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HomeMy WebLinkAbout20040223Said Rebuttal.pdf~ECEIVEO ITI:iLED LaHli fEB 20 Pt'14: . .n' t ;;LI(J U TiLITtE-S CU,'ir1iSSION BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION Kimball Properties Limi ted Partnership, and Hewlett Packard Company, Complainants, Idaho Power Company, an IdahoCorporation, Respondent. CASE NO. IPC-OO- vs. IDAHO POWER COMPANY REBUTTAL 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. Are you the same Gregory W. Said that previously submitted direct testimony in this proceeding? Yes. What is the purpose of your rebuttal testimony? The purpose of my rebuttal testimony is to discuss a number of areas within Staff witness Sterling direct testimony where the Company believes Mr. Sterling has arrived at erroneous conclusions. At page 3 of Mr. Sterling s testimony, he states that Rule H is not applicable in this case because Rule H addresses distribution facilities whereas the HP/Kimball Properties dispute concerns substation costs. Does the lack of direct applicabili ty of Rule H to substation facilities at question in this case suggest that the policy or rationale underlying Rule H is irrelevant to this case? No.Mr. Sterling is correct that this case is concerned with substation costs whereas Rule H specifically addresses the costs of distribution facilities. However, the Company believes that, in this case, it is important to consider the rationale underlying Rule H SAID, Di-Reb Idaho Power Company because Rule H embodies a standard policy by which the Company seeks contributions in aid of construction (CIACs). Idaho Power believes that its procedure for collecting a CIAC for substation costs in this case was consistent with the rationale for Rule H collection of CIACs. What is the standard procedure by which the Company seeks CIACs for distribution facilities under Rule H? In accordance with Rule H, whenever the Company receives a request for service, the first question asked is "Are existing distribution facilities adequate to serve the requested load? If the answer is yes, then no CIAC is collected from the customer.However, if the answer is no, customers may be asked to make a CIAC provided that allowances granted by Rule H do not exceed the cost of new distribution facilities required to serve the request. Are CIACs directly addressed by any other tariff schedules? Yes.Schedule 72, the tariff schedule addressing interconnections with PURPA quali fying facili ties (QFs), includes provisions for requesting CIACs. Is the procedure for requesting CIACs under Schedule 72 similar to the procedure for requesting CIACs under Rule H? Yes.The procedures for requesting CIACs SAID, Di-Reb Idaho Power Company under Rule H and Schedule 72 are very similar except that the analysis of Schedule 72 requests involves evaluating the adequacy of existing capacity to accept additional generation whereas the analysis of Rule H requests involves evaluating the adequacy of existing capacity to accept addi tional load.Under Schedule 72, if the existing line and substation facilities are adequate, there is no CIAC other than site-specific interconnection equipment expenses which are charged to the customer. Are the procedures the Company follows to identify the need for CIACs for ei ther Rule H requests for service or Schedule 72 requests for interconnection similar to the procedure that Mr. Sterling has called discriminatory /l in this proceeding? In this case, HP/Kimball PropertiesYes. requested service at a location where additional facilities were required in order to provide capacity adequate for the request.Because additional facilities were required, a CIAC was requested. At page 5 of his testimony, Mr. Sterling states that Idaho Power did not violate its tariffs, but that the Company did exercise judgment and, because judgment was involved, questions of discrimination can arise.Please comment. I agree that Idaho Power did not violate its SAID, Di-Reb Idaho Power Company tariffs, and I also believe that the way the Company exercised its judgment concerning HP/Kimball was not discriminatory. It is important to review those areas where the Company exercised judgment with regard to the HP/Kimball request.The Company first exercised judgment in determining if adequate facilities existed to serve the HP/Kimball request.Mr. Sikes has discussed the process the Company followed to determine the best method of serving the HP/Kimball request.The Company routinely performs this type of evaluation whenever it receives a request for service or a request for interconnection in the case of Schedule 72. Mr. Sterling suggests that the Company determination , in this case, that additional substation facili ties were required, may have been the basis for discrimination by the Company.However, he doesn t seem to contend that the determination was incorrect.The Company believes that there is nothing in this record to support a contention that HP/Kimball was discriminated against or that, based on HP/Kimball's request, the Company incorrectly determined that addi tional facili ties were required. The second instance where the Company exercised its judgment was in computing the CIAC required as a result of HP/Kimball requesting service at a location SAID, Di-Reb Idaho Power Company where inadequate facilities existed.Again, I see nothing in Mr. Sterling s testimony that suggests that the CIAC collected should have been determined in a different manner. Rather, Mr. Sterling suggests that, after the fact, HP/Kimball should benefit via a refund of a portion of their CIAC because their ultimate consumption of electricity was different from what they told Idaho Power at the time of their service request.In essence, the Commission Staff is recommending that other cus tomers of Idaho Power absorb addi tional costs because Hewlett Packard and Kimball Properties failed to properly assess their load requirements. Was the computation of the HP/Kimball CIAC consistent with the computation of CIACs required of other Schedule 19 requests? HP/Kimball was treated in a mannerYes. consistent with the treatment of other Schedule 19 requests where inadequate facilities existed. Have other Schedule 19 requests requiring a CIAC for substation facili ties been subj ect to refund? No, they have not.The only instances where a CIAC for substation facili ties was refundable were for large speculative developments that consisted primarily of residential and non-Schedule 19 requests.In those instances, the Company and the developer submitted a SAID, Di-Reb Idaho Power Company contract, detai ling the provisions for refunds, to the IPUC for approval prior to the collection of a CIAC. At page 15 of his testimony, Mr. Sterling states "It is discriminatory whenever one customer has to pay for substation facilities and another customer, who may require the same or even larger substation capacity, does not have to pay just because extra substation capacity is already available. Please comment. I believe Mr. Sterling is incorrectly applying the term "discrimination /l in this case.The fact that extra substation capacity is already available in the second instance is a very important distinction.A new customer who requires no additional facilities provides a benefi t to other Idaho Power customers in that no additional costs are added to the system, but the existing costs can be spread across a greater load, thereby effectively reducing the cost responsibi li ty of other customers. Conversely, a new customer who requires addi tional facilities, but is not required to make a CIAC, adds total costs to be recovered by the Company.Those addi tional costs adversely impact existing customers, since those customers must absorb those additional costs.Asking a customer for a CIAC in an effort to reduce a cost impact to other customers who don t require the additional facilities is not only not discriminatory, it is good SAID , Di-Reb Idaho Power Company regulatory policy.I believe it is that same good regulatory policy that provides the basis for the provisions contained wi thin Rule H and Schedule 72 that allows for collection of CIACs from new customers or QF developers requiring additional facilities. On page 6 of Mr. Sterling s testimony, he offers a resolution to the HP/Kimball dispute that he describes as "fair.Do you agree that Mr. Sterling solution is fair? First, I believe Mr. Sterling s suggestion of a fair solution arises from his erroneous contention that Idaho Power discriminated against HP/Kimball.He states that Idaho Power did not violate its tariffs; yet, he provides no evidence that additional facili ties ~lere not required to satisfy the HP/Kimball request and he does not specify how the CIAC should have been determined in a different "non-discriminatory " manner.Rather, he believes that a refund should be granted based upon an after-the-fact determination that things didn t turn out as HP/Kimball had planned.I don t believe Idaho Power could have acted in a discriminatory manner based upon facts that were not in existence at the time of the CIAC collection.It appears that Mr. Sterling is sympathetic to the mistakes made by HP/Kimball and, therefore, is singling them out for special treatment that no other Schedule 19 request has been SAID, Di-Reb Idaho Power Company afforded.Such special treatment would come at a cost to be borne by other customers of Idaho Power. At page 10 of his testimony, Mr. Sterling states, "there simply is no current rule or mechanism in place to provide for such a refund or to determine the proper amount.Nonetheless, he proposes a refund and quantifies an amount.Please comment. As Mr. Sterling has noted, Idaho Power did not violate any of its tariffs or rules.He does not dispute that additional facilities were required to serve the HP /Kimball request.He has not stated that the CIAC collected was computed in an inappropriate manner.I fail to understand, based upon Mr. Sterling s testimony, how he concludes that the Company discriminated against HP/Kimball. My belief has not changed; Idaho Power did not discriminate against HP/Kimball, and, therefore, no refund is appropriate. In Mr. Sterling s testimony, at page 11 , he states "HP/Kimball will effectively pay twice." What does thi s phrase imply to you? I think that there is ambigui ty in the phrase effectively pay twice.When I first read Mr. Sterling testimony, I believed Mr. Sterling was suggesting that HP/Kimball was paying double the amount that they should be paYlng.However, in response to Interrogatory No. SAID, Di-Reb Idaho Power Company propounded by the Company, Mr. Sterling clari fied his testimony by stating that "Pay twice means pay two times; it does not necessarily mean pay double the amount.Based upon this response, I believe that Mr. Sterling is stating that Idaho Power will not collect double amounts. recognizes that when Idaho Power collects a CIAC, those construction costs covered by the CIAC are excluded from the Company s revenue requirement and associated rates. In Mr. Sterling s testimony, at page 11, he states "HP/Kimball will have paid once through up-front charges and will effectively pay a second time for a share of substation costs built into the rates paid by it and all other Schedule 9 customers.Is there a double payment by HP/Kimball? Through the CIAC, HP /Kimball paid forNo. new substation construction costs that the Company experienced as a direct result of the HP /Kimball request for service.Through rates, HP/Kimball pays for substation costs that are allocated to their customer class.Those allocated substation costs exclude the amount contributed by HP/Kimball via the CIAC.The rationale for requiring a CIAC is that the relative cost of service for a new customer requiring addi tional substation facilities will generally always be higher than the cost to serve the incumbent customers wi thin the same customer class.While HP/Kimball SAID, Di-Reb Idaho Power Company pays on multiple occasions, the payments are for different costs.On no occasion does HP /Kimball pay twice for the same costs. Does Yes. that complete your rebuttal testimony? SAID , Di-Reb Idaho Power Company