20031212Sikes Direct Test.pdf

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UTILITIES COt'H1ISSION
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.
Responden t .
IDAHO POWER COMPANY
DIRECT TESTIMONY
DAVID L. "KIP" SIKES
Please state your name and business address.
My name is David L. Sikes and my business
address is 1221 West Idaho Street, Boise, Idaho. I am also
known as Kip Sikes.
By whom are you employed and in what
capaci ty?
I am employed by Idaho Power Company as the
Leader of the Distribution Planning and Customer & Load
Research Departments.
Please describe your educational background.
In May of 1982, I received a Bachelor of
Science Degree with honors from the Universi ty of Idaho in
Electrical Engineering. I have also taken non-matriculated
graduate level courses. In 1991 , I took and passed the
Professional Engineer s exam and I am a licensed engineer in
the State of Idaho.
Please describe your work experience with
Idaho Power Company.
During my college education, I was employed
by Idaho Power Company three consecu ti ve years as a summer
engineering student. Upon my graduation in 1982, the Company
hired me to work in the System Planning Department where I
participated in both distribution and transmission planning.
I performed system studies for new load and generation
requests I provided operations support and developed most of
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Idaho Power Company
the methods and approaches currently used in Distribution
Planning at the Company.
Beginning in 1988 until 1991, I worked as a System
Planning Engineer conducting transmission transfer capacity
studies on the interconnected grid.
In 1991 , I was promoted to Distribution Planning
Supervisor and was responsible for expansion plans for
substations, distribution and sub-transmission systems. I
was named National Chair of the EEl Distributed Resource
Cornrni ttee in addition to having a lead role in development
of the Company s Reliability Management Process. In 1995,
those responsibilities were further expanded due to an
internal re-alignrnent. I also developed a methodology and
published an IEEE technical paper on stochastic reliability
assessment on voltage sags, customer impact and mitigation
measures.
Beginning in 2001, my responsibilities were agaln
increased as the Customer & Load Research Department was
aligned under me.
Please summarize Idaho Power s planning
process used to determine the need for and location of new
substation and distribution facilities.
Idaho Power Company continually plans for the
construction of growth related infrastructure. The Company
uses both long-range and short-range methodologies to
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Idaho Power Company
identify facilities and service areas that are likely to
need capacity increases or facility additions. Long-range
planning is land-use based and attempts to identify the
development potentials of an area and the infrastructure
requirements of that development. Short-range planning is
directed at optimizing facility utilization and identifying
budgetary requirements for the next few construction
seasons.
Please elaborate on the process of long-range
planning.
The first step is estimating an end point or
target for anticipated load demands in a given area and
determining the electrical infrastructure requirements to
accommodate those load demands for periods of ten , twenty,
fifty or even as long as seventy-five years into the future.
This view of "ultimate " or "build-out" development is used
to estimate infrastructure requirements that may be required
if the estimated development actually occurs. By identifying
typical load densities, that is, the electrical demand for a
given area such a s a square mile, the Company is able to
estimate the future electrical facility requirements for
normal development. This map or plan provides the direction
required to permit Idaho Power to make orderly construction
decisions as growth and development occur.However, it only
provides a framework in which to make consistent decisions.
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Idaho Power Company
It is intended to establish the long-range vision of the
electrical needs of the Company s service territory.
specific electrical facility needs arise in the short-term,
those needs are assessed against the long-term plans
developed by the Company.If actual development has
significantly higher load densi ties than contemplated in the
long-range plan, that plan must be modified or updated to
reflect actual conditions.
Is this where the difference between long-
range and short-range planning materializes?
A conceptual, long-range plan does notYes.
include a fast and hard development or construction schedule
since it does not and cannot specifically identify all of
the unique requirements of each and every type of land-use
development.Short-range planning, on the other hand,
involves translating immediate needs of specific
developments into budgeted proj ects each year.However , the
long-range plan is always in view.
You mentioned budgeting proj ects each year.
Do Idaho Power s plans require knowing when the need for
electrical infrastructure will occur and then budgeting and
working on those proj ects?
As with any other business, Idaho Power
ability to construct infrastructure is limited.Financial
and resource constraints limit the amount of construction
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Idaho Power Company
tha t the Company can undertake in any given year.As a
resul t , Idaho Power prepares an annual budget that is
intended to manage and priori tize its construction proj ects .
To that end, the Company budgets proj ects to meet expected
in-service or need dates. If there is considerable
uncertainty whether or when load growth-based needs actually
will materialize, the Company will defer installation of
those proj ects.
In some cases, aren t Idaho Power s planning
proj ects years ahead of actual budgeting and construction?
That is the Company s goal. However, just
because Idaho Power has identified a construction proj ect
for an expected future need does mean that funds for that
construction project will automatically be budgeted for that
year.Part of the short-range planning process is to
optimize the utilization of existing assets to minimize
costs.The Company monitors existing loads each year and
annually determines which projects have the greatest need.
Building a proj ect too early or indefinitely carrying unused
capaci ty puts an undue financial burden on the Company and
its customers.
Can the Company s budget and proj ects change?
In fact, the Company s Capital ProjectYes.
Priori tization Committee meets regularly to address changes.
Based upon new or updated information, the Company may defer
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Idaho Power Company
some proj ects or accelerate others to maintain the safety
and reliability of the system. Given the uncertainty of when
and where specific load requests will occur and to be
responsive to the requests of its customers, the Company
must maintain planning and construction flexibility.
However, Idaho Power cannot simply increase its construction
budget.when the Company receives a large load reques t that
requires new facilities, it at tempts to make the best use of
those facili ties in order to reduce costs and defer other
projects to a later construction date.
Is the 4 MW request by Kimball Properties and
Hewlett Packard requiring the accelerated construction of
the Bethel Court substation an example of adjusting
priori ties?
When a large load reques t such as theYes.
Kimball Properties request is made, there are usually tight
time constraints placed upon Idaho Power to meet the
customer s desired time lines, particularly when significant
infrastructure is required to accommodate that customer
request and to meet the unique demands of that customer.
You describe the Kimball Properties 4 MW
request as a large load request. Why is that?
A 4 MW load is large from the perspective of
a single request.A request of that size equals about 40%
of the capacity of a single distribution feeder. More
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Idaho Power Company
importantly, the timing and location of the expansion
desired by Kimball Properties, in conjunction with the
requested high load densi ty, makes this significant. While
it varies, commercial development areas typically have load
densities approaching 20 MW per square mile.Kimball
Properties ' request covered a small land area and resulted
in a requested load density of around 200 MW per square mile
or about 10 times what Idaho Power would typically expect
based on prior commercial development load density
requirements in its service territory.
Didn't this unusually large request ralse a
question in your mind that the customer may have over-stated
its load requirements?
The request seemed unusually high andYes.
Idaho Power initiated further discussions with Hewlett
Packard.
The Record of Decision (ROD) originated on May 27,
1999, attached as Exhibit 101, indicates from the
preliminary discussions with the customer that Hewlett
Packard desired 1.5 MW by October 1999, an additional 1.5 MW
by January 2000, an additional 1 MW by March 2000, and an
additional 1 MW by January 2001 for a total of 5 MW.At the
time Hewlett Packard executed the service request, attached
as Exhibit 102, it had reduced its request to 4.0 MW at
single location, that is, at 303 N. Kimball.However, gl ven
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Idaho Power Company
the sophistication of the customer, the concentrated
electronic equipment needs required for a call center and
the Company s legal obligation to serve the customer at the
levels requested, the Company moved forward to respond to
Kimball Properties ' request.
Has Idaho Power ever experienced receiving a
large load request, serving that request and then been faced
wi th either the development not materializing or having the
large load disappear?
Yes. Jabil Circuits is a good example. Jabil
Circui ts requested service for a large load and paid the
Company a Contribution in Aid of Construction for the
improvements required to accommodate that request.Wi thin a
short period of time, Jabil Circuits ceased operations.Had
Idaho Power not requested and received a Contribution in Aid
of Construction from Jabil Circuits, the Company would have
made a significant investment on behalf of a customer only
to be left with under-utilized facilities.This would have
required Idaho Power s remaining ratepayers t~ pay for
improvements specifically required as a result of the load
requirement of one customer.
Was there any indication the service request
from Kimball Properties might be similar?
Discussions with the customer indicated that
Hewlett Packard required service as early as the fall of
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Idaho Power Company
1999, only a few months after the request date, and that the
call center Hewlett Packard intended to site in this
location would only be in operation for about three years.
Did the service request signed by the
customer indicate their desired service requirements?
As I mentioned in earlier testimony, the
Record of Decision (ROD) originated on May 27 , 1999,
attached as Exhibit 101, indicates from preliminary
discussions with Hewlett Packard that it desired a total of
5 MW in relatively quick succeSSlve stages.However, the
signed service request, attached as Exhibit 102, shows a
request of 4.0 MW at the single location of 303 N. Kimball.
Was there sufficient capacity existing in the
system at the time of the request to provide the service
requested by Kimball Properties?
Typically, an urban distribution feederNo.
will have an operating capacity of approximately 10 MW.The
existing feeders from the Cloverdale substation serving from
the West into the area were CDAL-012 loaded to 8 MW and
CDAL-014 loaded to 10.5 MW. The existing feeders from the
Ustick substation serving from the North, but only to about
Fairview Avenue, were USTK-014 loaded to 9.9 MW and USTK-015
loaded to 7.2 MW.The existing feeder from the Victory
substation serving from the South was VTRY-Oll loaded to 8.
MW.The existing feeder from the Wyee substation serving
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Idaho Power Company
from the East was WYEE-015 loaded to 4.5 MW, however, it
would have also have had to accommodate the West Park
subdivision and other load to reach the Kimball Properties
development.Addi tionally, the transformer serving this
feeder was loaded to 20 MW with a capacity of 25 MVA and,
therefore, unable to serve the existing loads which would
have been picked up to reach the area along with the
additional 4 MW load request. Given the large size of the
Hewlett Packard load request and the limited capacity of the
existing distribution feeders to this area, the Company
concluded that different options would have to be explored.
Was there any available capacity?
Yes. The feeders had some capacity available
but not enough to accommodate the entire amount of the
Hewlett Packard request.Also, due to existing loads that
were tapped off of the existing feeders along with the
combination of loads, roads and wire, it was impractical to
reconfigure the service areas to combine this capacity into
a single service location.To do so would have led to
overlapping and non-contiguous service by different feeders
which would likely have created undesirable operational,
reliabili ty and safety consequences for the Company.
Was the construction of a substation the only
option to serve Hewlett Packard's load request?
Other options such as bui lding anNo.
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Idaho Power Company
additional feeder from Cloverdale substation could have
worked.Although construction of the Bethel Court
substation was a higher total cost option (estimated at $1.
million as shown in Exhibit 101, the customer s prorated
share of the proj ect was less than if they would have had to
pay the entire cost of some of the other options.Based on
the planning estimates made at the time, the new substation
cost to Kimball Properties would have been 4/20 th of
$1,200,000 or $240,000.
While not explici tly shown in Exhibit 101 , the costs
of a new feeder from Cloverdale substation would have
included approximately $50,000 in costs to get out of the
substation plus about $250,000 in costs associated with
construction of approximately two miles of new feeder which
would be double circuited wi th an existing feeder at least
part 0 f the way.In addi tion, there would have been an
estimated $100,000 per year cost in wire-mile right-of-way
fees that would have been charged by the Union Pacific
Railroad.The new feeder from Cloverdale exceeded the cost
of the Bethel Court substation cost assessed Hewlett Packard
even without considering the additional use fees that would
have had to be paid to the Railroad.
One of the critical elements driving the decision to
build a substation was Hewlett Packard's above-normal, high-
density load request.While Idaho Power had some margin to
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Idaho Power Company
absorb normal growth in the area for the foreseeable future,
Hewlett Packard had advised the Company its load demands may
increase beyond the 4 MW request.To address and
accommodate the uncertainty of future Hewlett Packard load
demands, the Company chose to pursue the least-cost option
to the customer that also provided flexibility in meeting
the future demands of the customer.
What other options did you consider?
Idaho Power considered, and could have built,
a substation with only 5 MW of capacity that would have
fulfilled Hewlett Packard's present and anticipated
requirements.
How would the cost sharing have been figured
then?
The cost sharing would have been calculated
in the same manner that the Company always employs, that is,
on the basis of the prorated capacity.
Would this have been a less expensive option
for Hewlett Packard?
The total cost of constructing a 5 MW
substation would have been less than constructing the 20MW
substation; however, Hewlett Packard's costs would have been
higher since it would have borne a much higher percentage of
the cost of the facility, if not the cost of the entire
facili ty.The incremental costs of building a 20 MW
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Idaho Power Company
substation versus a 5 MW substation are not linear due to
non-capaci ty based costs or fixed costs such as land.There
are other economies of scale that favor constructing a
larger capacity facility.
How could you justify the increased costs to
Idaho Power s other cus tomers that had to be incurred to
build the larger substation when you testify that it was not
necessary to construct a substation that large under your
current area plans?
Wi th a large load of between 4 MW and 5 MW
from Hewlett Packard in such a small area, Idaho Power
determined it would be prudent to invest in additional
capabili ty to accommodate the Hewlett Packard service
request and to provide options for the immediate area. As I
testified concerning the Company s planning methodologies,
Idaho Power s previous plans had to respond to this request.
One of the tools the Company always reserves the
right to use in planning for higher-than-normal loads is
development of in-fill facilities to prevent both congestion
and decreased reliability.Given the business critical
nature of the Hewlett Packard request, Idaho Power was also
taking into consideration a reduction in the risk exposure
of two miles in distribution compared to the exposure if the
load were to be served from an existing substation. While
there is no exact science in making these decisions, the
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Idaho Power Company
Company s ultimate decision was consistent with the long-
range planning process to maximize value to Idaho Power
customers. The decision to build the Bethel Court substation
provided a solution to the 4 MW service request at a lower
cost to Hewlett Packard than other alternatives, while also
providing additional operating flexibility and reliability
to the existing area at a low incremental cost.
Given the current loads at these locations
versus what was originally requested, is the Bethel Court
substation being adequately utilized?
The summer 2003 load on the BethelYes.
Court feeders was BCRT-Oll at 8.1 MW and BCRT-012 at 8.3 MW.
Isn t that a significant amount of load when
you say the Company would not have built the substation
absent Hewlett Packard's request?
As I previously testified, when Idaho Power
constructs new capacity, the Company attempts to fully
utilize that capacity as a means of offsetting projects in
other areas so the Company can manage its overall budget. By
shifting existing loads to these newer facilities, the
Company is able to unload other facilities where the growth
is occurring to enable those facilities to continue to
provide safe and reliable services.
Could you summarize this decision process?
Given the type of operations and growth rate
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Idaho Power Company
in the area of Kimball Properties at the time of Hewlett
Packard's service request, Idaho Power had no plans or need
to develop the Bethel Court substation.When the Company
received the service request from Kimball Properties/Hewlett
Packard, Idaho Power confirmed the load request and
developed a least-cost plan to accommodate the needs of
Hewlett Packard based upon the information available at that
time.
Mr. Teinert suggests that due to poor
planning decisions by Idaho Power, there are not enough
distribution corridors to serve this area and that is what
made it less expensive to build a new substation. Please
comment.
Mr. Teinert' s conclusion is based on a
simplistic analysis and is incorrect.There were and are
available routes to build additional distribution circuits
to thi s area.Furthermore, it was not less expensive in
terms of proj ect costs to build the Bethel Court substation
versus building a new distribution feeder.
Presently or at any time in the past, were
the Company s facilities inadequate to serve the load in the
area?
The facilities have always been capableNo.
of serving the load in the area except when new large load
requests such as the Hewlett Packard request are made.
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Idaho Power Company
Idaho Power has routinely made facility and capacity
expansions as required by normal load growth.It is
important to remember that there are different constraints
in the distribution, substations and transmission systems
that are dealt wi th at different times.It is highly
unlikely that there would there be simultaneous limitations
in all three system elements when providing service to a
specific location.
Was that the case here?
As I have already testified, there wereYes.
various feeder constraints and some substation capacity
issues.The only transmission limitations were reliability
constraints under contingency outages.It requires a
systems view to understand how the system works and what
limi tations exist.Idaho Power cannot simply look at
several maps and make conclusions on what is or is not
possible.The process requires an analysis of the Company
system as a whole.
Mr. Teinert suggests that Idaho Power
amalgamated loads " for purposes of charging for the
substation construction.please comment.
Mr. Teinert is incorrect.First, the Hewlett
Packard request is a single request for 4 MW.Second , the
buildings and timing communicated by Hewlett Packard outside
of the formal signed request indicated that each of the
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Idaho Power Company
buildings would be over a megawatt and that the combined
timing of construction and occupancy of the building was
entirely within the lead time required for construction of
the facilities needed to serve the request.
If Idaho Power receives multiple requests within a
similar time frame, whether by the same customer or multiple
customers, the Company views all of those requests as
contributing equally to the need to upgrade the facilities
and each of those customers would be expected to pay for the
increased capaci ty on the same prorated capacity basis.
this case, the cost causation and payment answer would still
be the same.
Why does the Company approach such requests
in this manner?
It is an issue of fairness.Following this
policy minimizes the likelihood that some customers will
time their requests to circumvent paying for facility
upgrades which they directly cause.This methodology
minimizes undue cost shifting.
Mr. Teinert indicated there was significant
growth in the area, which he identified in his Exhibits
10 and 11, and claims that Hewlett Packard was only a small
contributor to the growth. please comment.
To my knowledge, none of the buildings
identified by Mr. Teinert in his Exhibits 9, 10 and 11 were
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Idaho Power Company
substantive enough to request or require load service in
excess of 1 MW.None of these buildings individually or
collectively place the same burden on the electrical system
as Hewlett Packard's high-density 4 MW request.
Mr. Teinert claims that Idaho Power would
have had to build the substation by 2002 anyway. Is that
true?
Mr. Teinert incorrectly interpreted theNo.
ten-year transmission plan.
Please explain.
In reviewing Mr. Teinert's credentials, it is
difficult to conclude that Mr. Teinert has any real
experience in the planning or design of an integrated
transmission-distribution system. His claim that the
Cloverdale to Bethel Court 69 kV line would be overloaded
due to high-density loads is simply not true.Teinert' s
Exhibit 13, Appendix C, is a table of outage contingencies
of transmission lines simulated during peak load conditions.
The Cloverdale to Bethel Court line is never shown as
overloaded in the table; in fact, it is shown as one of the
line outages which could create a temporary overload
condition of a transformer at the Boise Bench substation on
the far East end of Boise if the outage were to occur during
a peak load time.Even under those condi tions, there would
not be a loss or interruption of any load.Furthermore,
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Idaho Power Company
whether Bethel Court substation existed or not would have no
bearing on the results of that transmission system
contingency analysis.In addition, the transmission
analysis would not have any bearing on the decision to
construct Bethel Court substation.
Does this conclude your testimony?
Yes.
SIKES, Di
Idaho Power Company