20031212Said Direct Test.pdf

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2003 DEC 1 I Pt1 4: 25
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UTILITIES cOt'U-USSIOH
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
Kimball Properties Limited
Partnership, and Hewlett
Packard Company,
Complainants,
Idaho Power Company, an IdahoCorporation,
CASE NO. IPC-OO-
vs.
Respondent.
IDAHO POWER COMPANY
DIRECT TESTIMONY
GREGORY W. SAID
please state your name and business address.
My name is Gregory W. Said and my business
address is 1221 West Idaho Street, Boise, Idaho.
By whom are you employed and in what
capaci ty?
I am employed by Idaho Power Company as the
Manager of Revenue Requirement in the pricing and Regulatory
Services Department.
Please describe your educational background.
In May of 1975, I received a Bachelor of
Science Degree with honors from Boise State Uni versi ty.
1999, I attended the Public Utility Executives Course at the
Uni versi ty of Idaho.
please describe your work experience with
Idaho Power Company.
I became employed by Idaho Power Company in
1980 as an analyst in the Resource Planning Department.
1985, the Company applied for a general revenue requirement
increase.I was the Company witness addressing power supply
expenses.
In August of 1989, after nine years in the
Resource Planning Department, I was offered and I accepted a
position in the Company s Rate Department.Wi th the
Company s application for a temporary rate increase in 1992,
my responsibilities as a witness were expanded.While I
SAID, Di
Idaho Power Company
continued to be the Company witness concerning power supply
expenses, I also sponsored the Company s rate computations
and proposed tariff schedules in that case.
In 1994, I was asked to become the Meridian
District Manager for a one-year cross-training opportunity.
In 1995 I returned to my position in the Rate Department.
In October 1996, I was promoted to lead a team of analysts
in the newly reorganized Pricing & Regulatory Services
Department, formerly known as the Rate Department.In tha
role, I became the Company contact for line installation
disputes concerning Company compliance with tariff
provisions.
As the Manager of Revenue Requirement,
continue to be the Company contact for line installation
disputes before the Idaho Public Utili ties Commission.
Are you familiar with the electric service
request received from Kimball Properties in 1999?
Yes. Kimball Properties requested that Idaho
Power Company be prepared to serve a 4-megawatt load at a
location now referred to as the Kimball Business Park.They
indicated that their tenant, Hewlett Packard, had provided
them with the load information.
Were existing distribution facilities
adequate to serve the 4-megawatt electric service request?
No.As Mr. Sikes has testified, additional
SAID, Di
Idaho Power Company
facili ties were required to serve the 4-megawatt electric
service request.
Was Kimball Properties notified that their 4-
megawatt request could not be served without the
construction of additional facilities.
Yes.Kimball Properties was notified that
addi tional facili ties would be required to serve a 4-
megawatt load and Kimball Properties reiterated their desire
to have 4 megawatts of capacity available for Hewlett
Packard Company.
Does the Company have a Commission-approved
tariff provision that specifically addresses electric
service requests where inadequate facilities exist to serve
the customer s request?
Yes.Rule H applies to requests for electric
service under Schedules 1 , 7, 9, 19, 24, 45, and 46 that
require the installation, alteration , removal, or attachment
of Company-owned distribution facilities.Exhibi t 3 is a
copy of Rule H that was applicable at the time of the
Kimball Properties request.
Which of Idaho Power s Commission-approved
rate schedules would apply to a 4-megawatt service request?
Rate Schedule 19 is the Large Power Service
schedule that is applicable to Customers with firm electric
demand of 1,000 to 25, 000 kW at a single Point of Delivery
SAID, Di
Idaho Power Company
who have entered into a Uniform Large Power Service
Agreement.Exhibit 4 lS a copy of Rate Schedule 19.
Mr. Teinert states in his testimony that "
the time of the interconnection request it was anticipated
that these buildings would be served under Schedule 19, the
large industrial customer rate schedule.Is this
significant?
Yes.This statement confirms that Idaho
Power and Kimball Properties were in agreement as to the
nature of the service request, i. e. the request was for
Schedule 19 serVlce.
Based upon the Schedule 19 service request
and the inability of the Company to serve the requested 4-
megawatt load with existing distribution facilities, did the
Company follow its standard procedure under Rule H and
evaluate the cost of constructing adequate distribution
facili ties?
Yes.As Mr. Sikes states in his testimony,
the Company evaluated a number of distribution feeder
addi tion options to serve the Kimball Properties request,
but found those alternatives more expensive to Kimball than
constructing a new distribution substation near the Kimball
property.
Was Kimball Properties notified that Idaho
Power had concluded that the best way to serve the 4-
SAID, Di
Idaho Power Company
megawatt request was to construct a substation?
Yes.
Did Kimball Properties or Hewlett Packard
contest the Company determination that constructing the
substation was the best way to serve the 4-megawatt request?
No.
If the Company had pursued one of the
distribution feeder alternatives, who would have been
responsible for the additional costs of constructing the
feeder?
Kimball Properties would have been
responsible for the entire cost of constructing the feeder,
but would have been entitled to up to four vested interest
refunds under the provisions of Rule
How would other customers be impacted if
Kimball paid the full costs of constructing the distribution
feeder?
As Mr. Sikes testi fies, in addition to the
cost of constructing a distribution feeder, the Company
would have been required to make annual $100,000 payments to
Union Pacific Railroad for using Union Pacific s right-of-
way.These ongoing expenses would be allocated to and
funded by Idaho Power s customers.
Does Rule H apply to the addition of a
substation?
SAID, Di
Idaho Power Company
No, Rule H specifically states,This rule
does not apply to transmission or substation facilities, or
to requests for electric service that are of a speculative
nature. "
Is the addition of a substation addressed in
Schedule 19?
Yes.Schedule 19, on page 1 in the section
enti tled "Availability," states that "To the extent that
addi tional facilities not provided for under Rule
including transmission and/or substation facili ties, are
required to provide the requested service, special
arrangements will be made in a separate agreement between
the Customer and the Company.
Did the Company and Kimball Properties enter
into a separate agreement for the construction of a
substation?
Yes. Idaho Power determined the amount of
contribution that would be required of Kimball in order to
construct a substation to satisfy their request for service
to a 4-megawatt load.Kimball paid that amount under
protest and advised Idaho Power that it intended to dispute
the assessment before the Idaho Public Utili ties Commission.
My understanding was that there was no dispute that the
construction of a substation was appropriate, but only that
Kimball Properties did not believe it was appropriate that
SAID, Di
Idaho Power Company
they be required to make a contribution in aid of
construction.That dispute is the subject matter of this
case.
How did Idaho Power determine the amount of
the required Kimball Properties contribution in aid of
construction for the substation in question?
Idaho Power prorated the cost of the
substation based upon the service request of 4 megawatts
compared to the total size (20 megawatts) of the substation.
Kimball Properties paid approximately 4/20 of $1,200,000,
which amounted to $240,000.The remaining 16/2 a became the
responsibility of the general body of customers.
Why does the Company believe it is
appropriate for customers other than Kimball Properties to
pay for a portion of a substation that was built
specifically to serve the request of Kimball Properties?
Al though the Company would not have
constructed the Bethel Court substation , but for the Kimball
Properties request, once the substation was in place the
Company was able to reconfigure loads on various feeders
thereby providing system benefit.Such benefit is similar
to the "Company Betterment
/I envisioned in Rule Company
Betterment is that portion of the cost of a line
installation that provides a benefit to the Company (and its
customers), but is not required by the Applicant.In thi
SAID, Di
Idaho Power Company
case, Kimball Properties did not need the additional 16
megawatts, and the Company and our customers do receive some
benefi t from redistributed loads.
Why does the Company require contributions in
aid of construction?
Generally, the cost of serving new load is
greater than the cost of serving existing load.The
rationale for requiring contributions in aid of construction
lS that by requiring such contributions " the upward pressure
on rates can be reduced.
Are all new customers subj ect to a potential
requirement to make a contribution in aid of construction?
Yes, however, Rule H provisions include
allowances or offsets to required contributions in aid of
construction of distribution facilities.Whenever the Rule
H allowances are greater than the work order costs for
providing service to the new customer, the new customer is
not required to make a contribution in aid of construction.
Do the Commission-approved tariffs provide
allowances for substations?
No.
please recap the steps the Company went
through to determine the contribution in aid of construction
required from Kimball Properties.
First, the Company looked at the request of
SAID, Di
Idaho Power Company
Kimball Properties.The request was for 4 megawatts of
electric service at a location where adequate capacity was
unavailable.Based upon the request, Kimball Properties was
evaluated as a Schedule 19 customer.
The Company next evaluated alternatives to
servlng the Kimball Properties request.Due to a variety of
considerations as discussed by Mr. Sikes, the Company
determined that the best solution was to construct a
substation to serve the Kimball Properties request.
Because the Schedule 19 request called for
the construction of a substation, Rule H provisions did not
apply.Idaho Power determined that a proration of
substation expenses was appropriate because there would be
some system benefits derived from the substation that were
above and beyond the expressed needs of Kimball Properties.
The cost of the substation was prorated in a manner such
that Kimball properties paid 4/20 of the cost of the
substation and the remaining 16/20 of the cost became the
responsibility of the general rate paying customers of Idaho
Power Company.
Mr. Teinert has stated that the Company does
not apply its policy concerning contributions in aid of
construction on a consistent basis.Do you agree?
No.The steps I have described are the same
steps Idaho Power goes through every time a new customer
SAID, Di
Idaho Power Company
requests service.The Company determines the appropriate
service schedule based upon the customer request.The
Company determines the appropriate facilities required to
serve the request.The Company complies with Rule H
provisions for determining contributions in aid of
construction.When facilities other than those addressed in
Rule H are required, the Company enters into a special
agreement to address the customers required contribution in
aid of construction.
Are you aware of any situations where the
Company has inconsistently applied its policy with regard to
the collection of contributions in aid of construction?
No,I am not.
If the Company erroneously failed to follow
its policy and require a contribution in aid of construction
from a customer whose request for electric service required
the construction of facilities such as a substation, would
that suggest that all subsequent electric service requests
that required the construction of a substation should not be
required to make a contribution in aid of construction?
No.If the Commission found that the Company
erred by not requiring a contribution in aid of construction
from a particular customer , the Company should be directed
to pursue the collection of the missed contribution in aid
of construction rather than instructing the Company to
SAID, Di
Idaho Power Company
18 .
repea t the error in perpetui ty .
Mr. Teinert suggests that West Farm Foods was
not assessed for a contribution in aid of construction when
the Company had determined that a contribution was
appropriate.Please discuss West Farm Foods.
West Farm Foods made a series of service
requests.The first request for additional capacity was
accommodated by an upgrade to a distribution feeder.West
Farm Foods next stated that they intended to grow their load
further.Idaho Power determined that the additional load
growth would require both substation and transmission
upgrades that would require a contribution in aid of
construction.West Farm Foods then reduced their service
request such that their request for additional capacity was
equal to the existing available capacity.Idaho Power
believes that West Farm Foods is circumventing the intent of
the policy requiring contributions in aid of construction
and is monitoring the loads of West Farm Foods to insure
that other customers are not adversely impacted by the
actions of West Farm Foods.No substation or transmission
investment has been made to provide for additional capacity
available to West Farm Foods.
Mr. Teinert suggests that Idaho Power charged
Meridian Gold Company (MGC) in a different manner than
Kimball Properties.Is that true?
SAID, Di
Idaho Power Company
Yes.The Meridian Gold request dealt with
transmission to a speculative mining venture.Idaho Power
contended that Meridian Gold should bear all of the costs of
the transmission upgrade.Meridian Gold disputed the costs
and the IPUC ordered a different assessment of costs to
Meridian Gold than the Company had determined.
Is it your understanding that the Commission
intended that all subsequent computations of contributions
in aid of construction should follow the Meridian Gold
template?
No.In its order the Commission recognized
the speculative nature of gold mining and I believe they
intended that the computations of Meridian Gold contribution
in aid of construction was not precedent setting.
Mr. Teinert has described the Company
policy of requiring a contribution in aid of construction
for substations as irrational.please comment.
I believe that the policy of requiring a
contribution in aid of construction for substations is not
only rational, but also consistent with Commission-approved
requirements for contributions in aid of construction.
While Rule H contains provision for allowances and Company
Betterment, the policy concerning substations does not
include allowances, but does consider Company Betterment via
proration.
SAID, Di
Idaho Power Company
Mr. Teinert also describes the Company
policy of requiring a contribution in aid of construction
for substations as capricious and discriminatory.Please
commen t .
The use of the word capricious suggests that
there is a lack of predictability to the policy.On the
contrary, the policy is very predictable.A Schedule 19
request for electric serVlce that requires the construction
of a substation will require a contribution in aid of
construction.The Company makes every effort to apply this
policy uniformly recognizing individual circumstances
presented.Mr. Teinert suggests that the policy is
discriminatory because the Company does not require a
contribution in aid of construction for a Schedule
request when electrical requirements do not require the
construction of a substation.Idaho Power believes that
when electrical requirements do not require the construction
of additional facilities and as a result no additional
investment is required of the Company, it is inappropriate
to require a contribution in aid of construction.In fact,
customers should be encouraged to locate in areas with
available capacity thus more fully utilizing the system.
The Company s policy of requiring a contribution in aid of
construction does require that construction actually occur,
but I don t understand how that can be considered
SAID, Di
Idaho Power Company
discriminatory.
Does this conclude your testimony?
Yes.
SAID , Di
Idaho Power Company