HomeMy WebLinkAbout20040223Said Rebuttal.pdf~ECEIVEO ITI:iLED
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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