20211124Public Hearing Transcript Vol II.pdf

BEFORE THE IDAHO PUBL]C UTTLITIES COMMISSION
IN THE MATTER OF ROCKY MOUNTAIN
POWERIS APPLICATION FOR
AUTHORTTY TO INCREASE ITS RATES
AND CHARGES IN TDAHO AND APPROVAL
OF PROPOSED ELECTRIC SERVICE
SCHEDULES AND REGULATIONS
CASE NO. PAC_E-21-07
.- F\a
--: rJ;'*' .. .,.ii.r{--1 ffi,---r,.; c3 ,N'ir{i:i.. 4, fn'i'"',, rl) miJ-;, Jr rnr|'n
ffie'j # hj*:r , (}f,ls( -!
*;(r, C,ffi
BEEORE
COMMISSIONER KRTSTINE RAPER (Presiding)
COMMISSIONER PAUL KJELLANDER
COMMISSIONER ERIC ANDERSON
PLACE:Commj-ssion Hearing Room
11331 West Chinden B1vd.Building 8, Suite 207-ABoise, Idaho
DATE:November L6, 202!
VOLUME II Pages 5 - 97
CSB REPORTING
C ertifrcd Sh orthand Reporters
Post Office Box9774
Boise,Idaho 83707
[e-mail]
Ph: 208-890-5198 Fa;r: 1-888-623-6899
Reporter:
Constance Br"y,
CSR
ORIGINAL
1
2
3
4
5
6
7
8
9
10
11
1,2
13
t4
15
t6
1-7
18
19
20
2L
22
23
24
CSB REPORTING
208.890.5198
APPEARANCES
For the Staff:Dayn Harrlie
and ilohn R. f,arnr4otrd, iIr.
Deputy Attorneys General
11331 West Chinden BIvd.Building 8, Suite 201-A
PO Box 83720Boise, Idaho 83720-0074
PacifiCorp/dba Rocky
Mountain Power:
Emi1y llegener
PacifiCorp/dba Rocky
Mountain Power
1407 West North TempleSuite 320SaIt Lake City, Utah 84116
Eor Idaho Irrigation
Pumpers Association:(Of Record)
Eric L. Olsen
Echo Hawk & Olsen PLLC
505 Pershj-ng AvenueSuite 100
PO Box 6L79Pocatello, Idaho 83205
For Bayer Corporation:Ra,ndaJ.J. C. Budge
Thonas J. Budge
RACINE, OLSON, PLLP
20L E. Center
PO Box 1391
Pocatello, Idaho 83204-1391
For PacifiCorp Idaho
Industrial Customers:
Rona1d L. Itilliams
WILLIAMS BRADBURY, P.C
PO Box 388
Boise, Idaho 83701
25
APPEARANCES
1
2
3
4
5
6
7
I
9
10
11
t2
13
74
15
L6
t7
18
L9
20
2L
22
23
24
CSB REPORTING
208 .890.5198
INDEX
WITNESS EXAMINATION BY PAGE
Joel-Ie Steward
(Rocky Mountain)
Ms. Wegener (Direct)
Prefiled Direct Testi-mony
I
11-
Donn English
( Staff)
Mr. Hardie (Direct)
Prefiled Direct Testimony
31
33
Mike Veile
( Bayer )
Mr. Budge (Direct)
Prefiled Direct Testimony
53
56
Brian C. Col-li-ns
( Bayer)
Mr. Budge (Direct)
Prefiled Direct Testimony
84
85
25
INDEX
1
2
3
4
5
6
1
8
9
10
11
L2
13
L4
15
t6
L7
18
19
20
21-
22
23
24
CSB REPORTING
208.890.5198
EXHIBITS
NUMBER DESCRIPTION PAGE
FOR ROCKY MOUNTAIN POVIER:
51 .Electric Service Agreement
between Rocky Mountain Power
and P4 Production
Premarked
Admitted 10
58.Complj-ance Tariff Sheets Premarked
Admitted 10
FOR THE STAEE:
101.Professi-onal Qualificationsof Donn English
Premarked
Admitted 32
EOR THE BAYER CORPORAT]ON
301.El-ectric Servj-ce Agreement
between Rocky Mountai-n Power
and P4 Production
Premarked
Admitted 55
302.Qualifications of Brian C
Col-1ins
Premarked
Admitted 85
25
EXHIBITS
1
2
3
4
5
6
1
I
9
10
11
12
13
74
15
16
77
1B
79
20
21-
22
23
24
CSB REPORT]NG
208.890.5198
BOTSE, IDAHO, TUESDAY, NOVEMBER 16, 202!, 9:30 A. M
COMMISSIONER RAPER: A11 right, good
morning. Welcome. Oh, hi, Ted. Mr. Weston, I didn't
even see you in the room. I didnrt know my vision was
that good, so welcome. Thls is the time and place set
for a technical hearing in Case No. PAC-E-21--07, further
identified as in the matter of Rocky Mountain Power's
application for authority to increase its rates and
charges in Idaho and approval of proposed el-ectrj-c
service schedul-es and regulations.
My name is Kristine Raper. I'm the Chair
of today's proceeding. To my right j-s Commissioner Eric
Anderson. To my left is past NARUC president and current
president of our Commj-ssion, Paul Kjellander. It's a
thing. We comprise the Commission and wilI ultimately
render a final decision in this matter.
For housekeeping
wil-l take all
things, which I donrt
think the hearing that long,it being on a
right aresettlement, but out
bathrooms and water.
the exj-t door to your
Also, the speakers
front of you, the microphones that
if you press the l-ittfe guy who has
coming out of his mouth, then that will make your mic
are rn
what
that are in
front of you,
looks like spit
5
25
COLLQUY
1
2
3
4
5
6
1
a
9
10
11
L2
13
14
15
L6
77
1B
19
20
27
22
23
24
CSB REPORTING
208.890. 5198
6
Iive.
You know it's live because it will light
up red, and I woul-d ask that when you're not speaking, if
you coul-d press the microphone that has the littl-e line
through it, that will mute your microphone. Then we
don't have any interference and there are no discussions
that shouldn't be on the record that
record, so are
appearances of
AppJ-icant.
oh, let see, we'11
the parties. We'11- start with
MS. WEGENER: Good morning. I'm Emily
Wegener on behal-f of Rocky Mountaln Power and with me in
the room, f have our witness Joel-le Steward and our state
regulatory manager for Idaho Ted Weston.
COMMISSIONER RAPER: Thank you. Welcome
to your firs.t hearing at the Idaho PUC. We'l-l- go to
Staff 's representation.
MR. HARDfE: Good morning, Madam Chair and
Commj-ssion. Can you guys hear me? Yeah, j-t's working,
okay. I am Dayn Hardie, counsef for Idaho PUC Staff, and
with me today are Terri Carlock and Donn English and John
Hammond.
COMMISSIONER RAPER: Thank you. Idaho
Irrigation Pumpers Association. Nobody in the room
representing Idaho Irrigation Pumpers Association. Bayer
end up on
begin by
the
taking
the
25
COLLQUY
1
2
3
4
5
6
1
B
9
10
11
L2
13
74
15
16
L7
18
19
20
2l
22
23
24
CSB REPORTING
208 .890.5198
Corporation.
MR. BUDGE: Good morning, Randy Budge and
to my right TJ Budge on behalf of Bayer Corporatj-on, and
we al-so have here our witnesses Mike Veil-e who is an
employee from the pIant, manages their energy, as well as
Brian Collins who is a consultant with BAI, and we also
have Jim Smith here with us that you may recognize who
now is retired from thewas a former energy manager that
company, but he is consulting.
COMMISSIONER RAPER: Thank you
PacifiCorp Idaho Industriaf Customers.
MR. WILLIAMS: Ron WiIl-iams representing
the PacifiCorp Idaho Industrial Customers.
COMMISSIONER RAPER: Thank you,
Mr. Will-lams. Nice to see you agaj-n.
MR. WILLIAMS: I had to remember the name
of that client.
remember the
rusty.
that ICL
It's
COMMISSIONER RAPER: Me, too, I
name of your client. We're all a
been awhil-e. I wll-l- note f or the
and CAPAI were intervenors in this case. They
have since withdrawn as intervenors, so we don't see any
representation for them in the room for that reason.
Are there any preliminary matters that
need to come before the Commission before we get started
had to
l-ittl-e bit
record
1
25
COLLQUY
with our first
start with the
Ms. Wegener, if
the stand.
witness? Okay,seeing none, ready to
Rocky Mountain Power,
to call your witness to
first witness.
you would like
MS. WEGENER: Yes, the Company cal-ls
Joelle Steward.
JOELLE STEWARD,
produced as a
Power, having
was examined
witness at the instance of Rocky Mountain
sworn to tel-1 the truth,
follows:
been first duly
and testified as
DIRECT EXAMINATION
BY MS. WEGENER:
state and
o
spe11
A
Good morning, Ms. Steward. Can you please
your name for the record?
My name is
S-t-e-w-a-r-d
Joe1le Steward. ft's
J-o-e-1-1-e
O And what is your posi-tion with Rocky
Mountain Power?
A
regulation.
o
support of the
f am the senior vice president of
Did you prepare and file testimony in
settlement stipulation in this matter?
1
2
3
4
5
6
1
8
9
10
11
t2
13
1"4
15
16
77
18
19
20
2L
22
23
24
CSB REPORTING
208.890.5198
B STEWARD (Di)
Rocky Mountain Power
25
A r did.
O Do you have any corrections to that
testimony?
A I do not.
O If I asked you the questions that are
contained in that prefiled testimony today, would your
answers be the same?
A Yes.
MS. V{EGENER: I move to admit
Ms. Steward's testi-mony into the record.
COMMISSIONER RAPER: Are there any
exhibits that you
MS.
testj-mony and the
301.
would like
WEGENER:
WEGENER: There is one exhibit, so her
exhibit to her testimony, Exhibit
COMMISSIONER RAPER: Thank you. Without
objection, we will spread Ms
record as if read and admit
. Stewardrs testimony on the
Exhibit 301.
Excuse me, f think she has
apologize, my
don't know the
two exhibits.
our exhibit.
MS
MR
MS
BUDGE: We don't object to her taking
WEGENER: We1l, w€ have the same
exhibit as 301, but that i-s Bayer's. I
binder does not have the exhibits and I
1
2
3
4
5
6
7
I
9
10
11
L2
13
L4
15
L6
L7
t_B
19
20
21,
22
23
24
CSB REPORTING
208 .8 90 . 5198
9 STEWARD (Di)
Rocky Mountain Power
25
numbers. They're attachments 1 and 2
so they weren't submitted as exhibits
them as well-.
to her testimony,
and I move to admit
COMMISSIONER RAPER: Thank you.
admit the attachments 1 and 2 to Ms. Steward's
We will
testimony.
(Rocky Mountain
were admitted into evidence. )
(The following
Power Exhibit Nos. 57 & 58
prefiled testimony of
Ms. Joe1le Steward is spread upon the record. )
1
2
3
4
5
6
1
B
9
10
11
L2
13
t4
15
16
77
18
19
20
27
22
23
24
CSB REPORTING
208.890.5198
STEWARD (Di)
Rocky Mountain Power
25
10
1
2
3
4
5
6
7
U
9
r. INTRODUCTTON AlrD QUATTFTCATIONS
O. Pl-ease state your name, business address, and
present position with PacifiCorp, d/b/a Rocky Mountain
Power ("Rocky Mountain Power" or the "Company").
A. My name is Joelle R. Steward. My business
address is 7401 West North Temple, Salt Lake City, Utah
84716. My present position is Vice President, Regulation
for Rocky Mountain Power.
O. Please summarize your education and business
experience.
A. I have a B.A. degree in Politica1 Science from
the University of Oregon and an M.A. in Pub1ic Affairs
from the Hubert Humphrey Institute of Publ-ic Policy at
the University of Minnesota. Between L999 and March 2001 ,
f was employed as a ReguJ-atory Analyst with the
Washington Utilities and Transportation Commission. I
joined the Company in March 2001 as a Regulatory Manager,
responsible for all regulatory filings and proceedings in
Oregon. On February L4, 20L2, I assumed responsibilities
overseeing cost of service and pricing for PacifiCorp. In
May 2015, I assumed broader oversight over Rocky Mountain
Power's regulatory affairs in addition to the cost of
service and pricing responsJ-bi-lities; and in 20L1 I
assumed my current rol-e as Vice Presi-dent, Regulation for
Rocky Mountain Power.
10
11
72
13
L4
15
16
t7
18
19
20
2t
22
23
24
Steward, STIP 1
Rocky Mountain Power
25
11
1
2
3
4
5
6
7
8
9
10
11
1_2
13
1,4
t_5
16
71
18
19
20
27
22
23
24
O. Have you appeared as a witness in previous
regulatory proceedings?
A. Yes. I have testified on various matters in the
states of Idaho, Oregon, Utah, Washington, and Vflyoming.
II. PT'RPOSE OF TESTIMOIIY
a. What is the purpose of your testimony?
A. The purpose of my testimony is to present and
support the Stipulation reached in
Steward, STIP 1a
Rocky Mountain Power
25
12
1
2
3
4
5
6
1
I
9
10
11
L2
13
74
15
76
1-1
18
19
20
2t
22
Z3
24
Case No. PAC-E-21-07 PacifiCorp's Generaf Rate Case,
("2021 GRC"), entered into by Rocky Mountain Power
( "Company" ) ; staff for the Idaho Public Utilities
Commission ( "Staff" ) ; the Idaho Irrigation Pumpers
Association,
affiliate of
Inc. ("IIPA"); P4 Production, L.L.C an
Bayer Corporation ("Bayer"); and PacifiCorp
Idaho Industriaf Customers ( " PI f C" ) ,' collectively
referred to in my testimony as the Parties.
My testimony provldes background on the
Company's 2021 GRC and explains the terms and conditions
of the Stipulatlon reached between the Parties. I present
the Stipulation and describe how it represents a fair,
just, and reasonable compromise of the issues in this
proceeding that are in the public interest. My testimony
supports the Parties' recommendation that the Idaho
Public Utilities Commission ( "Commission" ) approve the
Stipulation and all- of its terms and conditions.
IIT. BACKGROI'IID
O. Pl-ease summarize the procedural background of
the 202L GRC.
A. On May 27, 202L, the Company filed j-ts 202L GRC
with the Commission requesting authorization to increase
rates by $19.0 million, or approximately 1.0 percent.
On September 73, 202\, the Parties began
negotiations with the Company. After the initial meeting
Steward, STIP 2
Rocky Mountain Power
25
13
the Parties met several more times continuing to
negotiate the terms of the settlement.
On October 14, 202L, the Parties agreed to
draft terms of a Stipulated Settlement Agreement,
("Stipu1ation") and Staff filed a Motion to Vacate Staff
and intervening parties' testimony deadline. On October
25, 202!, the Company filed a Sti-pulation, signed by all
the Parties to the 2027 GRC, with the Commission with the
intent of resolvj-ng all the issues of the case.
1
2
3
4
5
6
1
8
9
10
l_3
1,4
15
L6
L1
18
t9
20
11
12
27
22
23
24
Steward, STIP 2a
Rocky Mountaj-n Power
25
1,4
o.
A.
increase
!, 2022r ds
Stipulation.
represents a
positions of
proceeding,
discussed in
acceptance by the
requj-rement adj ustment
cost of capital.
Except for the
Sti-pulation, the Parties
STIPI'I,ATION
terms of the Stipulation.
an overall base rate
9 percent effective January
set forth in Attachment 2 and 3 to the
The Parties agree that the Stipulation
compromise of the disputed cl-aims and
the Parties on all- issues in this
with
the
the exception of the items specifically
Stipulation there was no agreement to or
Parties of any specific revenue
IV. SETTLEMENT
Pl-ease summarize the
The Parties agree to
of $8.0 million or 2.
and no stated return on equity or
specific
agree to
and tariff
changes noted in the
the Company's design of
changes as set forth inrates by rate schedul-e
the Applicat j-on. This includes increasing the customer
service charge for Electric
Resi-dential- Service from $5
Service Schedul-e No. 1 -
to $A per month, which is the
since 2017.
a fair, just, and reasonabl-e
this proceeding and is the
first change
The
to this charge
Stipulation is
the issues inofcompromr-se
culmination of extensive work by all Parties to review
the Application, submit
and intensive settlement
discovery, evaluate positions,
discussi-ons.
1
2
3
4
5
6
7
I
v
10
11
L2
13
L4
15
1,6
L1
t_8
19
20
2t
22
Z3
24
Steward, STIP 3
Rocky Mountain Power
25
l5
O. P1ease summarize the regulatory assets
addressed in the Stipulation and how they will be
treated.
A. The Stipulation outlines the treatment for four
of the regulatory assets that the Company proposed to
amortize in its Applicatj-on:
1. 2O2L incremental-depreciation expense
deferral of $13,940,303;
2. Deer Creek Mine regulatory asset;
1
2
3
4
5
6
7
8
9
10
11
72
13
14
15
16
L7
18
19
20
2L
22
23
24
Steward, STIP 3a
Rocky Mountain Power
25
16
3. The Resource Tracker Mechanism ( "RTM" )
regulatory asset;
4. The Tax Cut and Jobs
liability.
The Parties agree that
Act regulatory
the
incl-uded in the Application but not
regulatory assets
addressed in the
Stipulation will be amortized as presented in Mr. Steven
R. McDougal's Exhibit No. 40 and described in his
testimony supporting the Application.
a. Please describe the incrementaf depreciation
expense and how it was addressed in the Stipulation.
A. On August 18, 2020, in Order No. 34754, the
Commission approved an increase to the Company's
deprecj-ation expense based on its 2078 Depreci-ation
Study. As part of an agreement between the Parties in
Case PAC-E-20-03, the Commission authorized the Company
to defer Idaho's incrementaf depreciation expense for one
year, anticipating that the Company would incorporate the
deferral as part of the 2021 GRC. The total authorj-zed
deferral amount was $13,940,303 with the amortization
period to be determined in the next general rate case. In
the Application the Company proposed a three-year
amortization,' ds part of the Stipulation the Parties
agree that this regulatory asset will be amorti-zed over
four years beginning with the rate effective date of
1
2
3
4
5
6
"7
I
9
10
11
L2
13
t4
15
t6
71
18
t9
20
2!
22
23
24
Steward, STIP 4
Rocky Mountain Power
25
77
,January L, 2022, of this case.
A. How is the regulatory asset associated with the
closure of the Deer Creek Mine treated in the
Stipulation?
A. Commission Order No. 33304 in Case No.
PAC-E-14-10 establ-j-shed a regulatory asset for all costs
related to the Deer Creek Mine closure. The mine closure
costs included supplemental- unemployment and medical
benefits, severance costs, royalties, unrecovered
recl-amation costs, and labor costs to close the mj-ne.
These closure costs
1
2
3
4
5
6
7
8
9
10
11
L2
13
l4
15
t6
\1
18
19
20
27
22
23
24
Steward, STIP 4a
Rocky Mountain Power
25
18
1
Z
3
4
5
6
1
B
9
are partially offset by deferred savings associated with
the Unj-ted Mine Workers Association settlement, interest
on the Bowie note receivable and a reduction in fuel
inventory. As of this filing, the unrecovered plant
bal-ances have been fuIly amortized. Alt other mine
closure costs and savings were deferred to regulatory
asset or l1ability accounts to be addressed in this
general rate case. As part of the Stipulation the Parties
agree that the Deer Creek Mine regulatory assets/
liabilities will- be amortized over three years consistent
with the Company's Application, including amortizatj-on
of $L4,341,296 in unpald royalties and $6,521,059 of
unpaid future remediation expenses on a total--Company
basis.
O. Please describe how the Resource Tracker
Mechanism ("RTM") is addressed as part of this
Stipulation.
A. Commission Order Nos. 33954 and 34704
authorized use of the RTM to cal-culate and defer to a
regulatory asset any costs related to the Repowering and
Energy Vision 2020 projects that exceeded the project
benefits returned to customers through the energy cost
adjustment mechanism, ("ECAM"). fn the Application the
Company estimated a total regulatory asset bal-ance of
approximately $1.6 million, Idaho-al1ocated, as of the
10
11
!2
13
14
15
L6
1,1
1B
19
20
2t
22
23
24
Steward, STIP 5
Rocky Mountain Power
25
L9
1
2
3
4
5
6
7
I
9
10
11
L2
13
t4
15
16
t7
18
19
20
27
22
23
24
end of 2021 and proposed to amortize that balance over
three years and to true-up any differences between the
actual- deferred balance and estimated deferred balance in
the next general rate case. The Partj-es agree that the
Company will continue to cal-culate these incremental
costs in the RTM through December 31, 202L and defer them
into a regulatory asset. There wil-I be no carrying charge
on the regulatory asset starting on the rate effective
date of this case and treatment of this regulatory asset
will be determined in the next general rate case.
Steward, STIP 5a
Rocky Mountain Power
25
20
1
2
3
4
5
6
1
8
9
0. How are the tax savi-ngs associated with the
2011 Tax Cut and Jobs Act treated?
A. On December 22, 2011, Congress passed and the
president signed the Tax Cuts and Jobs Act ("TCJA")
setting a new corporate income tax rate of 21 percent
compared to the previous rate of 35 percent. On June 1,
2018, the Company began refunding to Idaho cusLomers an
annual credit of $6.2 million through Electric Service
Schedule 797 Eederal Tax Act Adjustment. Beginning June
l, 201,9, the credit was increased to an annual- amount of
$7.6 miI1ion, or 100 percent of the cal-cul-ated current
tax savings. The current tax savings associated with the
lower corporate tax rate are included in the Company's
Application.
O. Did the TCJA impact Excess Deferred Income
Taxes ("EDIT" ) bal-ances also?
A. Yes. There are three different cl-assifications
of EDIT: protected property, non-protected property, and
non-protected non-property. The TCJA reduced the
Company's future tax obl-igation creating a regulatory
liability owed to customers. In total-, Idaho's TCJA
regulatory liability balance availabl-e for refund
was comprised of $14.7 milllon of deferred protected
property and $13.5 mil-lion of non-protected property
EDfT. After the tax gross-up Idaho's TCJA regulatory
10
11
72
13
L4
15
L6
T1
18
19
20
2L
22
23
24
Steward, STIP 6
Rocky Mountain Power
25
2t
tiability balance was $37.3 mill-ion. The Phase II
Settl-ement Stipulation in Case No. GNR-U-18-01 authorized
the Company to use approximately $9.1 million of this
EDIT balance to offset ECAM and other regulatory asset
balances. Additionally, Order No. 34384, Case No.
PAC-E-20-03, authorized the Company to use a portj-on of
the avallable EDfT balance to buy-down the remaining
unrecovered Chol1a Unit 4 plant balances. After updating
for actual plant balances upon closure, the Company
bought-down approximately $16.4 mil1ion, Idaho-allocated,
of the unrecovered plant ba.l-ances.
1
2
3
4
5
6
7
I
9
10
13
1,4
15
76
t1
18
79
11
!2
20
21,
22
23
24
Steward, STfP 6a
Rocky Mountain Power
25
22
1
2
3
4
5
6
7
B
9
a. How are customers receiving the benefit of the
remaining EDIT ba1ance for the TCJA in this case?
A. The Company's Applicatj-on included the
ro I rowins addi t i;"r."::-:.:i
;' :; l':i r r""'",
Idaho-allocated closure costs, net of
savings, and decommissioning costs
related to ChoIIa Unit 4;
Approximately $Z thousand to offset the
remainj-ng balance for Powerdale
decommissioning costs ;
Approximately $88 thousand to buy-down
the remaj-ning balance of the electric
plant acquisition adjustment for the
Craig and Hayden plants that would have
otherwise amortized through April 2022;
$300 thousand for the deferred balance
due to the 20L7 Protocol equali-zation
adjustment; and
Approximately $103 thousand of deferred
intervenor fundi-ng costs.
After netting these regulatory assets against
the TCJA regulatory liability, which is summarized in
Company Exhibit 43, the remaining TCJA deferred tax
balance is approximately $8.5 mil-lion. The Parties agree
10
11
L2
13
1,4
15
76
1-1
1B
19
20
21
22
23
24
Steward, STIP 7
Rocky Mountain Power
25
23
to amortize the remaining EDIT balance of $8.5 million
over two years through Electric Service Schedule No. L97.
O. Did the Stipulatj-on address the possibility of
a tax increase being discussed in theU.S. Congress?
A. Yes. If the federal- t.ax rate is increased
before the $8.5 million balance is completely returned to
customers the amortization will stop as of the effective
date of the tax increase. Additionally, if there is a
change to federal taxes before the Companyrs next
1
2
3
4
(
6
7
8
9
10
11
72
13
t4
15
76
71
18
t9
20
21
22
23
24
Steward, STIP 7a
Rocky Mountain Power
25
24
1
2
3
4
5
6
1
I
9
general rate case, the Parties will support the Company's
filing of an applicatj-on seeking to defer the incremental-
tax impacts as of the effective date of the new tax rate.
O. Does the Stipulatlon specify the base amounts
for the ECAM?
A. Yes. The Parties reconrmend as part of the
overall Stlpulation that the Commission approve the
following base ECAM amounts:
' Net Power Costs - $1.368 billion or $24.sLlUWfr
' Production Tax Credits $256,612,41'7 or
$4.16lMWh
' Renewable Energy Credits $4,321 t004 or
$0.07luwrr
. LCAR - $8.74lMWh
O. Was the val-ue of Bayer's curtaj-Iment products
part of the overal-1 Stipulation?
A. Yes. As part of an overall stipulation the
Parties agree to a value for Bayer's curtail-ment
products of [redacted] effective January L, 2022.
0. Has the Company and Bayer negotiated a new
El-ectric Service Agreement?
A. Yes. On September 76, 2021, the Company filed
El-ler Supplemental Exhibit 36 that j-ncl-uded the terms and
conditions of the new electric service agreement ( "ESA" ) .
However, at that time the Company and Bayer were stil-l-
10
11
1-2
13
t4
15
16
!1
1B
19
20
2I
22
23
24
Steward, STIP B
Rocky Mountaj-n Power
25
25
negotlating the value of the curtailment products that
Bayer was offering the Company. With the val-ue of the
curtai-lment products settled as part of the overall
Stipulation the Company has updated the ESA and is
providing a final copy as Exhibit No. 57 for Commission
approval.
O. Did the Stipulation address any other rate
design issues?
A. Yes. The Stipulation called out three changes
to rate schedules from the Companyrs Application:
1
2
3
4
5
6
1
I
9
10
11
t2
13
L4
15
L6
71
1B
19
20
2L
22
23
24
Steward, STIP 8a
Rocky Mountain Power
25
26
1
2
3
4
5
6
1
I
9
10
1l-
1,2
13
L4
l_5
16
L1
18
19
20
2t
22
23
24
Steward, STIP 9
Rocky Mountain Power
Parties aqree that Electric Service
Schedu1e No. 401 ("Schedule 401"), wil-l- be
mj-grated j-nto El-ectrj-c Service Schedule
No. 9 ("Schedule 9"). Rates for Schedule 9
were designed for current Schedule 9
customers prior to the migration of the
Schedule 401 customer, based on the system
average rate increase, with the difference
applied to the off-peak energy charges.
Additionally, Parties agree that Schedule
9's maximum power requirement is increased
from 15,000 kW to 30,000 kW.
Electric Service Schedul-e Nos . 7 , 17, and
!2 Security, Street, and Area Lighting
Service customers wiII receive a decrease
in rates that moves them 50 percent closer
to their cost of service.
Rates f or El-ectric Service Schedul-e No. 23
General- Service are designed with use of
a seasonal difference ratio of 1,.20 and a
primary customer charge
Additionally, El-ectric
No. 19 Commerci-a1 and
of $48 per month.
Service Schedule
customers, which
Industrial Space
i-s closed to new
Schedule No. 23.will- migrate to
Heating
service,25
27
V. RECOMMEIIDATION
O. Please summarize the Companyrs recommendation.
A. The Stipulation is a compromise of the disputed
claims and positions of the Parties on all issues in this
proceeding and represents a fair, just, and reasonabl-e
compromj-se of these issues. Based on this representation
I respectfully request that the Commission issue an order
approvi-ng an increase to base rates of $8.0 million
effective January 7, 2022, adopting aIl other terms and
conditions of the Stipulation as flled, approving the ESA
between the Company and Bayer provided as Exhibit No. 51,
and approve the
1
2
3
4
5
6
7
8
9
10
11
t2
13
L4
15
16
t1
18
1,9
20
2t
22
23
24
Steward, STIP 9a
Rocky Mountain Power
25
28
1
2
3
4
5
6
7
8
9
complj-ance tariff sheets provided as Exhibit No. 58 to my
testimony.
O. Does this conclude your stipulation testimony?
A. Yes.
10
11
t2
L3
!4
15
L6
L1
18
19
20
21"
22
23
24
Steward, STIP 10
Rocky Mountain Power
25
29
(The fol-lowing proceedings were had in
open hearing. )
MS. WEGENER: I have nothing further for
this witness. She is now available for cross-examinatron
and questions from the Commissj-on.
you're good.
us, so thatrs
Staff for this
COMMISSIONER RAPER: We're all rusty, so
You're also new to this forum, at least for
quite al-l right.
Are there any questions from Commission
witness ?
MR. HARDIE: No questj-ons from Staff .
COMMISSIONER RAPER: Mr. Budge and Mr.
Budge.
MR. BUDGE: No questions.
COMMISSIONER RAPER: Thank you.
Mr. Wil-liams .
MR. WILLIAMS: No questions.
COMMISSIONER RAPER: Any questions from
the Commissioners for this witness?
Okay, Ms. Steward, it looks like you are
done. Thank you --
THE WITNESS: Thank you.
COMMISSIONER RAPER: -- for appearing.
(The witness left the stand. )
COMMISSIONER RAPER: Does the Company have
1
2
3
4
5
6
1
8
9
10
11
L2
13
L4
15
L6
17
18
19
20
21
22
23
24
CSB REPORTING
208.890.5198
STEWARD
Rocky Mountain Power
25
30
1
2
3
4
5
6
1
8
9
10
11
1,2
13
L4
15
L6
L1
1B
r_9
20
2L
22
23
24
CSB REPORTING
208.890. s198
ENGLISH (Di)
Staff
any more witnesses that they woul-d like to put forward?
MS. WEGENER: No further witnesses. Thank
you.
COMMISSIONER RAPER: Commissi-on Staff .
MR. HARDIE: Thank you, Madam Chair. At
this time I would like to call Staffrs witness Mr. Donn
English to the stand.
DONN ENGL]SH,
produced as
having been
examined and
a witness at the instance of the Staff,
first duJ-y sworn to teIl the truth, was
testified as follows:
DIRECT EXAMINATION
BY MR. HARDIE:
O Mr. Engli-sh, could you please state your
name for the record, spelling your last name?
A My name is Donn Eng1j-sh, E-n-g-1-i-s-h.
O Are you the same Donn English who
previously fil-ed direct testimony consisting of 1,4 pages
and one exhibit?
A Yes.
O Do you have any changes to your
testimony?25
31
1
2
3
4
5
6
1
B
9
10
11
12
13
t4
15
76
L7
1B
19
20
21
22
23
24
CSB REPORTING
208.890. s198
ENGLISH (Di)
Staff
A I do not.
O If I asked you the same questions as
appear in
same?
your testimony, would your answers be the
A Yes, they will.
MR. HARDIE: Thank you. Madam Chair, f
the testimony of Donn English on the
the witness to cross-examination.
move to spread
record and open
COMMISSIONER RAPER: Without objection, we
record as ifwil-1 spread Mr. English's
read, and I presume there
testimony on the
are no exhibits attached to his
testimony that you need admitted?
MR. HARDIE: He had one exhibit, Exhibit
background and I would101,
l-ike
which was his educational-
to admit that on to the record, too.
COMMISSIONER RAPER: With no objection,we
will admit Exhibit 101 into the record.
(Staff Exhibit No. 101 was admitted into
evidence. )
(The fol-l-owing prefiled testimony of
Mr. Donn English is spread upon the record. )
25
32
1
2
3
4
5
6
1
B
9
O. Please state your name and buslness address?
A. My name is Donn English. My business address
is 11331 W. Chinden B1vd., BLDG 8, STE 201,-A, Boise,
Idaho 837L4.
O. By whom are you employed and in what capacj-ty?
A. I am employed by the Idaho Public Utilities
Commission as a Program Manager overseeing the Accounting
and Audit Department j-n the Utilities Division. I am
also the Program Manager overseeing the Technical-
Analysis Department, also within the Utilities Division.
O. Pl-ease describe your educational background and
professional experience.
A. My educational background and professional
experiences are shown in Exhibit No. 101.
0. What is the purpose of your testimony in this
proceeding?
A. The purpose of. my testlmony is to describe
Rocky Mountain Powerrs ("Rocky Mountain" or "Company")
Application to increase its rates and charges for
electric service in ldaho, describe the proposed
Settlement Stipulation ("Settlement") reached by the
parties in this case, and explain Staff's support for the
proposed Settlement.
A. How j,s your testimony organized?
A. My testimony is organized under the following
( Stip)
STAFF
10
11
12
13
1-4
15
!6
L7
1B
19
20
2t
22
23
24
CASE NO PAC-E_21-07
77/ 08 /2t
1
25
33 ENGLISH, D
1
2
3
4
5
6
1
I
9
headings:
Background Page 2
Staff Investigation Page 3
Settlement Evaluation Page 5
Settlement Overview Page 6
Background
O. Please describe Rocky Mountain's Applj-cation.
A. Rocky Mountain made its original- fiJ-ing with
the Idaho Publ-ic Util-ities Commission on l(ay 27, 2027,
requesting authority to increase its revenue by $19.0
miIlion, or approximately 7.0 percent. The Company's
proposed increase was based on a historical- twelve-month
period ending December 31, 2020, adjusted for known and
measurable changes through December 31, 2021. The
Company proposed a capital structure of 47.16 percent
long-term debt and 52.84 percent equity, with a return on
equity ("ROE") of L0.2 percent. The Company proposed to
allocate the price change to customers in line with the
class cost of service results filed in its Application;
however, the rate increases for all major rate schedule
classes were limited to 10 percent
The Company's Application refl-ected net power
costs ("NPC") of $1,365.1 million on a total--Company
basis and $86.4 million on an Idaho jurisdictional- basis.
This was a $120 million, or 8.1 percent, decrease in NPC
ona
CASE NO PAC-E-21-07
7t/08 /21
( stip )
STAEF
10
11
L2
13
14
15
t6
t7
18
t9
20
2L
22
23
24
2
25
34 ENGLISH, D
total-Company basis compared to the
Application also requested recovery
incl-uding costs associated with its
proj ect.
20L6 NPC update. The
of capital addltions,
Energy Vision 2020
O. How was the case processed after the Company's
Application was received?
A. The Commission issued a combi-ned Notice of
Appllcation,
Intervention
Notice of Suspension, and Notice of
Deadline ("Notice") on June 2021. The
Notice suspended the proposed effective
202L, for thirty days plus five months
Intervention Deadl-ine of July 8, 2027.
77,
date of July l,
and established an
Intervenor status
was subsequently granted to the Idaho Irrigation Pumpers
Association, Inc. ("IIPA"), Bayer Corporation ("Bayer"),
and Pacificorp Idaho Industrial Customers ("PfIC")
intervened. Idaho Conservatj-on League and Community
Action Partnership Association of Idaho also intervened,
but fater withdrew from the case.
The Company, Staff, IIPA, Bayer, and PIIC
(col-lectively the "Parties") participated in four
settl-ement conferences, and on October 25, 2021, a
Settlement Stipulation was filed with the Commissj-on,
signed by the Parties.
Staff Investigation
0. What type of investigation did Staff conduct to
I
2
3
4
5
6
7
I
Y
10
11
1,2
13
74
15
16
t1
18
19
20
2t
22
23
24
CASE NO PAC-E_27_01
77/08/21
( Stip )
STAEF
3
25
35 ENGLISH, D
1
2
3
4
5
6
1
o
9
evaluate the Company's rate increase request?
A. Staff's approach in any general- rate case is to
extensively review the Company's Application and
associated testimony, attachments, exhibits, and
workpapers; identify adjustment.s to its revenue
requirement, revenue norma.l-ization, rate spread, and rate
design; and prepare to fife testimony for a fu11y
litigated proceeding. There were 15 Staff members
analyzlng this case, including auditors, engineers,
utility analysts, and consumer investigators, and
supervisors. Staff auditors reviewed the Company's 2020
resufts of operations, capital budgets, capital- spending
trends, operations and maintenance ("O&M") expenses and
trends and verified al-I of the Companyrs calculatj-ons and
assumptions regarding the overall revenue requirement.
Because of the continued public health emergency due to
variant strains of the COVID-19 virus, Staff was unabl-e
to conduct onsj-te audits or reviews of the Company's
books and records and they did not have extensive
interviews with Company personnel. However, the auditors
reviewed thousands of transactions, selected samples, and
performed transaction testing in accordance with standard
audit practices. Staff reviewed the Company's labor
expense, incentive plans, and employee benefits to ensure
the appropriate l-eveI of expenditures are j-ncluded in
rates.
(stip)
STAFF
10
11
t2
13
1,4
15
1-6
L1
18
19
20
21
22
23
24
CASE NO PAC-E-21-07
Lt/08/21
4
25
36 ENGLISH, D
1
2
3
4
5
6
1
8
9
Staff reviewed both completed and proposed
Company investments to determine the prudence of capital
additions. Expenditures includi-ng pension expense,
salaries, and O&M expense were al-so examj-ned.
Additionally, Staff evaluated the Company's cost of
capital, capital structure, class cost of service, rate
spread, and revenue normalization. In totaf, Staff
submitted 228 production requests and held several-
vj-rtual meetings with Company personnel as a part of its
comprehensive investigation. Staff al-so reviewed the
Company's responses to 365 production requests submitted
by intervening parties. Based on its investj-gation,
Staff was prepared to defend over 30 proposed adjustments
to the Company's revenue requirement in testimony and at
hearing.
Settlement Evaluation
O. How did Staff determine that the overall
Settlement was reasonable?
A. In every settlement evaluation, Staff and other
parties must examine the ri-sks of losing positions at
hearing and determine if the settlement agreement is a
better overall outcome. Staff must evafuate each
individual adjustment and determine the likelihood of the
Commission accepting or rejecting Staff's rationale for
the adjustment. UltimateIy, Staff's intent in every
CASE NO PAC_E-21-07
t7/08/21
( stip )
STAFE
10
11
12
13
L4
15
t6
71
18
19
20
2t
22
23
24
5
25
31 ENGLISH, D
L
2
3
4
5
6
1
8
9
settlement conference is to negotiate the best possible
outcome for
CASE NO PAC-E-2L-07
tL/08 /2t
(Stip1
STAF'F
10
11
L2
13
t4
15
16
1,7
18
19
2A
21
22
23
24
25
38 ENGLISH, D 5a
customers.
O. Does Staff support the proposed Settlement as
reasonable?
A. Yes. After a comprehensive review of the
Company's Application, thorough audit of the Company's
books and records, and extensj-ve negotiations with the
parties to the case, Staff supports the proposed
Settlement. The proposed Settlement offers a reasonable
bal-ance between the Company's opportunity to earn a
reasonabl-e return on its investment and affordable rates
for customers. Staff believes the proposed Settlement,
interest;supported by the Parties, is in the public
fair, just, and reasonable; and should be
Commission.
Sett].enent Overview
approved by the
0.
proposed
A.
Would you please describe the terms of the
Settlement?
The proposed Settlement provides a reduction in
requested revenue requirement. Instead of
proposed base rate increase of $19.0
percent,
or 2.9
Idaho base rates would increase
the Company's
the Company's
million, or 7
by $8.0 mil1ion,percent., effective
further reduced by
January 1,
the refunding2022. The increase i-s
of $8.5 mill-ion in excess deferred income taxes
over two years. The net effect is a first-year
( "EDrT" )
increase
1_
2
3
4
5
6
7
I
9
1_0
11
72
13
74
15
t6
t1
18
19
20
2t
22
23
24
CASE NO PAC-E-21-07
77/08/27
( stip )
STAFF
6
25
39 ENGLISH, D
of approximately $3.8 mi11ion, or 1.4 percent, provided
the corporate tax rate does not change.
The proposed Settlement provides the
amortization period for certain deferred regulatory
assets; establishes the NPC, Production Tax Credi-ts
("PTC"), Renewable Energy Credits ("REC"), and the Load
Change Adjustment Rate ("LCAR")
Energy Cost. Adjustment Mechanism
the remaining benefits from the
("TCJA"); the val-ue of the Bayer
for inclusion in the
("ECAM" ) ,' the return of
Tax Cuts and Jobs Act
curtail-ment products ;
The proposed Settl-ementand rate spread and
does not detail all
revenue requirement
rate design.
of the different components of the
calculation, including the cost of
capital, return on equity, or net rate base balances.
O. Please explain how the proposed Settlement
addresses the amortization of deferred regulatory assets.
A. In Order No. 34154, Case No. PAC-E-18-08, the
Commission approved a settlement stipulation allowing the
Company to defer incremental- depreciation expense of
$l-3,940,303 as a regulatory asset. Under the terms of
the proposed Settlement, this regulatory asset will be
amortized over four years and included in the base rate
increase.
In Order No. 33304, Case No. PAC-E-l4-10, the
Commission authorized the Company to defer for future
1
2
3
4
5
6
7
o
9
10
11
1-2
13
L4
15
76
t7
18
79
20
27
22
Z5
24
CASE NO PAC-E_21_07
Ll./08/2L
(St j-P I
STAFF
1
25
40 ENGLISH, D
recovery certain costs associated with the cl-osure of the
Deer Creek Mine. The Parties agreed to amortj-ze the Deer
Creek Mine regulatory asseL over three years consistent
with the Company's initial flIing in this case. The
bafance in the regulatory asset account is approximately
$82.4 mlll-1on (total system) , which includes $14,34'7 ,296
in unpaid royalties and $6,521,059 of unpaid future
remediation expenses.
In Order No. 33954, Case No. PAC-E-17-06, and
Order No. 34L04, Case No. PAC-E-L7-01, the Commission
authorized the Company
and new windrepowered
Tracking
facilities through a Resource
Mechanism ("RTM") included as a component of the
ECAM up to
from those
the amount of the benefits customers received
projects. Any costs above the benefits were
to be deferred as a regulatory asset with
to defer the costs for certain
recovery to
The Parties
be
determi-ned in the
to excl-ude
next general rate case.
the RTM regulatory asset
the Company will- contlnue
agreed
in this case, and
incrementaf costs 1n the RTM
this regulatory asset
December 31, 202L,
no carrying charge
will be determined
next general rate case.
explain the ECAM components addressed in
from recovery
to defer the
asset. There
through
wil-] beas a regulatory
and recovery of
in the Companyrs
O. Pfease
the Settl-ement.
1-
2
3
4
5
6
1
U
9
t-0
11
L2
13
L4
15
76
71
18
79
20
2L
22
23
24
CASE NO PAC-E_21-07
7t/ 0B /2t
( StiP )
STAFF
8
25
4L ENGLISH, D
1
2
3
4
5
6
1
U
9
A. Attachment 1 to the proposed Settlement
provides the calculation of certaj-n components for the
Company's annual ECAM filing on a total system basis,
which are summarized below:
' NPC $1.368 bif l-ion or $24.sLlMegawatt-hour
( "MWh" )
' PTC - $255,672, 4'7'7 or $4 . 16lMWh
' REC - $A ,32't,004 or $0.07luwfr
. LCAR _ 98.74lMWh
O. Pl-ease describe the tax benefits associated
with the TCJA.
A. On January ll, 2078, the Commission opened Case
No. GNR-U-18-01 to investigate the impact of the TCJA on
utility costs and ratemaking. The Commission reduced the
rates Rocky Mountain Power charges customers in Idaho to
reflect the reduced income tax expense at the new 21
percent corporate tax rate. However, the TCJA also
required companies to revalue their deferred tax amounts
at the new corporate tax rate which resu1ted in excess
deferred federal income tax reserve balances. Balances
associated with reguJ-ated util-ity operations resul-ted in
a balance sheet reclassification from a deferred tax to a
deferred regulatory asset or liability. This revaluation
affected plant (protected or permanent tax benefit) and
non-p1ant (unprotected or temporary tax benefit)
CASE NO PAC-E-21-07
77/08/2r
( stip I
STAEF
10
11
72
13
74
15
L6
L7
18
79
20
21-
22
23
24
9
25
42 ENGLISH, D
1
2
3
4
5
6
7
I
9
10
11
t2
13
t4
15
L6
t7
18
19
20
21,
22
23
24
25
balances.
For plant-related EDIT, the utilities had to
/
cAsE NO PAC-E-21"-07
Lt/08 /2L
ENGLISH, D. (Stip) 9a
STAFF
43
amortize the balance over the remaining life of the
assets. Non-plant EDIT balances could be returned to
customers in any manner approved by the Commission.
On June 7, 2018, the Commission issued Order
No. 34012 approving a settl-ement stipulation that woul-d
return $8.385 mil-l-ion to customers, either through a
separate tariff schedule, or offsetting deferred amounts
in the ECAM. The remaining benefits of the TCJA were to
be determined in a separate phase of the case.
On May 3, 20L9, the Commission issued Order No.
34331 approving
outlined how the
the Phase 2 settlement stipulation, which
remaining benefits wou1d be returned to
customers. Beginning on June L, 20L9,
plant and non-pIant EDIT balances were
over seven years (approximately
and be used to offset the 20].3
expense
in Case
non-protected
to be amortized
$2.L milfion per year)
incremental depreciation
deferral approved by Commission Order No. 329L0
No. PAC-E-13-04. However, in that settlement
stipulation, the parties agreed that changes to the
seven-year amortization period for the unamortized
bal-ances could be proposed in the Company's next general
rate case.
In Order No. 34384, Case No. PAC-E-20-03, the
Commission approved a settl-ement stipulation, which in
part discontinued the seven-year amortization of the
1
2
3
4
5
6
-
8
9
10
11
L2
13
74
15
l6
L1
1B
19
20
27
22
23
24
CASE NO PAC_E-2L-01
tL/08/27
( StiP )
STAFF
25
44 ENGLISH, D 10
1
2
3
4
5
6
7
8
9
remaining EDIT balances and used the balances to offset
the
CASE NO PAC.E-2L-07tt/ 08 /2L
10
11
1,2
l-3
L4
15
15
t7
18
19
20
2L
22
23
24
(Stip) 10a
STAFF
25
45 ENGLISH, D.
unrecovered balances of the Companyrs Cholla Unit No. 4
that cl-osed at the end of 2020. Remaining EDIT balances
would then be used to mitigate the impact of the rate
increase in this case.
The Company has approximately $8.5 million in
remaining EDIT balances to return to Idaho customers.
The Parti-es to the proposed Settl-ement agreed to return
the balance to customers over two years through Electric
Service Schedule No. 197. However, if federal corporate
tax rates j-ncrease before the balance is completely
amortized, the Parties agreed that the Company will stop
the amortization as of the effective date of the tax
increase. If there ls a change to the corporate federal
tax rate before the Company's next general rate case, the
Partj-es will support the Company's fiting of an
application seeking to defer the incremental- tax impacts
as of the effective date of the new tax rate.
O. P1ease explain the value of the Bayer
curtailment products contained in the Settlement.
A. The Parties agreed to a credit amount for
Bayer's ability to interrupt and curtail- electric service
during times of high demand on the system. The Partj-es
agreed the amount and method for cal-culating the credit
i-n this Settlement should not be construed as
precedential.
conditions of
The Parties
the
also agreed that the terms and
1
2
3
4
5
6
7
8
9
10
11
t2
r_3
1,4
15
76
L1
18
19
20
21,
22
23
24
CASE NO PAC-E-2L_07
t1,/ 08 /2L
( stip)
STAFF
25
46 ENGLISH, D 11
Energy Service Agreement filed with the Commissj-on as
Supplemental Exhibit No. 36 on September L6, 202I, are
fair, just, and reasonable.
O. Please explain the rate spread and rate desi-gn
contained in the proposed Settl-ement.
A. The Parties agreed to a rate spread based upon
the $8.0 mil-lion rate increase as set forth in Attachment
2 lo the proposed Settlement. The rate design and tariff
changes are consistent with the Company's proposed
methods to move customer classes toward cost of service
utilizing the normal-j-zed billing determinants incl-uded in
the Company's original filing.
The Parties agreed to increase the monthly
customer charges based on the proposal in the Company's
original filing. This includes, but is not limited to,
raising the customer service charge from $5.00 to $8.00
for Schedule 1 residentiaf customers, from $14.00 to
$15.00 for Schedule 36 Time-of-Day residential customers,
and from $16.00 to $18.00 for Schedule 23 general service
customers.
to migrate
Schedule 9
The Parties agreed with the Company's proposal
the Schedufe 401 special contract customer to
Rates for Schedule 9 will be designed for
the migration
system average
the current Schedule 9 customers prior to
of the Schedule 401 customer, based on the
1
2
3
4
5
6
1
U
9
10
11
t2
l_3
L4
15
16
71
1B
19
20
2L
22
23
24
CASE NO PAC_E-21-07
L7/08/27
( stip )
STAFF
25
41 ENGLISH, D t2
1
2
3
4
5
6
7
8
9
rate increase. Electric Servi-ce Schedule 9 will be
revised to
CASE NO PAC-E_2I-07
Lt/ 08 /21
(stip)
STAFF
10
L2
1t_
1-3
L4
15
L6
L7
18
19
20
21
22
23
24
25
48 ENGLISH, D L2a
1
2
3
4
5
6
7
8
9
increase the limit on the customer's maximum power
requirement from l-5,000 kilowatts ("kW") to 30,000 kW.
Similarly, the Parties agreed with the
Company's proposal to migrate current Schedule 19
customers to Schedul-e 23, since all new customers that
once qualified for Schedu1e 19 are currently being
classified as Schedul-e 23 customers. To mitlgate the
rate impact of migrating existing Schedule 19 customers
to Schedul-e 23, Schedul-e 23 customers will- use a seasonal
difference ratio of 1,.20 and a primary customer charge of
$48.00.
The Parties also agreed that Schedule 7,
Schedule 11, and Schedule 1,2 street and area lighting
customers will receive a rate decrease to move rates 50
percent closer to cost of service.
O. Do you have any other comments on the proposed
Settlement?
A. Yes. Staff has reviewed Attachments 1-4 to the
proposed Settlement and verified they are consistent with
the agreement. The agreed upon rate design wil-l offer
the Company a reasonable opportunity to recover the
proposed revenue requirement. As implied throughout this
testimony, the proposed Settl-ement represents a fair,
just, and reasonabl-e compromise of the positions put
forth by all parties and 1s in the public j-nterest.
CASE NO PAC-E-21-07
t1,/08/21
( stip )
STAFF
10
11
L2
13
14
15
L6
71
1B
L9
20
21
22
23
24
25
49 ENGLISH, D 13
1
2
3
4
5
6
7
8
9
Therefore, Staff recommends the Commission approve the
proposed Settlement
cAsE NO PAC-E-21,-07
Lt /08 /2L
10
11
72
13
L4
15
t6
t7
18
19
20
2t
22
23
24
(Stip) 13a
STAEE
25
50 ENGLISH, D.
1
2
3
4
5
6
7
I
9
without material- changes or modifications.
O. Does this conclude your testimony?
A. Yes, it does.
CASE NO PAC-E-2L-07tt/ 08 /21
ENGLISH, D. (St.ip)
STAFF
10
11
1,2
13
L4
15
76
t7
t_8
19
2A
2L
22
23
24
25
51 L4
1
2
3
4
5
6
7
I
9
(The following proceedings were had in
open hearing. )
MR. HARDIE: I'd like to open Staffrs
witness to cross-examination.
COMMISSIONER RAPER: Rocky Mountain Power,
Ms. Wegener.
MS. WEGENER: No questions. Thank you.
COMMISSIONER RAPER: Thank you. Mr. Budge
and Mr. Budge.
MR. BUDGB: No questions. Thank you.
COMMISSIONER RAPER: And Mr. Wi11iams.
MR. WILLIAMS: No questions.
COMMISSIONER RAPER: Are there any
questions from members of the Commj-ssion?
So there would be no redirect to be had;
is that correct?
MR. HARDIE: No redirect.
COMMISSIONER RAPER: It looks like, Mr.
English, you are excused as wel-I.
(The witness left the stand. )
COMMISSIONER RAPER: Thank you. Okay, we
wil-l go to Mr. Budge and witnesses for Bayer.
MR. BUDGE: Bayer will caII as its first
witness Mike Veile.
CSB REPORTING
208 .8 90 . 5198
ENGLISHStaff
10
11
L2
13
74
15
16
t'7
18
19
20
2t
22
23
24
25
52
MIKE VEILE,
produced as a witness at the i-nstance of P4 Production,
L.L.C., having been fj-rst duly sworn to tell- the truth,
was exami-ned and testif ied as follows:
D]RECT EXAMINATION
BY MR. BUDGE:
O Mr. Veile, please state your name and
spell your last name for the record.
A My name is Mike Veile, V-e-i-l-e.
O And please state your business address and
position with Bayer Corporation.
A It is P4 Product j-on, L. L. C. , 1853 Highway
34, Soda Springs, Idaho, 83216.
O Mr. Veil-e, just briefly describe your
position with P4 Production and explain some of your
responsibil-ities 1n that role.
A My main title is process optimJ-zation lead
and energy manager, and maj-n1y for this I'm managing the
electricity contract for the Soda Springs p1ant.
Additlonal responsibilities have to do with production
system implementation at the site as wel1.
O Thank you, and Mr. Veile, did you submit
testimony in this case consisting of 16 pages and
1
2
3
4
5
6
1
8
9
10
1l-
72
13
L4
15
1,6
L7
18
19
20
2L
22
23
24
CSB REPORTING
208.890.5198
VEILE (Di)
P4 Production, L.L.C
25
53
incl-uding Exhibit 301?
A Yes.
O Would you l-ike to make any corrections to
your testimony?
A I woul-d. On page 8 of the testimony, and
we're looking down on l-j-ne 11 and L2, there is the
sentence there, again, page 8, fine 11 and L2, we have
the sentence that says, "The Company wil-l no longer cal-l
economic interruptions at its discretion. " We are going
to now insert and substitute a new sentence that says,
"The Company wiII
curtail-ments are
pri-ce trigger is
OMr
continue to control when economic
taken once the
reached up to
. Vei1e, with
$250 per megawatt-hour
the contract limits. "
that correction, if you
were asked the same questions today as found in your
testimony that's
the same?
been submitted, would your answers be
A Yes, they would.
MR. BUDGE: I move to spread the testimony
of Mike Veil-e on the record.
COMMISSIONER RAPER: Wj-thout objection, we
will spread the testimony of Mr. Veile on the record as
if read.
MR. BUDGE: Including 301.
COMMISSIONER RAPER: Admit 301. Thank
1
2
3
4
5
6
1
I
9
10
11
72
13
L4
15
1,6
77
18
L9
20
2t
22
23
24
CSB REPORTING
208.890.5198
vErLE (Di)
P4 Production, L.L.C
25
54
1
2
3
4
5
6
7
8
9
you.
(P4 Production, L.L.C., Exhibit No. 301
was admitted into evidence. )
(The following prefiled testimony of
Mr. Mike Veile is spread upon the record. )
10
11
L2
13
t4
15
16
L7
18
19
20
2t
22
23
24
CSB REPORTING
208 .890.5198
VEILE (Di)
P4 Production, L.L.C.
25
55
I. TNTRODUCTION
O PLEASB STATE YOUR NAME, EMPLOYBR AND BUSINESS
ADDRESS.
A My name is Mlke Veile. I am employed by P4
Production, L.L.C. ("P4"), an affiliate of Bayer
Corporation, at its Soda Springs pIant. My business
address is P.O. Box 876, Soda Springs, Idaho 83276.
A PLEASE PROVIDE YOUR EDUCATIONAL BACKGROUND,
WORK EXPERIENCE, AND CURRENT POSITION AT BAYER.
A I graduated from Utah State University with a
B.S. in 7992 and an M.S. in 7994 in Mechanical-
EngJ-neering. I began working in 1998 as a Mechanical
Engj-neer at the Soda Springs p1ant. Monsanto and P4 were
acquired in 2018 by Bayer and now operate as part of the
Bayer Corporation group of companies. While the Soda
Spring plant is owned by P4, I refer to P4 and Bayer
Corporation col-lectively as "Bayer." I have continued to
work for Bayer in various capacities. I am currently the
Site Energy Manager for the Soda Springs p1ant.
O WHAT RESPONSIBILITIES DO YOU HAVE AT THE SODA
SPRINGS PLANT?
A My responsibilities include the procurement of
electricity as well as Iean manufacturing and production
systems and site optimization. Electricity is the single
1
2
3
4
5
6
1
I
9
10
11
72
13
14
15
16
t1
1B
L9
20
2t
22
23
24
CSB REPORTING
208 .8 90 . 5198
VEILE (Di)
P4 Productj-on, L
3
.L.C.
25
55
1
2
3
4
5
6
7
8
9
largest input cost of producing elemental phosphorus. For
the past several years I have been directly involved in
negotiations and management decisions pe::taining to
existing and future electrical contracts between Bayer
and Rocky Mountai-n Power (the "Company"). I have also
reviewed and am generally familiar with prior
VEILE (Di)
P4 Productj-on, L.
10
11
1,2
13
't4
15
16
1,7
18
19
20
2t
22
23
24
CSB REPORTING
208.890.5198
3a
L. C.
25
57
1
2
3
4
5
6
1
I
9
10
11
L2
13
L4
15
L6
77
18
19
20
27
22
23
24
electricity contracts for the Soda Springs plant along
to, and orders issued by, thewith documents submitted
Idaho Public Utilities Commission.
O WHAT ]S THE PURPOSE OF YOUR TESTIMONY?
A The purposes of my testimony are to: (1)
explain Bayer's support for the Commission to enter an
order approving the Settlement Stipulation entered into
between the Company, Staff, and Intervenors filed October
25, 2021, including approva1 of the new Electric Service
Agreement ("ESA") between Bayer and the Company attached
to the Settlement Stipulation as Attachment 2; (2) review
the new ESA between Bayer and the Company and describe
the differences between the existing ESA and new ESA; (3)
provide insight into the operational impacts that the
curtailment products under the new ESA have on operation
of the Soda Springs plant; (4) provide rel-evant history
and informatj-on concerning the operation of the Soda
Springs plant; and (5) review the history of electric
service agreements between the Company and Monsanto.
II. SUPPORT OF SETTEMENT STIPI'IATION AI{D
APPROVAT OF THE NEIY ELECTRIC SERVICE AGREEMENT
BETTUEEN ROCKY MOI'NTAIN POITER A}ID P4 PRODUCTION
O PLEASE EXPLAIN WHY BAYER SUPPORTS THE
SETTLEMENT STIPULATION.
A As PacifiCorp's largest customer in Idaho, and
L. t. c.
CSB REPORTTNG
208.8 90.5198
VEILE (Di) 4
P4 Product j-on, L. L. C
25
58
because electricity is the largest single cost of
producing phosphorus, Bayer takes an active role in all
Rocky Mountain Power rate proceedings.
Commencing on September 13, 202L, the parties
held several meetings which culminated in a settlement
agreement, the details of which are set forth in
1
2
3
4
5
6
7
8
9
10
11
t2
l_3
L4
15
16
!7
18
t9
20
21_
22
23
24
CSB REPORTING
208 .8 90 . 5198
VEILE (Di)
P4 Production, L
4a
L.C
25
59
1
2
3
4
5
6
7
B
9
10
11
L2
13
74
15
1,6
L1
18
19
20
2t
22
23
24
the Settlement Stipulation submitted to the Commission
for approval
million rate
The Settlement
increase and an
Stipulation incl-udes an $8
increase of the Bayer
interruptible credit
$ [redactedl mi1]-ion.
f rom $ lredactedl mil]ion to
the
A11 things
settlement
considered and
r_s arecognizing that
disputed claims,
conditions of the
compromise of
the terms andBayer believes that
Settlement Stipulation are fair, just,
reasonable, and in the public interest.
O HOW WAS BAYERTS [redactedl M]LLION CURTAILMENT
PRODUCT VALUE ARRIVED AT AND WHY SHOULD THE COMMISSION
APPROVE IT AS PART OF THE SETTLEMENT?
A The lredactedl million value for Bayer's
interruptible products, along with the $8 million rate
increase, were arrived at as a compromise. The
methodology applied by the Company to value Bayer's
interruptible product resulted a credit of $ lredactedl
million, as explained in the testimony of Craig El-l-er.
The methodology applied by Bayer resulted in a credit
between $ [redacted] mi]Iion and $ [redacted] mi11i-on, as
explained in the test j-mony of Brian Col-1ins. The
sett.l-ement val-ue of $ lredacted] million is based on a
compromise. Bayer support.s the settlement as fair, just,
and reasonable under the circumstances.
ITI. PROPOSED NEIiT 2022 ELECTRIC SERVICE AGREEMET{T
CSB REPORTING
208 .890. s198
vErLE (Di) 5
P4 Production, L.L.C
25
60
O HAS ROCKY MOUNTAIN POV{ER AND BAYER NEGOTIATED
THE TERMS OF A NEW ESA?
A Yes. After a period of extensive negotiations,
Bayer and the Company agreed on terms of a new ESA,
excluding the value of Bayer's interruptible products, to
become effective January 1, 2022. On September 16, 202L,
1
2
3
4
5
6
7
8
9
10
11
t2
L3
t4
15
16
t7
18
19
20
2L
22
23
24
CSB REPORTING
208.890.5198
VEILE (Di) 5a
P4 Production, L.L.C
25
61
filed a Partial Stipulation
Service Agreement ("Partia1
Confidential- Exhibit No. 36
termi-nation. The charges
400 forforth in Schedule
on Terms of P4's Energy
Stipulation" ) as Supplemental
to Craig Eller's testi-mony. A
for electric servi-ce wiII be set
demand and energy, l-ess the
copy of the new ESA is attached to the Partial
Stipulation as confidential Attachment 1. The Partial
Stipulation a1l-ows the Commission to determine the value
of Bayer's interruptible products in the absence of an
agreement between the parties. (Partial Stipulation,
p. 2, tl 4.)
O HAS AN AGREEMENT BEEN REACHED TO ESTABLISH
BAYER'S INTERRUPT]BLE CREDIT VALUE?
A Yes. Pursuant to the Settlement Stipulation,
the Company, Staff, and all Intervenors settled al1
pending issues in this proceeding, including a
$[redacted] million value for Bayerrs curtailment
products. Attached as Bayer Exhibit 301 is a copy of the
final ESA as signed by Bayer with the Company's signature
page in progress and expected by the hearing date.
O PLEASE SUMMARIZE THE TERMS OE BAYER'S NEW ESA.
A The BSA is for a two-year term commencing
and ending December 31, 2023.January l, 2022,
Thereafter, the ESA automaticall-y renews for successive
180-day notice ofone-year terms until either party gives
1
2
3
4
5
6
1
B
9
10
11
t2
13
L4
15
t6
t1
1B
19
20
2t
22
23
24
CSB REPORTING
208 .8 90 . 5198
VEILE (Di) 6
P4 Production, L.L.C
25
62
curtailment credit, spread equally over the twelve
monthllr bills. All parties aqree that the terms and
conditions of the new ESA are fair, just, reasonable, and
in tn'e public interest. (Settlement Stipulation, 91 14.)
CSB REPORTING
208 .890. 5198
VEILE (Di) 6a
P4 Productj-on, L.L.C.
63
1
2
3
4
5
6
1
B
Y
O PLEASE DESCRIBE THE DIFFERENCES BETWEEN THE
CURTAILMENT PRODUCTS UNDER THE EX]ST]NG ESA AND THE NEW
ESA?
A Under the current ESA, the Company has the
right to interrupt Bayer a total of 1r 000 hours annua1Iy,
consisting of 12 hours of system integrity interruptions
at 762 MW (a11 three furnaces), 1BB hours of operating
reserves interruptions at 95 MW, and 800 hours of
economic interruptions at 61 MW. These curtailment
scenarios can be accomplished through any combinatj-on of
shutting down or reducing load on the three furnaces.
Significantly, Bayer has had the right to
buy-through economic curtailment. at market prices versus
the Schedule 400 rate, which it has regularly done to
meet production requirements or safeguard the plant
operations. As a resul-t of these economic curtailment
events, the Company does not have to plan resources to
supply Bayer with buy-through power coming from the
market.
Under the new ESA, the system integrity
curtailment product has been eliminated, the operating
reserves curtailment product contj-nues with slight
changes, and the economic curtailment product continues
with significant changes.
Operating reserve interruptions wiII continue
CSB REPORTING
208 .8 90 . 5198
VEILE (Di)
P4 Production, L
10
11
t2
13
1A
15
L6
1,1
1B
19
20
27
22
23
24
1
.L.C.
25
64
to be directed by the Company in its sole discretion when
it determines that curtailment is needed to meet
operatinq reserve requirements. The Company may interrupt
Bayer a maximum of 188 hours per cal-endar year for
operating reserves. The Company is required to give Bayer
not less than six minutes notice of curtailment.
Historically, when Bayer receives a curtailment notice it
has shut down the furnaces within 1-2 minutes. The
current ESA and the new ESA both provide operating
reserve curtailment based upon a
/
1
2
3
4
5
6
7
8
9
10
11,
72
13
t4
15
16
71
18
79
20
2!
22
23
24
CSB REPORTING
208.890.5198
VEILE (Di) 7a
P4 Producti-on, L. L. C
25
6s
95MW load; however, under the current ESA Bayer
utilize a combination of furnace nos. 1 , 8 and
can
q1Jf which
allows Bayer some operational flexibility, whereas
the new ESA requj-res that furnace nos. 7 and 8 wiII
always be curtailed.
The economic curtailment product has changed
considerably under the new ESA. Prevj-ous1y, Bayer was
subject to 800 hours of economic curtailment based on
one-hour intervals-i.e. up to 800 interruptions annua11y.
Under the new ESA, Bayer .is subject to 1r 600
interruptions annually based on l5-minute intervals.
Significantly, Bayer no longer has the right to
buy-through economic curtailments. When the marginal
price at the Monsanto Price Node exceeds $250 per MWh,
Bayer is automatically interrupted. Bayer and the Company
have developed an operating procedure so that
interruptions wiIl be hard-wired into Bayer's plant
operations. The Company will continue to contro1 when
economic curtail-ments are taken once the $250 per
megawatt-hour price trigger is reached up to the contract
limits.
The new ESA identifies each furnace as its own
specific curtailment
value for curtailment
resource and no longer cal-l-s a MW
This significant change reduces
operational flexibility
1
2
3
4
5
6
1
B
9
10
11
12
13
14
15
L6
L7
18
19
20
2t
22
23
24
CSB REPORTING
208 .890.5198
vErLE (Di) 8
P4 Production, L.L.C
otr.J
66
In addition, the Company can simultaneously
curtail furnace nos. 7 and B for operating reserves and
furnace no. 9 for economj-c curtailment, resulting in a
complete shut-down of the Soda Springs p1ant. This
risk for Bayer, ascreates significant operational
explained below.
o How Do THE CHANGES TO
AEFECT BAYERI S OPERAT]ONS?
ECONOMIC CURTAILMENT
lMonsanto's furnace numbers 1-6 were in Col-umbia, Tennessee, and were
shut down in 1986.
1
2
3
4
5
6
1
I
9
10
11
72
13
L4
15
1,6
t1
18
79
20
2L
22
23
24
CSB REPORTING
208 .8 90 . s19B
VEILE (Di)
P4 Production, L
8a
L.C
25
67
A Monsanto's furnace numbers 1-6 were in
Columbia, Tennessee, and
inability to buy-through
significant operational
interrupt regardless of
curtail-ment may
ESA, the Company
curtaiLment that
the third furnace
were shut down in 1986. The
economi-c curtai-lment is a
risk since Bayer is required to
operation conditions at the
regardless of Bayer's need
plant
time of the interruptions and
to produce phosphorous.
In addi-tion, the inability to buy-through means
that economic curtai-lment and operating reserves
occur simultaneously. Under the current
cannot call operating reserve
results in two furnaces being off whil-e
is of f f or economic curtai-lment. The
only time that all furnaces can be curtalled
simuftaneously j-s under the L2 hours of system emergency
curtail-ment.
By contrast, under the new ESA the inabll-ity to
buy-through economic curtailments, combined with the
large number of economic curtailment instances and the
potential for simul-taneous curtailment of al-I three
furnaces, introduces significant operational risk to the
plant due to the hiqh temperature operati-ng parameters
for the pIant.
An integral feature of the plant is the ki1n,
which is a very large refractory l-ined piece of equipment
1
2
3
4
trJ
6
1
I
9
10
11
t2
13
L4
15
t6
71
1B
79
20
2t
22
23
24
CSB REPORTING
208 .890.5198
VEILE (Di) 9
P4 Production, L.L.C
25
6B
that calcines phosphate
the furnaces. The kil-n
ore prior to it being fed into
is fueled by carbon monoxide
off-gas from the furnaces. If all three the furnaces are
shut down, the kil-n becomes inoperable due to the lack of
fuel and triggers a cascade of harmful consequences to
the pIant. Losing fuel contributes to a "thermaf shock"
of the kiln by reducing kiln temperature. Thermal shock
may in turn cause kiln refractory failure depending upon
the severi-ty and/or number of instances of shock. Kiln
refractory failure causes serious damage, resulting in a
minj-mum of 7 days downtime and significant repair costs.
1
2
3
4
5
6
1
8
9
10
11
L2
13
L4
15
76
1,7
18
19
20
21,
22
23
24
CSB REPORTING
208 .890.5198
VEILE (Di)
P4 Production, L
9a
L.C
25
69
Another adverse consequence of not being able
to buy-through economic curtaiIments and of being forced
to take down specific furnaces is the interruption of
metal tapping. Furnaces must be operating to complete
certain operations. One of these is known as a metal- tap,
removing the built-up molten metal within the furnace.
This operation can take 3-4 hours to execute and involves
numerous operators. If Bayer is curtailed in the middl-e
of the operation i-t must be suspended and restarted when
the furnace in back onl-ine in a steady state operation.
The current ESA, which gives Bayer fl-exibility to curtail
MWs versus specific furnaces, has allowed sufficient
flexibility to avoid this scenario in most cases.
Thus, in addition to production loss from
curtailment, the new ESA introduces additional- rj-sks to
the p1ant. Bayer has accepted this additional- risk in
order to provide a curtailment product that has greater
vafue to the Company.
O WHY DID BAYER AGREE TO ASSUME THESE NEW
ECONOMIC CURTAILMENT RISKS?
A Eor two primary reasons. First, the Company
expressed a
function as
desj-re for economic curtailment product to
a capacity resource, which
greater val-ue to the Company given its
renewable wind and solar resources that
woul-d provide
growth of
are not always
1
2
3
4
5
6
1
8
9
10
11
72
13
74
t-5
L6
71
1B
L9
20
2t
22
23
24
CSB REPORTING
208.890. 5198
VEILE (Di)
P4 Production,
10
L. L. C.
25
10
available. Bayer's buy-through option undermined the
ability of economic curtailment to provide capacity
value. Second, to provide greater value to Bayer by
increasing the value of its curtailment products.
O PLEASE EXPLAIN WHY BAYERIS LOAD CURTA]LMENT
HOURS ARE UN]QUE?
1
2
3
4
5
6
7
I
9
10
11
L2
13
1,4
15
L6
77
18
79
20
2t
22
23
24
CSB REPORT]NG
208 .8 90 . 5198
VEILE (Di)
P4 Production,
10a
L. L. C.
25
1L
1
2
3
4
5
6
1
I
9
10
11
72
13
l4
15
\6
11
18
19
20
27
22
23
24
A Bayer is unlike any other non-firm customer on
the PacifiCorp system because of the magnitude of the
curtailable Ioad, the number of curtailment hours, and
the short response time. Bayer provides 188 hours of
operati-ng reserves which can be taken in a matter of
seconds, The curtallment Bayer's load is quicker than any
peaker resource. Economic interruptions provide up to
7,500 instances of 15-minute interruptions that can be
taken within 22.5 minutes notice. Bayer's three furnaces
can be curtailed separately as well as collectively in
combination. The increased beneflt of these products to
the Rocky Mountaj-n Power system is undisputed and
warrants an increased credit for the losses and risks
newly incurred by Bayer, though the value of Bayerrs
interruptibl-e credit was a matter of substantial-
dj-sagreement.
IV. HISTORY ATiID OPERATIONS OF SODA SPRINGS PI,ANT
O PLEASE PROVIDE A BRIEF HISTORY AND OVERVIEW OF
THE OPERAT]ON OF BAYER'S SODA SPRINGS PLANT.
A The Soda Springs plant began operations j-n 7952
and has since operated continuously-for nearly 70 years.
The plant produces one producL: elemental phosphorus.
Elemental phosphorous 1s identified as I'P'r in the
Periodic Tabl-e of El-ements. Bayer's product I'P4rr is a
mol-ecufe of 4 phosphorus atoms. Phosphorous is an
CSB REPORTING
208. 890. 5198
VEILE (Di)
P4 Production,
11
L.L.C
25
12
essential building block for many products. Its primary
use is the production of glyphosate, the actj-ve
ingredient in Roundup@ herbicide.
O DESCRIBE HOW PHOSPHORUS IS MANUFACTURED.
A Phosphate ore is mined in the mountains east of
Soda Springs and transported by truck to the plant. The
phosphate ore is calcined in a kiln and then combined
with coke, most of which is manufactured at our sister
plant in Rock Springs, Wyoming,
1
2
3
4
5
6
7
I
9
10
11
L2
13
74
15
16
L1
18
19
20
21,
22
23
24
CSB REPORTING
208 .890.5198
VEILE (Di)
P4 Production,
11a
L.L.C
25
73
and with quartziLe which we mine from a quarry west of
the p1ant. The mixture is placed into one of three
electric furnaces where electrical- energy creates the
heat to drive a chemical reaction liberating t.he
phosphorus as a gas. The phosphorus gas is cleaned,
condensed, and then shipped to other Locations. The
phosphorus manufacturing process is capital intensive,
with electricity being the single largest variable
cost.
O WHERE IS THE PHOSPHORUS SHIPPED AND HOW IS IT
USED?
A Most of the phosphorus produced in Soda Springs
is transported to Bayer's Louisiana facility by railcar
or to its Brazil facility by railcar and ocean
freightlj-ner. There phosphorous is converted into
glyphosate. Small- amounts of phosphorus are sold to other
entities for use in a variety of products.
O DESCRIBE THE ELECTRICAL SERVICES AT THE SODA
SPRTNGS PLANT.
A Bayer has a
This load consi-sts of
total load of approximately 797 MW.
162 MW of non-firm power which is
.'l (46 MW) , furnace no. 8 (49
(61 MW), approximately 20 MW of
MW of firm l-oad. The Soda Springs
provided to furnace
MW) and furnace no.
auxiliary Ioad,
plant utilizes in excess of [redacted] KWh of energy
no
and
9
9
1
2
3
4
5
6
7
8
9
10
11
L2
13
74
15
L6
71
1B
t9
20
2L
22
23
24
CSB REPORTING
208 .890. 5198
vErLE (Di) t2
P4 Production, L.L.C
25
14
1
2
3
4
5
6
1
I
9
10
11
L2
13
t4
15
l6
L7
i1g
19
20
21-
22
23
24
CSB REPORTING
208.890. s198
VEILE (Di)
P4 Production,
72a
L.L.C
annually and
single-point
stable since
is Rocky Mountain Power's largest
customer. Bayer's load has been relatively
furnace no. 9 came on-llne in 7966.
O ARE OTHER ELECTRTC FURNACES USED TO MANUFACTURE
PHOSPHORUS?
25
15
1
2
3
4
5
6
l
B
9
10
11
t2
13
L4
15
t6
t7
18
19
20
2t
22
23
24
A Not in the United States. Monsanto's first six
electric furnaces to manufacture phosphorus were built
and operated in Columbia, Tennessee. That plant closed in
L986 when its costs were no longer competiti-ve-primarily
due to rising electricity costs. Monsanto constructed
furnace nos. 7 and B at Soda Springs which began
operating in 7952. Furnace no. 9 became operational in
1966, and is the last and largest el-ectric furnace
phosphorous constructed in North America. At that time
there were 31 efectric phosphorous furnaces in operation
in North America. Bayer' s three furnaces are al-l- that
remain. Outside of North America there are el-ectric
furnaces operating to produce phosphorous in China,
Vietnam, and Kazakhstan, which supply competitors.
V. HISTORY OF ELECTRIC SERVICE CONTRACTS
O PLEASE PROVIDE A HISTORY OF THE ELECTRIC
SERVICE CONTRACTS SUPPLYING THE SODA SPRINGS PLANT.
A Bayer and its predecessor Monsanto have been a
special contract customer of Rocky Mountaj-n Power and its
predecessor, Utah Power & Light Company, since 1951.
Electric Service Agreements were entered into i-n 1951,
1965, 7991, 1995, 2000, 2003, 200J,2008, 2017, 201,4 and
2016. Each ESA provlded a non-fi-rm load for the furnaces
and a sma1l firm load for auxifi-ary power. Each contract
contained varying curtailment hours and terms of
CSB REPORTING
208 .8 90. s19B
VEILE (Di)
P4 Production,
13
L. L. C.
ZA
16
curtailment. In many of the contracts Monsanto had the
option of buying through curtaj-lments at replacement
energy costs. The rates and terms of all special
contracts were arrived at by agreement negotiated
between the parties and approved by the Commission, with
the exception of 2003 and 2011.
1
2
3
4
5
6
7
I
9
10
11
L2
13
t4
15
1,6
71
18
19
20
21,
22
23
24
CSB REPORTING
208 .890.5198
VEILE (Di)
P4 Production,
13a
L.L.C
25
77
Each of these contracts provided the Company
with the right to curtail the delivery of electricity for
operating reserves, system integrity interruptions, and
for economic purposes. Each curtail-ment product provided
unique features designed to provide capacity and energy
beneflts to the Company and billing credits to Monsanto
to enable it to remain competitive and in business.
Until 2004, rates were based upon a single flat
all-in
These
energy
costs.
charges and began receiving a
energy rate for both firm and interruptible power.
rates were designed to cover the Company's variable
costs and make a reasonabl-e contribution to fixed
In 2004 Monsanto began paying
credit
demand and energy
for j-nterruptibl-e
products.
O PLEASE EXPLAIN THE LAST CONTESTED RATE CASE AND
THE EFFECT ON MONSANTO'S CONTRACT?
A On May 28, 20L0, Rocky Mountain Power filed
Case No. PAC-E-10-07. The values of Monsanto's economic
curtailment, non-spinning operating reserves, and system
integrj-ty curtailment products were hotly contested. This
case was concluded by Order No. 32196 issued February 28,
2071. This was the first time the Commission settled upon
a definitive methodology for valuing Monsanto's
interruptibl-e products, establishing energy and capacity
val-ues for all three products totaling $ [redacted]
1
2
3
4
5
6
7
a
9
10
11
t2
13
14
15
76
77
18
L9
20
27
22
23
24
CSB REPORTING
208.890.s1-98
VEILE (Di)
P4 Production,
14
L. L. C.
25
1B
mil-l-ion. This total included $[redactedl million for
operating reserves with a capacity value based upon the
average of the capacity costs of the Company's Currant
Creek gas turbine and an Aero-derivative gas turbine from
the IRP. (Order No. 32796, p. 57 . ) The Commlss j-on
established a value of $ [redactedl million for the
economic curtailment product based on market prices. Id.
at 57. The value of the system integrity product
1
2
3
4
5
6
1
I
9
10
11
72
13
74
15
L6
L7
18
t9
20
2t
22
23
24
CSB REPORTING
208.890.5198
VEILE (Di)
P4 Production,
l4a
L. L. C.
25
19
was established at $ [redacted] million. Id. at 57. In
vafue of interruptibl-e products, theestablishing the
Commission stated:
Arriving at a specific val-ue for Monsantocredit is at least as much art as science. Thecost of service for firm l-oad customers is an
emphaslzed science and establishing the cost ofservice for an interruptibl-e l-oad is even moredifficult, requiring considerabl-e judgment. Id.at 72.
***
The Commission finds that the ability tocurtail Monsanto Ioad, one of Rocky Mountain
Power's largest, provides a direct benefit to
Rocky Mountain Power's system as a whole.SimilarIy, we find that whil-e Rocky Mountaj-n
Power might replace the interruptible servicescurrently purchased from Monsanto using itsother existing resources in the short term, the
long-term cost of the system would be higher.
Rocky Mountaj-n Powerrs 2008 IRP recognizes
Monsanto interruptibility as a firm capacity
resource. If it were not recognized in such a
manner, the Company would have significantlylarger capacity deficits. .Id. at 56.
The Commission directed "that the parties will
execute a five-year contract. . . to promote greater price
certainty and stability for Monsanto." Id. at 51.
Accordingly, Monsanto and Rocky Mountain Power entered
into a new ESA for the five-year period 20LL-20L6.
O HAS BAYER'S INTERRUPTIBLE PRODUCT CREDIT
CHANGED SINCE THE 2077 COMMISS]ON ORDER?
A Yes. As a resul-t of a 20ll settlement
stipulation in Case No. PAC-E-11-12, Monsanto's
1
2
3
4
5
6
7
8
9
10
t-1
L2
13
L4
15
16
T1
t_B
L9
20
2t
22
23
24
CSB REPORTING
208 .8 90 . s198
VEILE (Di)
PA Production, L
15
L.C
25
80
interruptible credit. increased to $ [redactedl milllon in
2012 and $[redacted] million in 2013. (Order No. 32432,
tt 7.) The $lredacted] million credit has not changed
since then.
O HAVE NEW CONTRACTS BEEN ENTERED INTO CONTINUING
THE CREDIT AT $20 MILLION?
A Yes. Rocky Mountain Power and Monsanto entered
i-nto new ESAs effective January 1, 2074, followed by the
current ESA effective January t, 201,6, which
1
2
3
4
5
6
1
8
9
10
11
72
13
L4
15
16
L1
18
19
20
2t
22
23
24
CSB REPORTING
208 .8 90 . 5198
VEILE (Di)
P4 Production,
15a
L. L. C.
,q
81
1
2
3
4
5
6
1
8
9
automatically renewed for successive one-year terms with
el-ectric service provided as specified in Schedule No.
400. Rocky Mountain Power gave the required 180-day
notice of termination of the current ESA.
O DOES THIS CONCLUDE YOUR TESTIMONY?
A Yes.
CSB REPORTING
208 .8 90 . s198
VEILE (Di)
P4 Production, L
1_0
11
L2
13
t4
15
t6
L7
18
19
20
27
22
23
24
16
L.C
25
82
(The following proceedings were had in
open hearing. )
MR. BUDGE: I
for cross-examination.
COMMISSIONER
any cross-examination?
MS. WEGENER:
Company. Thank you.
COMM]SS]ONER
MR. HARDTE:
COMM]SS]ONER
Mr. Williams.
MR. WILL]AMS:
COMMISSIONER
members of the Commission?
would now tender Mr. Veil-e
RAPER: Ms. Wegener, is there
No questj-ons from the
RAPER: Thank you.
No questions from Staff.
RAPER: Thank you.
No questions.
RAPER: Questions from
No redj-rect to be had, I suppose. Thank
you, Mr. Veile, for your time.
THE WITNESS: Thank you.
(The witness left the stand. )
MR. BUDGE:
Bayer Corporation, would
C. Col-Iins.
P4 Productj-on, an affiliate of
call as its second witness Brian
1
2
3
4
5
6
'7
8
9
10
11-
72
13
t4
15
t6
L7
18
t9
20
21,
22
23
24
CSB REPORTING
208.890.5198
VEILE
P4 Production, L.L.C
25
83
BRIAN C. COLLINS,
produced as a witness at the instance of P4 Production,
L.L.C., having been first duly sworn to te1l the truth,
was examined and testified as fol-lows:
DIRECT EXAMINATTON
BY MR. BUDGE:
O Mr. Collins, please state and spell your
name for the record
A Brian C. Collins, B-r-i-d-rr C,
C-o-1-1-i-n-s.
O Thank you, Brian. Please state your
business address and title as well.
A My business address is 76690 Swingley
Ridge Road, Suite L40, Chesterfield, Missouri. I am a
consul-tant and principal with the fj-rm of Brubaker &
Associates.
O And your testimony is submitted on behalf
of P4 Production; correct?
A That is correct.
0 Brj-an, did you submit testimony in this
matter consisting of five pages and an attached Appendix
A?
A That is correct.
1
2
3
4
5
6
7
I
9
10
11
t2
l_3
L4
15
l6
1-1
1B
19
20
2L
22
23
24
CSB REPORTING
208 .8 90 . 5198
COLLINS
P4 Production,
(Di)
L.L.C
25
B4
1
2
3
4
5
6
1
I
9
O And 1f you were asked the same questions
today as is found 1n your filed testimony, woul-d your
answers be the same?
A They would.
MR. BUDGE: I would move to spread on the
record the testimony of Brian C. Collins, includJ-ng
attached Appendix A.
COMMISSIONER RAPER: Without objection,
the testimony of Mr. Coll-ins wil-I be spread on the record
and Exhibit A will be admitted.
(P4 Productlon, L.L.C., Exhibit No. 302
was admitted into evidence. )
(The following prefiled testimony of
Mr. Brian C. Col-l-ins is spread upon the record.)
10
11
72
13
74
15
t6
L7
1_8
L9
20
2L
22
23
24
CSB REPORTING
208 .8 90 . 5198
COLLINS
P4 Production,
(Dr )L.L.C
25
85
O PLEASE STATE YOUR NAME AND BUSINESS ADDRESS.
A
Swingley
o
A
utility
Brian
Ridge
V[HAT
Iam
C. CoIIins. My business address is 16690
Road, Suite 740, Chesterfield, MO 63017.
]S YOUR OCCUPATION?
regulation and a Principal
field of public
of Brubaker &
Associates, Inc. ("BAI"), an energy, economic and
a consul-tant in the
consulting firm.
PLEASE DESCRIBE YOUR EDUCATIONAL BACKGROUND AND
regulatory
o
EXPERIENCE.
A This information is included in Appendix A to
my testimony.
O ON WHOSE BEHALF ARE YOU APPEARING IN THIS
PROCEEDING?
A I am appearing
L.L.C., an affiliate of
on behalf of P4 Production,
Bayer Corporati-on (hereinafter
customer of Rocky MountainttBayertt ) , a
Power ( "RMP"
PacifiCorp.
I
special contract
or "Company" ) .RMP 1s a division of
have
formerly Monsanto
O WHAT IS
A I provide testimony
for the Idaho PubLic Utll-ities
to enter an order approving the
previously appeared on beha1f of Bayer,
Company, in Case No. PAC-E-10-07.
THE SUBJECT OT YOUR TESTIMONY?
regarding Bayer's support
Commission ( "Commission" )
Settlement Stipulation
1
2
3
4
5
6
1
8
9
10
11
t2
13
\4
1tr-LJ
16
L1
1B
L9
20
21
22
23
24
ColIins, Di 1
Bayer Corporation
25
B6
1
2
3
4
tr
6
1
I
9
("Stipulation") between the Company, Staff and
Intervenors ("Parties") settling all issues in this
proceeding. The Stipulation provides for an $B mil-lion
increase in the Company's base rates. The Stipulation
also inc1udes a provlsion for va1uing the
interruptibility provided by Bayer to the Company under
the new El-ectric Service Agreement ("ESA") between Bayer
and the Company.
As described by Mr. Mike Vei1e of Bayer 1n his
testimony, the ESA terms and conditions have now been
final1zed and agreed to by both parties and submitted to
the Commission for approval. Under the ESA effective
January 1, 2022, Bayer provides two curtailment products
to RMP, an operating reserves product and an economic
curtail-ment product.
O IS THE SETTLEMENT REACHED BY ALL PARTIES TN
THIS RATE CASE REASONABLE?
A Yes. Bayer undertook an act j-ve role in the
review of the Companyrs rate filing. Bayer engaged a
Iarge team of expert consul-tants from three different
firms, Brubaker and Associates, Inc. (primary witnesses
Brj-an C. Coll-lns, Greg R. Meyer, and Christopher C.
Walters), Energy Strategies (primary witness Kevin
Higgins) and Aegis Insight (primary wj-tness Lance
Kaufman) .
10
11
1_2
13
74
15
t6
77
18
L9
20
2L
22
23
24
Col-l-ins, Di 2
Bayer Corporation
25
B7
1
2
3
4
5
6
1
I
9
Bayer's consulting team conducted extensj-ve
discovery and made a thorough revi-ew of the Company's
rate filing, scrutinizlng all aspects of the Company's
filing. As a result, Bayer identified an extensive list
of adjustments to the Company's revenue requirements and
rate base to be included in filed testimony and exhj-bits.
These adjustments were shared with the Parti-es.
Commencing on September 13, 2021, the Parties
held several meetings whi-ch cul-minated in a settlement
agreement, the detail-s of which are set forth in the
Stipulation submitted to the Commission for approval.
10
11
t2
13
L4
15
16
!7
18
19
20
21-
22
23
24
Col-l-ins, Di 2a
Bayer Corporation
25
88
REDACTED
When considering all- aspects of the globaI
settlement, and recognizing that the settlement is a
compromise of disputed claims, Bayer believes that the
terms and conditions of the Stipulation are fair, just,
reasonable, and in t.he public interest. All Parties
independently and collectively reached this same
conclusion, upon which the Commissj-on is urged to enter
an order approving the Stipulatj-on, including Bayer's
new ESA and the valuation of Bayerrs interruptibilty.
O WHAT AMOUNT OF INTERRUPTIBIL]TY DOES BAYER
PROVIDE RMP IN THE NEW ESA?
A
types of
Operating
which can
The 2022 ESA specifically provides for two
interruption of Bayer's furnace loads: (1)
Reserves of at least 95 MW (Eurnaces 7 and B)
be called upon 1BB
Curtai]ment of
hours per calendar year; and
(2)
be
Economic 61 MW (Furnace 9) which can
for 1,600 incidents of 15 minutes each per
Thus, Bayer provides both an operating
and an economic curtailment product.
WAS BAYER'S [redacted] MILLION
cal-Ied upon
cal-endar year.
reserve product
o How
CURTAILMENT PRODUCT VALUE ARRIVED AT IN THE SETTLEMENT
AND WHY SHOULD THE COMMISS]ON APPROVE IT AS PART OF THE
SETTLEMENT?
A When considered in the context of the global
1
2
3
4
5
6
1
I
9
10
11
72
13
L4
15
16
71
18
79
20
27
22
23
24
Collins, Di 3
Bayer Corporation
25
B9
1
2
3
4
5
6
7
8
9
settlement that reso1ves all issues i-n the case, the
value of Bayerrs curtailment product is a reasonable
compromise among all Parties. As a result, the Commission
should approve the [redacted] million as part of the
settlement agreed upon by all Parties.
10
11
L2
13
t4
15
16
1.7
18
t9
20
2t
22
23
24
Collins, Di 3a
Bayer Corporation
25
90
REDACTED
O PLEASE DESCR]BE THE COMPROM]SE REACHED
REGARDING BAYER' S INTERRUPTIBIL]TY VALUAT]ON.
A The Company offered its valuation of Bayer' s
of RMPinterrupti-bility through
witness Craig E1ler. Mr.
the Direct Testimony
Eller's valuation analysis
resul-ted in a value of [redacted] million for Bayer's
lnterruptibility. By contrast, Bayer's valuation
analysis resulted in a val-ue range of [redactedl million
to [red"acted] million.
Both the Company and Bayer recognize capacity
and economicvalue for both the operating reserve
curtaj-l-ment products provided by Bayer. One of the
primary differences between the Company's -r"lr.tion and
Bayer's val-uation lies in the specific capacity resource
used as a proxy for valuing Bayer's interruptibility.
RMP uses Bayer's interruptible l-oad resource
much like it would a simple cycle combustion turbine
("SCCT"), which is a peak generation resource or
"peaker." Bayer's provisJ-on of operating reserves and
economic curtai-Iment to RMP under the 2022 ESA
effectively avoids the cost of constructing and operating
an SCCT resource. Bayer calculated the avoided peaker
cost under two different scenarios. The first scenario is
based on two separate SCCT resources - an Aeroderivative
l-
2
3
4
5
6
1
8
9
10
11
72
13
74
15
76
L1
1B
19
20
2T
22
23
24
Col-l-ins, Di 4
Bayer Corporation
25
9l_
I
2
3
4
5
6
1
I
9
("Aero") SCCT for the operating reserve product and a
Frame F SCCT for the economic curtailment product and
resulted in a value of [redacted] million. This
valuatj-on is based on val-ues from PacifiCorp's 201,9
Integrated Resource PIan ("IRP"). The second scenario is
based on a single proxy resource that woul-d replace
both Bayer's operating reserve and the economic
curtailment products and resulted in a value of
approximately [redacted] mj-l-l-j-on. Thus, Bayer determined
a range of its interruptibility value of between
lredactedl mil-Iion and [redacted] million.
Based on the context of the global settlement,
and all things considered, including the settlement of
all- revenue requirement issues in the amount of an $8
mil-Iion increase for the Company, the lredacted] million
for Bayer' s interruptibility
10
11
72
13
t4
15
t6
71
18
79
20
21
22
23
24
Co1lins, Di 4a
Bayer Corporation
25
92
1
2
3
4
5
6
7
I
9
valuation is a reasonable compromise between all Parties
and should be approved by the Commission.
O DOES TH]S CONCLUDE YOUR DIRECT TESTIMONY?
A Yes, it does.
10
11
t2
13
1,4
15
16
t7
18
1.9
20
2t
22
23
24
Col1ins, Di 5
Bayer Corporation
25
93
(The followj-ng proceedings were had in
open hearing. )
MR. BUDGE: I will now move to tender
Mr. Collins for cross-examination.
thank you, Mr.
COMMISSIONER RAPER: Thank you.
Ms. Wegener.
MS. WEGENER: No questions. Thank you.
COMMISSIONER RAPER: Mr. Hardie.
MR. HARDIE: No questions. Thank you.
COMMISSIONER RAPER: Mr. Williams.
MR. WILLIAMS: No questions.
COMMISSIONER RAPER: Commissioners?
No redirect opportunity to be had, so
Coll-ins, for your time and effort and you
are excused.
THE WITNESS: Thank you.
(The witness left the stand. )
COMMISSIONER RAPER: And that exhausts the
witness list for Bayer; is that correct?
MR. BUDGE: Yesr oo further witnesses.
Thank you.
COMMISSIONER RAPER: Thank you. We will
move on to the name that Mr. Wil,l-iams and I are both
going to practice, PacifiCorp Idaho Industrial
Customers.
1
2
3
4
5
6
1
I
9
10
11
72
13
74
15
16
77
18
t9
20
2L
22
23
24
CSB REPORTING
208.890.5198
COLLINS
P4 Production, L.L.C
25
94
1
2
3
.t
5
6
1
I
9
10
11
1-2
13
74
15
16
T1
t-B
19
20
2t
22
23
24
CSB REPORTING
208.890.5198
obj ections
refiled as
Industrial
MR. WILLIAMS: Thank you, Madam Chair. We
had witness Brad MuIllns file direct testimony of five
pages with Exhlbit 401, 6 pages. Mr. Mul-l-ins because of
time, distance, and monetary constraints is not able to
be here today, and so I would make a motion that Mr.
Mu1lins' testimony and his exhibit be withdrawn as
prefiled direct testimony and then be considered
resubmitted as public comments
COMMISSIONER RAPER:Are there any
belng wj-thdrawn and
PacifiCorp Idaho
to Mr. Mullins' testimony
Customers ?
Okay, no objectlon being had, we will-
withdraw it -- withdraw the testimony of Mr. Mullins from
the record as direct testimony in support of the
settlement stipulati-on, but it will- remain a part of the
record as comments on behalf of PacifiCorp Idaho
Industrial Customers.
MR. WILLIAMS: Thank you, Madam Chair.
COMMISSIONER RAPER: Thank you,
Mr. Will-iams.
Does that exhaust our witness l-ist for
today? We can't posslbly be done already. It looks like
we have no more witnesses left for the day. Rule 164
al-lows 14 days to apply for intervenor funding, although
comments on behalf of the
25
95 COLLOQUY
1
2
3
4
5
5
1
8
9
10
11
t2
13
t4
15
16
L1
18
t9
20
21,
22
23
24
CSB REPORTING
208 .8 90 . s198
that may apply to the parties who withdrew from this
proceeding more than it does those in the room. I will
state for the benefit of the record, 1,4 days from today
is November 30th. At the close of business on November
30th, that will be the deadline for any applications for
intervenor funding.
I appreciate everyone's attendance. At
the close of business today, the comment deadline will
al-so expj-re. The record will close, and the Commission
will privately deliberate and render its decision with an
awareness that the
date of January L,
and should not have
this matter prior to
effective date to be
stipulatj-on does
2022, so we will
a problem issuing a
that date to aIlow
utili zed.
lnclude an effective
do everything we can
final decision in
for that
If there are no other matters or business
before the Commission, this hearing is adjourned.
(The Hearing adjourned at 10:05 a.m.)
25
96 COLLOQUY
AUTHENTICATION
This is to certify that the foregoing
proceedings held in the matter of Rocky Mountain Powerrs
appli-cation for authority to increase its rates and
charges in Idaho and approval of proposed electric
service schedules and regulations, commencing at 9:30
a.m. on Tuesday, November 76, 2021, dt the Commissj-on
Hearing Room, 11331 West Chinden B1vd., Building 8,
Suite 20L-A, Boise, Idaho, is a true and correct
transcript of said proceedings and the original thereof
for the fil-e of the Commissi-on.
Accuracy of al-1 prefiled testimony as
orlginally submitted to the Reporter and incorporated
herein at the direction of the Commi-ssion is the sol-e
responsi-bility of the submitting parties.
CONSTANCE
Certified
S. BUCY
Shorthand Repor #187
$rcYSCONSTN.ICE
IDAHOOFSIA'IEPUBLICNOTARY
12995NUMBERcotutMlssl0N$$2024EXPIRESMYCOMMISSION
1
2
3
4
5
6
1
I
9
10
11
72
13
L4
15
16
L7
1B
t9
20
21
22
23
24
CSB REPORTING
208.890. s198
25
9t AUTHENTICATION