome Taxes) .
o.Is Idaho Power proposing to accrue a carryJ-ng
charge on the amounts included in the regulatory asset?
A. Yes. The Company is proposing to accrue a
carrying charge on $of the regulatory asset,
in initiation fees and $2. 9 million of the
initial spare parts. Because $2.9 million of the initial
spare parts has not yet been included in the Company's
authorized rate base and therefore the Company is not
currently earning a return on the amounts, Idaho Power is
requesting to accrue a carrying charge on that amount,
using the Company's most recent authorized rate of return.
o.WiII approval of Idaho Power's request in this
case change customer rates at this time?
A. No, the Company is not requesting to change
33REDACTED - WATTES, Dr 10
Idaho Power Company
customer rates at this ti-me.
l- Q. Has the Company determj-ned what, if drrlr
2 impact the LTP Contract will have on Idaho Power's revenue
3 requirement?
4 A. Yes. Idaho Power completed an analysis that
5 quantified the present value revenue requirement impact of
6 executing the LTP Contract over a 2O-year period, the
7 estimated length of the agreement. The analysis compared
8 the annual revenue requirement difference between two
9 scenarios: (1) a scenario in which there was no LTP
10 Contract (the self-management scenario) and (2) an LTP
11 Contract scenario. Accordingly, this revenue requirement
L2 analysi-s Iooked at incremental costs assocj-ated with the
13 execution of the LTP Contract as compared to the costs that
L4 would exist under continued self-management.
15 O. What are the results of the present value
16 revenue requirement analysis?
l7 A. By entering into the LTP Contract, the
18 Company's Idaho jurisdictional revenue requirement would be
19 reduced by approximately $7.3 million over a 2O-year period
20 (20L5-2034).
2L 0. Have you prepared an exhibit demonstrating the
22 estimated revenue requirement impact?
23 A. Yes. Exhibit No. 1 provides a summary of the
24 revenue impact to the Company's Idaho jurisdictional retail
25 customers.
34REDACTED - WAITES, Dr 11
Idaho Power Company
O. Please explain what is driving the lower
2 annual revenue requirements.
A. The annual revenue requirement under the LTP
4 Contract generally provides for lower capital expenditures
5 and lower operating expense amounts over the estimated life
6 of the agreement, resulting in savings over 20 years.
O. If the LTP Contract provides cost reductions
B over the next 20 years, why is Idaho Power not proposing to
9 reduce customer rates at this time?
A. The present value revenue requirement analysis10
11 performed by the Company identified avoided costs that
72 would exist under the LTP Contract. Absent the LTP
13 Contract, these avoided costs would be included in future
14 rates for recovery from customers. However, because the
15 level of recovery of equivalent costs currently incl-uded in
16 rates is less than the cost that would be incurred under
11 the LTP Contract, it is not appropriate to further reduce
18 rates at this time. The execution of the LTP Contract will
19 serve to keep future customer rates lower than they would
20 have otherwise been.
2t O. Please summarize fdaho Power's proposed
22 accounting treatment of costs associated with the LTP
23 Contract.
24 A. Idaho Power is requesting approval of a
25 regulatory asset that includes the deferral of $I
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A.
I or j-nitiation fees paid to siemens , $2L.9 million
associated with the net book value of the initial- spare
parts being transferred to Siemens, and $1.8 million
related to the net tax expense resulting from the transfer
and sale of the initial spare parts to Siemens. The
Company is proposing to amortize these amounts over the
estimated life of the LTP Contract, or 20 years. Pinally,
Idaho Power is proposing a carrying charge equal to the
most recent authorized rate of return on
the regulatory asset balance.
Does this conclude your testimony?
Yes, it does.
36REDACTED
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HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
(The following proceedings were had in
open hearing. )
(fdaho Power Company Exhibit No. I, having
been premarked for identification, was admitted into evidence. )
MS. NORDSTROM: f '11 make this witness avail-able
for cross-examination.
COMMISSIONER SMITH: Are there any questions for
Ms. Waites?
MR. KLEIN: No.
COMMISSIONER KJELLANDER: No.
COMMISSIONER RAPER: No.
COMMISSIONER SMITH: Nor I. Thank you,
Ms. Waites.
(The witness l-eft the stand.)
COMMISSIONER SMITH: Does that conclude your
case, Ms. Nordstrom?
MS. NORDSTROM: It does. The Company also filed
reply comments, but that is the only testimony that we filed.
COMMISSIONER SMITH: Okay. Is there anything
that anyone would l-ike to bring before the Commission before we
adj ourn?
Seeing nothing, we are adjourned and we thank you
very much for your heIp. We wil-I issue an order as soon as
poss j-b1e. Thank you.
(The hearing adjourned at 10:10 a.m.)
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HEDRICK COURT REPORTING
P. O. BOX 578, BOTSE, rD
AUTHENTICAT]ON
This is to certify that the foregoing is a
true and correct transcript to the best of my ability of the
proceedings held in the matter of Idaho Power Company's
application for approval of long-term maintenance program
contract with Siemens Energy, sal-e of spare parts inventory to
Siemens Energy, and deferral of associated costs, Case No.
IPC-E-15-17, cofltmencing on V{ednesday, September 9, 20L5, dt the
Commission Hearing Room, 472 West Washj-ngton, Boise, Idaho, and
the original thereof for the file of the Commission.
Accuracy of al-l- prefiled testimony as
originally submitted to this Reporter and j-ncorporated herein
at the direction of the Commj-ssion is the sole responsibitity
of the submitting parties.
WENDT J., Nc,i[ary Publicin and for th.e,,rState of Idaho,
I
residing at Meridian,
My Commission expires
Idaho CSR No. 475
Idaho.
2-8-2020.
38
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COLLOQUY
ld.ho Powr Comp.ny
ldaio JuEidlctls.l pc6tValue Rsanur Requimot lmp.ct
Lflg Tm Prctnm Cdtnct
D15 - 2034
LTP Contftt Rd Req
iAIE BA'E
Eledric Plant in
Produdion Plant
[.5s: Ac@mulated Depr*ialion
N* El.dric Plant in Seruice
Less: A@mulated Defered lnffie Taxer
Add: Coneruatid -Other Deferred Prog
TOIAL @'TIBITED RATE BAS€
Nr rilailF
Tdal Operating Rilenues
Operatint EeenrE
Operation and MaiBtenance Etpen€s
Depteci.ti@ Erpens
AmMizdion of Umhed Term Plant
Tax6 OtherThan lncffie
Prdision fd Defered ln@m€ Texes
FedeEl lncome Taxer
State ln@eTaxes
TdalOFrating ExFBes
Co@trdd.d Op.rtir{ llrffi.
PropGed Rate of Retum
E.mings lmpad
l{ct-to-Grcs Tar Muhiplier
ReoE R.qulrcmdt
Srlf Mil{e Rry Req
NATE EASEffi
Produdion Ptent
[ss: Acumulated Oepreciatid
I{ct Eledric Plant in Service
[6s: A@mulated D.ferred lncffie Tiles
Add: Con*ruatim - Other Defercd Prog
TOTAL COI{ililED RATE BASE
I{ET IT{COi'E
Total Operatint Revenues
OpeEting ExpensE
Operation and Mainlenance Expens$
ltpredilid Expenres
Amdizetion of Umfted Term Plam
Tax6 OtherThan ln@me
Prditon for Deferred lncomclaxes
Federal lncome Taxei
Stale lncomeTiles
Total OpeEting kpen3es
Coslldd.d Opcntint lmmG
Prop@d Rate of Return
Eamings lmpad
Net-to€r6s Tax Multiplier
R46m R.quircmmt
477,51s 28s,5ss (8s,9731 (1s9,278)
7.6%
t(6&182) {269,585)
7_%% 7.*%
3,443,702 3,430,270 4,751,539
L.642 L.642 1-642
5,65455E 5219,205 7,tO2,027
tu,1a 8,2
(171,932)(s35,r1) (318,123) (4s,215)
0 0 7,a52;6 14.M,4% 74,2 ,496 22,O2A,@s 22,028,085 32,272,96 32,272,W 12,272,96
o 0 253,630 775,m \777,783 1,88a,59 2,600,197 1,542,68 4,685,032 5,727,4*0 0 7,598,679 13,581,089 11,119,312 20,139,394 79,421,A7 2A,630,377 21,5A7,954 26,545,516
(1,76s,931) (1,s89,338) (1,493,834) (1,330,110) {1,129,915) (991,s23) (8s1,49O) (735,132) (628,419) 1s31,s91)
30,111,326 28,517,453 3+603,358 39,0(X,784 36,925,544 42389,963 40,12!"154 47,79\W 4s,223,67O 42,567,@5
0000000000
0 0 92&042 767,977 1lir15 98,327 17,94 7,229,399 25,818 27,oAG
0 o 253,530 16L,7Tt 46L,7n 71L,SO7 7t7,5O7 7,042177 1,042.417 I,U2,1L7IIIIIIIIII0 0 49,9€5 97,126 9r"883 742,2At 742,n3 2rO,S44 277,5 272,6548,297 *,297 702,712 239,757 326,506 339,345 4?9,9n 393,470 468,809 410,532
(1,16s,6O0) (1,16s,50O) {1,6s5,828) (1,873,s68) (1,76,781) (2,189,ffi) 17,976,4811 12,566,s631 (2,242,9141 (2,LA9,2O71
(223,91s1 (223,91s) (318,281) (3s9,917) (327,877) (420,545) t37s,s7) (493,120) {430,859) (420,ss2)
111,701 Lt!,702 772,201 739,699 269,844 92t,24 359,t73 t,225,667 488,7n 495,850
(111,7011 lL!7,7o21 1772,m\ (739,599) (269,844) (921,245) {3s9,173) (1,228,657) (/t88,7r) (49s,8so)
7.*% 7.*% 7.6% 7.6% 7.8% 7.6% 7.*% 7.6% 7.6% 7.6%
2,474,452 2,353,L74 3,492,025 3,g]5,475 3,172,!92 4,2s3,097 3,512,595 d9a5,041 4,043,353 3,A49,M
t-642 1.542 1.642 L642 1.&2 t-42 !92 L_642 1.6t2 7.A2
1,I,69,617 !,'63,912 5,733.96 5,24$91 t2!,l,733 6pt35t5 5J67,t46 A,t SA37 6dt9,1t5 6,320152
22,550,631 32,78&560 44632330 48,353,455 50,438,463 54,6a7,417 69,A76,s53 76,76,269 76,7ffi,269 77,a42,O72
12,972,M1 11,973,410) (535,386) 1,025,431 2654,594 4,478,736 5,675,749 9,7s5,299 L7,634,*O !4,749,L49
8,523,175 34702,070 43,158,716 4732a,O34 17,7a3,*9 50,198,681 6a,2OO,&1 67,610,970 65,137,420 63,692,924
4,2a7,743 4,93,775 4,i164,296 4683,391 d83&323 4,8:D,378 4,931,000 5,022,56/ 5,073,141 4,975,N5
0000000000
21,30t372 30,398,895 38,7O44m 12,644,613 42945,545 45,299,303 58,269,805 52,58a,4O3 @,057,979 58,7t7,57a
174,670 16,649 65,099 6'14,51, 4$,745 680,529 238,989 1,282,3s 254,926 s17,539
728,385 1,69,074 1,377,021 1,!,67,4t7 \,629,152 L,74,r43 2,257,073 2,479,551 2,479,551 2,574,29o000000000
a42,469 207,607 271,276 36,219 324,155 352,778 453,595 500,810 503,315 512,920
77,297 94,739 256,&t 407,659 457,279 433,970 4116,535 575,6Oa 522,985 /105,107
(L,291,7e21 lr,*e,222) (2,0s0,072) 1231A,s341 12,331,6731 12,184,$41 12,7M,9@l 13,272,w) (2,887,s) (2,936,5331
L,El,OA
a.642
2,W,1iB
7.*% 7.*% 7. %
2,703,68 3,724,L4L 3,511,747
a.g2 a.uz 7.a2
t,M,272 9,r35,q1 5,755,:N
7.6% 7.6% 7.%%
5,456,220 5,267,36 5,64,472
1-6.2 1.642 L642
9,6r.19r.3 t,64t921 t315,765
REDACTED - Exhibit No. 1
Case No. IPC-E-15-17
C. Waites,lPC
Page 1 ot 2
to{s ": . .265 ., tn, :o{3 . 20!' ,@o M. &il Mt
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i
ldaho Pomrcompany
ld.ho JuEidicdfial PGst V.lu! Rmns! Rcquimant lmp.ct
L08Tm Prcgnm Cfftnct
2015 - m34
LTP ContGt ReY irq
RATE AASE
Eledric Plant in S.ilice
P.odudion Plant
tess: Accumulaled Depreciationild El€dric Plant in Seruie
l6s: Acemuhted Delerrcd lncome Tarei
Add: Con$ruatio - Othrr Deferrad ProS
TOTAI COTI8II{O RAIE SASE
ilET II{COME
Tdal Operating Rdenues
Operatin8 B(prnses
Operation and Mainienane Expens
Oeprecjiliff Expcres
Amffiratio of limhed Term Plant
Tax6 otherThan lncme
Prdision fd Deferred lncomc Taxas
Federal ln@me Taras
State lncme Taxes
Tdal Oprrdin8 Expenes
C$ioliLt d ODcEtht lffia
Prop6ed Rate of Rcturn
Ea.nints lmpad
Nei-to-G16 Tax Muhiplier
Rdoe [.qulEl|Mt
S€lf Milage Re Req
RAft AEE
34,66A,425 34,66A,425 47,494,192 47,494,192 47,494,!92 47,194,792 47,494,L92 60,557,W 71,90s,&]3 71,S5,833
5,U7,24 7,%7,O3O 9,501,G2 11"035,155 12,369,277 I4,LO3,2AO t5,637,342 17,593,47 19,915,906 2L234464
27,A21,LA5 26,707,395 32993,099 36,4s9.O37 34,924,975 33,390,9L2 31,8s5,SO 42,964,@7 51,989.927 19,667,164
(4a4375) (401,790) (3(n,S32) (13L884) s,42A s2.082 1(x),s19 18s,O6s a47,4* s46,747
-IIIIIII
42,47A,89 !9,a5a,512 49,dr"789 /16,51180:, 41423,165 4O,4E,179 37,416410 17,030,447 54,176,972 50537,8!11
310,634 29,581 r,545,933 47,479 41,894 42313 42,736
L119,79O 1,119,790 1,534062 1,534062 t,534,O62 t,531,O62 1,534,062IIIIII I229,541 230,78 317,654 3L9,257 320,853 322,457 124,059
386,545 399,112 11LS7O 559,E14 510.601 476,528 444,882
l2,3B,4nl 12,233,2961 13,028,472l, 12,672,0741 12,627,013) (2,s96,021) (2,s71,004)
1,584,783 1,398,'to!l 6,62
1,956,005 2,322,58 2,322,554III4L5,27t 4%,557 49a,03S
451,028 597,L6 672,94L
13,377,2631 13,697,9321 (3,332,4141
701,669 529,913 1,613,9s 682145 688,561 693,557 697,769 1,805,116 1,818,27' 1m0,534
(701,669) (s29,9:j}) {1,613,9(N) {582,14s) {688,661) (593,ss7) 16s7,7691 (1,s,!r6) la,A18,2nl {1.m,S38)
7.%% 7.*% 7.%% 7.%%7.%% 7.%% 7.%%7.%% 7.6* 7.%%
4,040.,t50 3,662,8m 5,514,963 4,337,974 4,7Or,722
1.642 1.642 7.642 t.642 L642
6,6:14/[35 5p14.3[ g,rEsFe 7,U2,9Sr 5,7r5,02t
3,870,976 3,538,59 5,50t,74 6,100,157 4,972,416
1.642 !.642 r.542 7.@2 L.642
5,355,1€ 5,974,74 9,O33r5t r0,01q474 t16s,36il
Produdion Plant
Less: Accumulated Depreciation
Itet El€dric Pl.nt in S€0ie
L6s: Acomulated Deferred lnffic TdE
Add: Con5arudion - Other Deferred Prog
TOTAI. COMBINED RAIE SASE
79,O5t,U3 79,741,739 81588,897 85,115,446 85,55r"064 85,734805
16,70L523 79,274,245 2t.974,167 24,727,394 27,4fi,597 30,259,931
5a349,320 S,6til93 51,5rq729 m,3S,O8a 58,050,357 55,474,a74
4,536,342 4,720,09! 4,610.899 4,515,479 4,4t4,65 4,237,941
123,858,000 L37,574,276 138,558,541
37 ,394,2a2 4\647 ,362 $,723,L25
86,473,7a8 90,026,914 92"445,476
3,920,539 3,95L,6$ 3,%L,67L
97,@9,750
33,393,345
63,616,{4
4,@2.O30
s7,slL917 55,745,N2 56,999,A30 55,872609 53,56,303 5r"185,932 59,524375 82,553,178 85,075,268 84,503,745
Tdal Op€ralint Rwenues
Operating Exp.ns6
OpGration and Maintenan@ Etpantei
Depreciation &pensea
Amortizilid olLimited Terfi Pl.nt
Provision for Dcferred lncomc Tarcs
F€deaal ln@mcTaxes
state lncmeTaxes
Tdal Op€rfiing Expc.es
CoMlld.t d Opcding lncom.
Prop6ed Rate of Return
Earnings lmpad
l{et-to4r6 T.x Muhiplier
RryduG RGqulMQt
530,342 273,4& L,702,54 29O,L67 586,098 302,%2 319,45
2,5s3,375 2,575,723 2,699,92t 2,749,230 2,763,299 2,769,214 3,133,4150000000<r, nrr
372347 351,053 3r2,W 339,725 321,44 31a,O79 r7O,2N
12,937,9391 12,849312) (3,1r,30/r) (2,9s3,44U {3,0s9,994) (2,9s9,34s1 (3,052,9s2)
4,000,936 4,253,079 4,475,764
000a4,410 907_166 _459,755
205,335 494,225 496,0&'
14,136,2991 1s,075,6551 (4,282,O9{r)
1.&% l.#ft. 1.6% 7. %
5,372,334 8,280,648 9,479,154 7,*4,9$
1.&2 A.542 L6/2 1.642
a,722,Agt 8,596,GX' t5,S6,,nt 8,721,7U
7.*% 7-85% 7.*%
4,97 ,7 4,775,28 5346,535
7.642 1.42 r.42
4,m6,t79 7J4,,.21 a, 5lx)
7.86% 7-86% t,6%
4,422,052 4,420,* 4,4€0,874
a-€4a Laz Lgz
7,9l7r1jJ r,915.O51 1321,5.56
REDACTED - Exhibit No. 1
Case No. IPC-E-15-17
C. Waites, IPC
Page2 of 2
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a,6.3t9 7,74,12a t,*1,6* 7,.t7A7O 1,9tri,6' 7324,& 8 722,853 13558[ t5,g,7n ,,i,LZt,7U
ql',rcrraE Krrgrl Lrn c lr,916 t,,or7,l 79.rs, rJli,@ rC. L 2J.,JE 4saa,e t 42r 4r6ar.rr
rryxPryI-tlr3 t (}rq2r)tEvna?lcr-roYis 3 7$xr9llvnl'ACI-.rr 3