The URL can be used to link to this page

Home My WebLink About20040319Gale Rebuttal.pdf('rc. ;' ; ' . ED (7J in:':!'~ ~- D J L : Icud',ii" -I Y IJ, - - , l " ,- - L il, l I L Ii i t~, C Uf'l i'ji S S ION BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF THE APPLICATION OF IDAHO POWER COMPANY FOR AUTHORITY TO INCREASE ITS RATES AND CHARGES FOR ELECTRIC SERVICE TO ELECTRIC CUSTOMERS IN THE STATEOF IDAHO. CASE NO. IPC-O3- IDAHO POWER COMPANY REBUTTAL TESTIMONY JOHN R. GALE representing. Please state your name and the party you are John R. Gale.I am testifying on behalf of Idaho Power Company. Are you the same Mr. Gale that presented direct testimony in this proceeding? Yes. What issues will you be responding to' in your rebuttal testimony? My testimony will (1) provide an overview of the Staff's collective recommendations and approach to this rate case,(2) respond to a variety of specific revenue requirement adjustments proposed by the Staff,(3) discuss the proposals for systematic ratemaking treatment of the irrigation subsidy,(4) respond to a number of witnesses who are opposed to the proposed increase to the monthly serVlce charge for small customer classes,(5) speak to the decoupling issue, and (6) end by summarizing revenue requirement impact of the Company s collective rebut tal posi tions. Overview Please summarize your understanding of the collective revenue requirement recommendations of the Commission Staff. The Staff attacks the Company s revenue GALE, DI-Reb Idaho Power Company requirement in a number of ways through a number of wi tnesses . Ms. Carlock recommends lower returns on both the debt and equi ty portion of the Company s proposed capital Her repricing of bonds expiring in 2004 reducesstructure. the debt component.The return on equi ty selected by Ms. Carlock is 10.0 percent compared to the 11.2 percent proposed by Idaho Power. Mr. English eliminates ongoing pension expense from the test year, removes prepaid pension. fro~ rate base, and makes other expense reductions related to membership dues, legal fees, and other business expenses. Mr. Leckie changes the Company s proposed annualiz,ing and known and measurable adjustments in a manner that effectively disallows important plant facilities that are providing customer service as we speak.Mr. Leckie reclassifies some past investments related to the Company hydro production in order to remove these investments from the test year.He also removes a portion of a document management system and some thermal production assets at IERCO. Mr. Holm accepts six Company proposed adjustments (all of which appropriately reduce the Company s revenue requirement), adjusts certain payroll-related expenses to account for year-end labor costs, and adjusts accumulated GALE, DI-Reb Idaho Power Company depreciation and depreciation expense to reflect the settlement and final order of Case No. IPC-03-Mr. Holm removes the incentive or pay-at-risk portion of the Company s compensation package.Mr. Holm also sets the Company s income tax rate to an effective rate that is based on an arbi trary five-year average, which effectively reaches back to grab a 2002 tax deduction and includes it in the These adjustments resul t in further decreases totest year. the revenue requirement. Mr. Sterling offers support of the Company normalized power supply expenses and the inclusion of the Danskin Station plant.Mr. Hessing addresses class allocations, but did raise the costs of the Company s cloud seeding program as an issue for consideration by the Commission. Other Staff wi tnesses presented testimony on issues related to rate spread, rate design, and customer service issues wi thout weighing in on revenue requirement. Did any Staff wi tness propose an adjustment that would have been a net increase to the Company s initial proposals? None that I can determine. Does the Staff have a designated individual leading the Staff's case? Although none of the witnesses identify GALE, DI-Reb Idaho Power Company themselves as the case manager or coordinator, Mr. Holm identifies himself as the overseer of the Staff audit and The collection of disallowances manifests itselftest year. in Mr. Holm s testimony.wi tnesses appear to have developed their issues independently.As such, it is my opinion that no Staff person weighed the collective impact or reasonableness of all of the proposals. Who is Idaho Power Company s case manager in this proceeding? I am with assistance from M~. Said on revenue requirement issues, Ms. Brilz on rate design issues, and Mr. Kline as lead counsel. Please summarize the Company s rebuttal testimony. Mr. Avera rebuts the rate of return on equity proposals of the Staff and Micron.Mr. Gribble rebuts the Staff's bond repricing proposal and Staff's American Falls Bond trea tmen t . Mr. Obenchain rebuts the Staff's treatment of annualizing and known and measurable adjustments.Mr. Minor rebuts Staff's compensation representations including the exclusion of the Company s pay-at-risk or incentive portion of its employees ' compensation.Mr. Fowler rebuts Staff' treatment of pension expense and prepaid pension in rate base. GALE, DI-Reb Idaho Power Company Mr. Prescott addresses Danskin Station Power Plant, the Woodhead Park improvements, the cost of the Biological Opinion litigation, and Idaho Power s cloud seeding program. Mr. MacMahon and Mr. Ripley rebut Staff's tax proposals. Mr. Said rebuts Staff's proposal for the Expense Adjustment Rate for Growth.Ms. Brilz rebuts the assorted class allocation issues and pricing proposals.Ms. Fullen responds to Ms. Parker s recommendations regarding customer service issues and addresses Mr. Robinette s proposals regarding Low-Income Weatherization Assistance. Revenue Requirement Reductions Mr. English excludes a number of Idaho Power expenses listed on Staff Exhibit 110.Please give your general response to these exclusions. Mr. English states that a Company expense must be directly or indirectly related to providing electrici ty in order for it to be a legi tima te expense recoverable through rates.By applying this definition, business expenses are excluded from the Company s revenue requirement based on Mr. English's opinion that they benefit only the shareholder and not the customer.Many of these exclusions deserve a closer look. Line 1 of Exhibi t No. 110 excludes 75 percent of the Company s expenses associated with its involvement with Edison Electric Institute ("EEl"Please respond to GALE, DI-Reb Idaho Power Company this exclusion. EEl is the trade association of the electric utili ty industry.As such it provides a variety of services to meet its clients ' needs wi th regard to electric policy formulation at the local,state, congressional, and federal regulatory levels.EEl serves as an educational guide through the complex issues facing our industry today: energy infrastructure, environmental issues, emerging accounting issues,legal and business practices, and reliability issues.EEl actively encourages debate among members as to how best to address and respond to these issues through its sponsorship of specialized committees, informational webcasts and conferences and the creation of Internet workrooms that foster collaboration wi th member utilities.In fact, EEl serves a similar function to investor-owned utili ties as the National Association of Regulatory Utility Commission does to state public utility commissions.Both entities exist to provide critical industry data to its members and support the advancement and promotion of equi table regulations. Staff's testimony recommends the elimination of approximately 75 percent of the Company s EEl dues from the Staff's reasoning is two-fold; first, theytes t year. believe it is inappropriate to pass on dues expense to customers if those dues go to associations that do not GALE, DI-Reb Idaho Power Company provide products that allow Idaho Power to provide electricity to its customers.Second, Staff states that customers should not be forced to support an organization whose ideology they may not agree with.Staff also questions the need for EEl lobbying efforts when the Company has an employee whose sole responsibility is representing the Company on maj or poli tical efforts. I would like to take a moment to address each of Staff's concerns. First, EEl, provides products and services to Idaho Power that directly affect the Company s ability to provide low cost, reliable power to its customers.For example Idaho Power participates in the Transmission Subject Area Committee ("TSAC") and the Distribution Subject Area Commi t tee ("DSAC"Both of these committees are sponsored by EEl. Participating on the TSAC and DSAC provides Idaho Power and its customers the following benefits: Best Practices - Idaho Power shares with, and learns from, other utili ties in the areas of design, engineering, construction, operation, and maintenance of substations, transmission lines, and distribution lines. a direct result of this participation, the Company has chosen design and drafting applications and tools. Equipment Failures - The Company receives GALE, DI-Reb Idaho Power Company reports of specific failures of equipment.By using this information , Idaho Power is able to prevent, or mitigate for, potential failures.This information has been used to avoid costly outages and catastrophic failures of transformers, circuit breakers, protective relays, and capaci tors. New Products - The Company receives reports of new equipment with which other utili ties have had success or failure.This allows the Company to keep up with technology that its small size would otherwise prevent. Based on this, new technology products have been used to increase reliability for Idaho Power customers.Idaho Power has also avoided other products that showed promise, but were not successful. Roundtable Surveys - The Company is able to participate in roundtable questionnaires that quiz utilities about their design, construction, and operating practices. This allows the Company to compare itself to the best class, and improve efficiency. EEl Network Survey - Idaho Power has the abili ty to canvas other utili ties on a particular issue at any time during the year, providing up to the minute information on equipment and issues. Idaho Power also participates in EEl on the Metering Subject Area Committee ("MSAC"Participating on MSAC GALE, DI-Reb Idaho Power Company provides Idaho Power and its customers the following benefi ts: Best Practices - Through a partnership between EEl and the American Gas Association, Idaho Power Metering Department participates and obtains the results of a benchmarking service called Data Source.Thi s membership enables the Company to compare standard performance measurements against other electric and gas utili ties and helps identify best practices and areas' for improvement. Equipment Failures - The EEI Transmission, Distribution, and Metering Conference occurs semi-annually. During these meetings specific sessions, excluding manufacturers, are held for the sole purpose of discussing equipment problems utili ties have been experiencing with their metering equipment.The Company considers the experience of other utili ties as part of its evaluation of products for servicing our customers. Industry Networking - Idaho Power is part of and utilizes a nation-wide network of individuals involved in the utility industry.The Company frequently contacts these people to discuss issues and ideas specific to metering. Surveys - The Company is able to participate in EEl enabled questionnaires that allow us to quiz other utili ties about their design, construction, and operating GALE, DI-Reb Idaho Power Company practices.This allows for acquisition of more specific information than is provided in the Data Source benchmarking service. These examples of membership benefits have been cited specifically because they are less high profile than the victories that the Company and its customers have had with the help of EEl in the legislative and federal regula tory arena.These victories include but are not limited to the Federal Energy Regulatory Commission FERC") recognition of the need for regional flexibility in its revised Wholesale Market Platform paper, and maj progress on the comprehensive energy legislation specifically with regard to the creation of a mandatory reliability organization, streamlining of hydropower relicensing, and new funding for Low Income Home Energy Assistance Program. Staff's characterization of EEl as solely a legislative lobbying and regulatory advocacy organization for investor-owned electrical utili ties providing no benefi to Idaho Powers customers is incomplete and incorrectly assumes that the interests of Idaho Power and its customers are unaligned. Second, Staff characterizes EEl as an ideological organization that customers should not be forced to support. In fact, EEl is a trade organization that represents the GALE, DI-Reb Idaho Power Company interests of its members through the education of decision makers about the complex issues facing the industry.The organi za tion promotes no doctrine or poli tical ideology for mass acceptance or belief in ei ther the modern pej orati ve sense or in the classic defini tion of the word. Third, Staf f takes issue wi th EEl lobbying efforts when the Company has a Company officer whose sole responsibility is representing the Company on major poli tical efforts.To begin with, EEl spends less than 25 percent of its membership dues on legislative advocacy. Applying this logic to Staff's adjustment would equate to the removal of 25 percent of EEl dues from the test year, However , I do not accept Staff's hypothesisnot 75 percent. that lobbying is per se "bad"Lobbying is targeted education and when such education serves to preserve or improve Idaho Power s ability to deliver reliable low-cost power to its customers, all interests benefit.Furthermore, the ef forts of EEl and the position of the Vice President of Public Affairs are not duplicative as alleged by Mr. English.The Vice President of Public Affairs is completely immersed in the major hydro relicensing efforts of the This means that the Company must marshalCompany. addi tional resources in order to cover the active proceedings at the FERC,(Standard Market Design, Generation Interconnection, Standards of Conduct, Regional Transmission GALE, DI-Reb Idaho Power Company Organization Formation, Supply Margin Assessment, Reliabili ty / and Infrastructure Protection), and on Capitol Hill (Comprehensive Energy Bill) Finally, Staff concludes their comments with regard to EEl membership dues by stating that the Company can access EEl research wi thout contributing to the cause. Clearly, Staff is conceding that EEl in fact serves more purposes than just advocacy, but regardless, I do not believe that the Commission would view this type of freeloading as sound public policy. Line 2, 3, and 4 of Exhibit No. 110 excludes Company dues and contributions to Rotary / Kiwanis, and Lions service clubs.Please respond to this exclusion. I am not sure which service clubs Mr. English has attended, but as a long time Rotarian and a past Kiwanian, it is incorrect to characterize any of these service clubs as "spiritual"Service clubs serve an important community and customer function.They serve as a great extension of our community relations ' efforts and complement the work of our Community Relations Representa ti ves .The opportunities to network with customers in our communi ties are particularly important since the centralization of the Company s customer service operations.Reaching out to the community is especially important during this cri tical time in the Company GALE, DI-Reb Idaho Power Company relicensing process.Idaho Power submi ts that there is a bona fide business purpose to being involved in the communi ty it serves.My experience has been that, besides the business establishments, many state agencles have employees as members in service clubs as well. Line 5 of Exhibi t 110 excludes Company expenses related to various Chambers of Commerce.Please respond to this exclusion. Mr. English incorrectly states that Chambers of Commerce actions have no impact on Idaho' Power Company. Chamber meetings and acti vi ties become great opportunities for Idaho Power to work for and with the customers on issues of mutual concern.Many of the Chambers to which Company employees belong are also responsible for their cities economic development function.To the extent that the Chambers are successful in business attraction and creating a heal thy business environment, their actions have a direct impact on our Company. Chambers serve an important community and customer function.As wi th the s ervi c e clubs, Chamber s are an extension of Company Community Relations Representatives, and particularly important since the centralization of the Company s operations and our current relicensing efforts. Idaho Power submi ts that there is a bona fide business purpose to being involved with our customers.I believe GALE, DI-Reb Idaho Power Company that many state agencies have employees as members of Chambers of Commerce as well. Line 6 of Exhibi t No. 110 excludes Company expenses related to $2,000 of poli tical contributions made during the test year.Please respond to this exclusion. The Company agrees with this exclusion.The transactions were incorrectly coded and inadvertently included in the Company s initial filing.It is not,the Company s intent to have our customers pay for political contributions. Line 7 of Exhibit No. 110 excludes Company expenses related to Company memberships in the Arid Club. Please respond to this exclusion. Memberships in the Arid Club serve a business purpose for Idaho Power - specifically, business meetings, business contacts, and board dinners.The Arid Club also provides some non-business social benefits that are not business expenses. The Company excluded non-business Arid Club expenses in its filing by including the individual members ' personal reimbursement to Idaho Power for the non-business use of the club.Accordingly, the Company believes that the partial inclusion of Arid Club expenses for business purposes is appropriate and standard for the industry. The Staff did not recognize the reimbursements in GALE, DI-Reb Idaho Power Company its posi tion.The Staff has also double-counted Arid Club expenses in several instances. Staff goes on to state that there may be other Company employees whose club memberships are provided by the On the contrary, the Company does not provide anyCompany. addi tional Arid Club memberships other than the four officers noted by Staff.Addi tionally, the Company provides no other memberships for any employee to a country club or similar type exclusive social organization. Line 8 of Exhibit No. 110 excludes Company expenses related to $36,066 of chari table contributions made during the test year.Please respond to this exclusion. The Company generally agrees with the items excluded on line The transactions were incorrectly coded and inadvertently included in the Company s initial filing. It is not the Company s intent to have our customers pay for chari table contributions, only benefit from them. reviewing Page 2 of Exhibit No. 110, it appears that Staff excluded several legi timate items; however, the dollar impact is inconsequential.Accordingly, we would accept the full exclusion. On Page 28 of his direct testimony, Mr. English excludes business expenses for Company management (Exhibit No. 111).Please respond to this exclusion. Whi 1 e admi t tedly, the audi t uncovered some GALE, DI-Reb Idaho Power Company items that were inappropriately brought above the line, the bulk of these expenses are legi timate.Previously, I have discussed the inclusion of EEl membership as a bona, fide business expense of the Company.EEl meetings are as well. The Company must be able to communicate wi th individuals (including legislators and lobbyists) concerning important matters impacting both the Company and its customers. Foremost among these is the relicensing of the Hells' Canyon Complex which will affect customers. Mr. English also excludes legal expenses related to the California and Pacific Northwest Refund Please respond to this exclusion.Cases. Mr. English has proposed to remove $352,544 in legal expenses from the test year.He does so on the erroneous premlse that these legal fees were incurred to defend IDACORP Energy s ("IE') actions in two proceedings before the FERC.These proceedings are commonly known as the California Refund Case and the Pacific Northwest Refund Case (collectively the "Refund Cases ) . While Idaho Power and IE did incur some legal expenses defending various allegations against IE in the two Refund Cases, none of those legal expenses are included in the test year.The $352,544 in legal expenses included in the test year were incurred solely to ensure that Idaho Power would not be precluded from receiving refunds that might ultimately be GALE, DI-Reb Idaho Power Company ordered by the FERC. Please elaborate. Mr. English is correct when he states that because IE operated under Idaho Power s FERC market rate authori ty for a time / Idaho Power was included as a respondent in the Refund Cases.At the time the Refund Cases were filed, Idaho Power recognized it needed to separate itself from IE to avoid the appearance of a conflict and preserve Idaho Power s ability to obtain refunds if refunds were ultimately determined to be owing. To avoid potential claims of conflict of interest, Idaho Power hired the law firm of Sidley, Austin, Brown & Wood, LLP ("Sidley, Austin ) to independently represent Idaho Power in the Refund Cases.IDACORP Energy retained the law firm of LeBoeuf, Lamb, Green & MacRae , LLP ("LeBoeuf, Lamb" to defend its interests in the two Refund Cases.The $352,544 in legal expense identified by Mr. English is attributable to the legal services provided to Idaho Power by Sidley, Austin.In short, the legal expenses Mr. English seeks to exclude were incurred by Idaho Power with the intent to benefit customers if refunds were ordered. Mr. English testifies that by seeking to include the above-referenced $352,544 in test year legal expenses, Idaho Power is acting in a way that is inconsistent wi th the commitment the Company made to exclude GALE, DI-Reb Idaho Power Company from its rates expenses from non-utility businesses.Is he correct? Idaho Power s actions in this instanceNo. are consistent with its representations to the Commission tha t it would separate Idaho Power and IE expenses. Contrary to Mr. English's assertions, Idaho Power is not seeking reimbursement of any legal expenses incurred to defend IE.The legal expenses in question were incurred to preserve potential benefits for utility customers. Will the Company continue to' incur expenses associated with the California Refund Case and the Pacific Northwest Refund Case? It is likely that it will.Al though FERC has determined in the Pacific Northwest Refund Case that no refunds are justified,that case is currently on appeal. The California Refund Case is still an ongoing proceeding. While it currently appears unlikely that refunds will be ordered, it is always difficult to predict the outcome of Ii tigation.Of course, if the Company knows it will be unable to recover its legal expenses incurred to pursue these refunds, it would be logical for the Company to cease actively participating in the cases and thereby reduce its exposure to unrecoverable legal expenses. Were you also asked to review the Staff proposal presented by Mr. Leckie to remove $19.8 million in GALE, DI-Reb I daho Power Company investment related to the Bridger rewind proj ect and the Brownlee-Oxbow transmission line? Yes. Did you also review the Staff proposal presented by Mr. Leckie to remove $7.5 million of the investment in the Brownlee Woodhead Park? Yes. Do you agree with Staff's proposals that these investments should be removed? No.Mr. Leckie s removal of investment for the Bridger rewind and the Brownlee-Oxbow transmission line is founded on an erroneous interpretation of prior Commission and Supreme Court rulings concerning the addition of investment in rate base that comes on line during the His position on Woodhead Park is based on thetest year. erroneous position that a return on the park can be deferred. Please explain. Both the Commission and the Supreme Court have observed that the test year to be utilized in a revenue requirement proceeding and the investment (rate base) that make up that test year are, to a certain extent, subj ect the Commission s discretion so long as the result that is obtained is reasonable.In that regard, there has been considerable discussion over the years in revenue GALE, DI-Reb Idaho Power Company requirement proceedings as to whether an average rate base should be used or a year-end rate base should be used.The material part of the discussions has focused on the type of investment or rate base that is added.The question is whether the investment in plant under consideration produces In short, the Commission and the courts are bothrevenues. concerned wi th the mi sma tch 0 f revenues wi th investment/expenses.If the plant that is added does not add additional revenue or if that additional revenue is de minimis, then there is no mismatch of revenues and expenses when the full or year-end investment of the plant item is included in rate base.In my opinion , if the full or year- end investment of the plant is not recognized in the test year when there is no additional revenue, a Commission determination to not include the investment would be unreasonable. What type of additional plant does not add addi tional revenue? There are two classic examples of this issue in the current proceeding.The rewind of the Bridger generator and other activities at Bridger No.3 do not increase the Company s revenues.The rewind did not add addi tional revenues that were not already included in the The rewind of the generator is required to avoidtest year. the potential failure of the generator and was undertaken GALE, DI-Reb Idaho Power Company for reliability purposes, not to increase plant production. Since reliabili ty has been increased, the investment is prudent and it must be fully recogni zed or the Company investors will not be compensated for their investment. Delaying a return on the full investment until a later test year is unfair when the full investment is for a project that will be used and useful throughout the period of time new rates will be in effect.This is doubly unfair when only the depreciated plant will be included in the next test year. The Brownlee-Oxbow transmission line falls in the That line was constructed for reliabilitysame category. purposes to add an additional power source to the greater Boise area and does not add additional revenue to the test year that is not already included.The full benefit of that line is realized once the transmission line is placed in service and the Company s customers are receiving the full benefi t of that line.To delay a return on a portion of the investment based upon an argument that the investment has not been on line for the full year ignores the basic fundamentals of rate making. Mr. Leckie implies that his position requlres an interpretation of Idaho Code, ~ 61-502A.Do you agree? No, I do not.I am advised by Company legal counsel that Idaho Code, ~ 61-502A does not apply to the GALE, DI-Reb , Idaho Power Company investments in Bridger or Brownlee-Oxbow.Ra ther, as set forth in the legislative intent section of that legislation, Idaho Code,~ 61-502A was passed specifically for the purpose of overturning the Supreme Court decision, Utah Power Light Company v. Idaho Public Utili ties Commission, 105 Idaho 822,673 P.2d 422 (December 14, 1983), which decision had required the inclusion of construction work in progress in rate base.Tha t section has nothing to do with the inclusion of short-term work in progress in rate base. , short-term work in progress referred to in the section? Yes, but only to make it clear that short- term work in progress is not excluded, and would continue to be included in rate base as it had always been. Why does Idaho Code,~ 61-502A not apply to the Bridger rewind proj ect and the Brownlee-Oxbow transmission line? Nei ther the Bridger rewind proj ect nor the Brownlee-Oxbow transmission line are proj ects that began and were completed in twelve months.The two investments are not construction work in progress, since they are now on- line, and for the same reason, they are not plant held for future use.As a result,Idaho Code, ~ 61-502A is not applicable. Can you also comment on Staff's proposal to GALE, DI-Reb Idaho Power Company disallow a return on the Brownlee Woodhead Park? I am not aware of any precedent for the Staff's recommendation.The plant is currently used and useful/the park is a part of a hydroelectric facili ty.The license for Hells Canyon is subj ect to the jurisdiction of the Federal Energy Regulatory Commission, and FERC has approved the improvements to the park.The only basis advanced by Staff for removing the investment is that it will also be used for relicensing purposes at a later date. Staff has not contended that the improvements to the Woodhead Park are imprudent.The Company s investors are enti tIed to a return on the investment of the Brownlee Woodhead Park, as that investment meets the criteria of all rate-making principles.It is used and useful , it is a prudent investment, and it is currently authorized under the Federal Energy Regulatory Commission license for the Hells Canyon Proj ect.Tha t the park wi 11 be a factor in the relicensing process should not disqualify the facility from being currently included in rate base. Does Staff's recommendation that the depreciation expense of the Woodhead Park investment be allowed further demonstrate the unreasonableness of Staff' posi tion? To contend that the Company can onlyYes. recover its depreciation expenses,(i. e. recover its GALE, DI-Reb Idaho Power Company investment, which will cause a reduction in investment) is, in essence, to allow for the recovery of the investment without any return on that investment.I am legally advised that this posi tion is one of obvious confiscation.The utili ty has made an investment for which Staff recommends it receive no return, even though the investment is being reduced through depreciation. On Page 33 of his testimony, Mr. Holm discusses three items related to outside consulting assistance used by Idaho Power in three different proceedings during 2003.He proposes to amortize these amounts over five years.What is your response to his proposal? Idaho Power retains expert outside services These three instances are indicative of theevery year. usual level of expense, not a one-time phenomena and should be recovered fully in the test year. Mr. Holm also addresses two intervenor funding amounts and proposes a similar one-fifth recovery In the al ternati ve, Mr. Holm also lists the PCAper year. as a means for their recovery.What is your response? Because the PCA is an annual adjustment, it is the perfect tool to recover intervenor funding amounts. Irriqation Subsidy Wi tnesses Mr. Higgins (Kroger), Dr. Peseau GALE, DI-Reb Idaho Power Company (Micron), and Dr. Power (AARP) both suggest systematic approaches to eliminate the irrigation subsidy demonstrated by the Company s Class Cost of Service Study, Exhibit No. Please respond to their recommendations.39. These witnesses seek to pursue a systematic approach to removlng the irrigation subsidy.Mr. Higgins and Dr. Power recommend periodic rate adjustments to all customer groups such that the irrigation revenues are increased over time wi th corresponding decreases to the Dr. Peseau sets aIr' customer groupsother customer groups. revenue requirements, except for irrigation service, to cost of service now and then periodically increases the irrigation rates until they have reached cost of service. The revenue shortfall experienced by Idaho Power is deferred and collected in the future from the irrigation class. In my mind, if the Commission were to accept any of these recommendations, three condi tions would have to be present - (1) cost of service would be the sole basis for determining the revenue requirement of each customer class, (2) the resul ts from the current-cost-of service analysis would be expected to continue into the future, and (3) the time period between general rate filings would be expected to be significant.I do not believe that any of these conditions exist at this time. Regarding the first condition, the Idaho Commission GALE, DI-Reb Idaho Power Company has historically taken more than just the pure cost of service result into account when establishing class revenue allocations, with rate shock being one of those considerations.Addressing the second condition, the costs of service results change over time for a number of economic and technological reasons.Changes in load and usage patterns wi thin customer classes as well as changes to the Company s marginal costs all affect the cost-o,f-service resul ts In addi tion, pricing impacts, 'consumer information, new peak clipping programs, arid the selection of new resources will continue to change the Company s costs golng forward.Finally ,wi th regard to the third condition, it is my' expectation that the Compa~y will be filing successive general rate adjustments in the coming years that wi 11 provide opportunities to timely reeval ua te the irrigation subsidy.I make thi s s ta temen t knowing that the Bennett Mountain Plant is under construction, the Company capi tal budgets are dramatically increasing in the next several years in all areas, and that the Hells Canyon Relicensing is scheduled for completion in 2008. Should the Commission decide to insti tute a systematic approach at this time, does the Company have a preference between the recommendations? The Company views the recommendations of Mr. Higgins and Dr. Power as the only workable approach.Idaho GALE , DI-Reb Idaho Power Company Power has no appeti te to establish a deferral for uncollected irrigation revenue.Postponing a rate lncrease to match a deferral of costs is inappropriate when rates can easily be approved to match current cost levels.Deferral accounting will only add another level of complexity to an already complicated issue.In addition, aggressively ramplng up irrigation rates without an evaluation at each step could have a severe impact to the irrigation customer class.The Company, or those irrigation customers remaining in business at the end of Dr. Peseau ' s process could easily be left holding the bag.Gi ven the importance of electrici ty to the quali ty of life for all people, the Company believes that great care must be taken with any systematic approach to the elimination of the irrigation subsidy. Monthly Service Charqe Witnesses Mr. Hirsh, Ms. Ottens, Mr. Schunke, and Dr. Power have addressed the Company s proposed monthly servlce charge.What is your understanding of the positions tha t these wi tnesses have taken wi th respect to the Company s recommendation? My understanding of the positions taken by these wi tnesses are as follows: Ms. Hirsh states in her testimony that the only costs that can appropriately be included in the fixed GALE, DI-Reb Idaho Power Company monthly service charge for the residential class are those that are customer-specific and that do not vary with the number of customers served or wi th demand or energy usage. Ms. Hirsh states these costs are meters, line drops, meter reading and billing; but in order to incent customers to increase energy efficiency and conserve energy, the monthly service charge should be considerably lower even than the sum of these costs.That is, that some portion of these customer-related costs, as defined by Ms. Hirsh,should be transferred into other rate elements within' the residential class to increase the portion of the bill over which customers have control. Ms. Ottens states that the Company s proposed monthly service charge does not take into account the si tuation of low-income customers and the impact of their monthly electric bills on limited financial resources.She states that the Company s proposal results in low-income households paying for fixed costs beyond their control and that low-income customers will be unable to compensate or utilize energy conservation methods in order to keep their bills low.Ms. Ottens recommends that Idaho Power residential monthly service charge remain at its current level. Mr. Shunke ' s posi tion regarding the monthly service charge varies from class to class.In general , Mr. Shunke ' s GALE , DI-Reb Idaho Power Company posi tion is that, at least with respect to the residential class,(Schedule 1) / the small general service class (Schedule 7), and the large general service class - secondary (Schedule 9- secondary) the monthly service charge should include only the direct costs of meter reading and billing and should not include any fixed plant cost. addition, he states that the Company s proposed monthly service charge for the residential class will have a disproportionate effect on low-income, customers and sends the incorrect signal that largest users should receive ~ small rate increase while customers with the lowest usage should receive the hiqhest increase He recommends an increase in the customer charge for the residential and small general service classes but not to the level justified by cost of service because of the low overall staff- recommended rate increase for these customers. Dr. Power asserts that the appropriate definition of customer costs are those meter reading and billing costs that vary with the number of customers and that this variable portion represents about 70 percent of total billing and meter reading costs for the residential class. Dr. Power obj ects to the Company s method of designating distribution costs as customer or demand related and to the principle of aligning fixed and variable costs with fixed and variable prices, respectively.He proposes a small GALE, DI-Reb Idaho Power Company increase in the existing monthly service charge, only, to account for some of the effects of inflation. please respond to the collective criticisms. Idaho Power seeks to better align costs and prices.As is expressed in my direct testimony on the irrigation subsidy, sometimes this alignment has constraining circumstances that calls for a less than cost of service result to be implemented.The Company realizes that within a customer group there can be billing impacts of a rate design change that are too dramatic 'for the moment. Idaho Power believes that ultimately the Monthly Service Charge should actually be much higher than the current proposal, potentially in the $25 to $30 range.Because of the intra-class billing impacts, the Company proposed a partial yet material step to $10.However, similar to our posi tion on the irrigation subsidy, the Company believes some progress needs to be made in reducing the disparity. In an ideal si tuation , the capaci ty costs for Residential and Small General Service customers would be recovered through some type of demand charge.The metering for these two customer classes do not presently provide that option, leaving only two charges from which to collect the capacity costs - the monthly service charge and the energy charge.Since energy costs to serve small customers are not dramatically more than serving large customers, Idaho Power GALE, DI-Reb Idaho Power Company seeks to remove or at least partially remove the capacity costs from the energy charge and move these costs onto the monthly service charge.The monthly service charge would eventually become an access charge. Deregulation would ultimately separate the energy component from the access component.The access component is the collection of facilities and expenses (unrelated to energy) required to serve a customer from the grid. Al though Idaho Power does not believe. deregulation to be on the immediate hori zon in Idaho, we do know how quickly the issue emerged before.We also have a reasonable idea of how much unbundling and rebundling needs to be done to our pricing structure before deregulation could take place. Finally, an access and usage approach is working in many service industries and has a logical application for electric service as well. Please respond to the suggestion that the energy rate needs to be high in order to provide a conservation signal. I would ask what is the economic basis for setting the high energy rate and why should it only apply to the small customer?It makes no sense to me to apply an arbi trary conservation price signal to only the smallest Fixed cost recovery through variable rates cancus tomers . itself be a barrier to the introduction of demand-side GALE, DI-Reb Idaho Power Company acti vi ties because the utili ty is resistant to reducing sales and not covering all of its fixed costs.Ultimately, customers can lower their bills by using less, no matter what the energy rate, since every kilowatt-hour is billed. Ms. Ottens, in her testimony (page 10 line 12), expresses concern that the Company s proposed lncrease to the minimum monthly service charge will hit the low income customers hardest because the charge is not directly correlated to the level of actual energy usage and because low income customers cannot compensate by turning the lights off and the heat down.please address these concerns. The Company disagrees with Ms. Ottens assertion.It is Idaho Power s position that because residential service includes two rate components ,the monthly service charge and the energy charge, every customer whether low income or not can affect the amount of their energy bill by improving control over household energy use. Customers can compensate not just by turning the lights off and the heat down but by changing fil ters regularly, moving furni ture away from registers, cleaning light fixtures regularly, and caulking doors and windows. It is also significant to note that because Residential Service includes only two rate components an increase in the amount of revenue recovered through the service charge results in a decrease in the necessary amount GALE, DI-Reb Idaho Power Company of revenue to be recovered through the energy charge.With a higher service charge, the energy charge can be set lower than it otherwise would be. Mr. Robinette states in his testimony (page 8, line 3) that "due to the very nature, low income households reside in older housing stock that are the most energy inefficient" He suggests that these inefficiencies lead to high usage and utility bills that "start building up and become unmanageable.The Company s data for low-income customers confirms that the maj ori ty of low-income customers have usage greater than 700 kWh in both the summer and non- summer months.(Please see Exhibi t No.7 9, Idaho Power Response to 3rd production Request of Staff No. 40).The Company analysis also confirms that for both the summer and non- summer months, but particularly during, the heating season , the lower energy charge resulting from the increase in the service charge to $10.00 is actually beneficial to a maj ori ty of our low- income customers. Fixed Cost True-Up Mechanism In Mr. Cavanagh's direct testimony, he states that there are significant financial disincentives to sustained investments in cost-effective energy efficiency and small-scale "distributed" generating resources by Idaho Power Mr. Cavanagh proposes a solution to this problem,Company. GALE, DI-Reb Idaho Power Company and starts off by stating that one of the Company s most important responsibilities involves the process of integrated resource planning.Do you agree? Yes, I do agree that one of the Company important responsibilities is integrated resource planning. In fact, the Company is currently preparing its 2004 Integrated Resource Plan.As part of this biennial process, the Company has solicited public inpu~ throughout the planning process, ,and has implemented an Integrated Resource Planning Advisory Council which meets r~gularly with the This Advisory Council reviews material prepared byCompany. the Company as well as makes suggestions and presentations to the group for al terna ti ve resources to meet the Company resource needs.Mr. Cavanagh is a member of this advisory council and has participated throughout the process. Mr. Cavanagh proposes a possible solution for these perceived financial disincentives by recommending that the Commission adopt a simple system of periodic true-ups in electric rates, designed to correct for dispari ties between the Company s actual fixed cost recoveries and the revenue requirement approved by the Commission in this proceeding. Mr. Cavanagh states that these true-ups would either restore GALE , DI-Reb I daho Power Company to the Company or give back to the customers the dollars that were under- or over-recovered as a result of annual throughput fluctuations.Does the Company agree with this solution? Mr. Cavanagh recognizes the dilemma that the Company faces when fixed costs are not recovered fully through retail sales because sales volumes are lower than proj ected.The Company has begun an extensive review of this problem and is looking objectively at severa'1 possible solutions.However, such a system of periodic true-ups may not ultimately be as "simple " as Mr. Cavanagh suggests.The Company has retained an independent consultant, Mr. Eric Hirst, to assist it in performing a survey and analysis of various true-up mechanisms, sometimes referred to as decoupling.Mr. Hirst is well known in the industry and has much experience with alternative methodologies for recovering utility fixed costs.A system of periodic true-ups may be something the Company and its customers may desire in the future, but the Company is not prepared to recommend one at this time. At this point, the Company remains fully objective on the decoupling issue, but is keenly interested in how the GALE, DI-Reb Idaho Power Company revenues are eventually recoupled as well.As Idaho Power has discovered in its Power Cost Adjustment,sometimes there are unanticipated and unintended consequences. The Company s preference would be to complete an issue analysis paper with the help of Mr. Hirst, and distribute a draft for comment to interested parties before coming to a decision point on how best to proceed.This issue lends itself to the workshop and settlement process. Rebuttal Summary Have you prepared an exhibi t that summarlzes Idaho Power s positions on rebuttal? Yes.Exhibi t No. 80 provides that summary in a format that shows Idaho Power s initially filed positions, the Staff's initial position, and our rebuttal posi tion. Each element of the revenue requirement equation is segmented in Exhibit No. 80.Under the overall Rate of Return section, Idaho Power -- through wi tnesses Mr. Avera and Mr. Gribble -- continues to support 11.2 percent as the appropriate rate.The Company can accept Staff witness Ms. Carlock's 2004 bond pricing adjustment to the debt component with the caveat that Idaho Power s 2004 adjustments remain in place.Mr. Gribble s Exhibi t No. 63 provides the updated capi tal structure without accepting the bond repricing. When Ms. Carlock's recommendation is considered, the debt component rate changes to 5.859 percent and the new overall GALE , DI-Reb Idaho Power Company Rate of Return remaining at 8.334 percent. As outlined in the rebuttal testimony of Messrs. Obenchain, Prescott, and Fowler, the Company does not believe any of the Staff rate base reductions are appropriate.The same overall rate of return applied to the Company s originally requested rate base amount results in no change to the return on rate base. Idaho Power has accepted several of the expense adjustments as proposed by Staff as reasonable in the light of changed circumstances.Obviously, ,the Company agrees with the reduction of depreciation expense of $4,411,292. This amount is reflective of the settlement depreciation case, IPC-03-07. The Commission approved the settlement in its Order No. 29363 issued on October 22 , 2003, a date that came after the filing of the general rate case on October 16, 2003. The Company also agrees that certain adjustments related to the year-end payroll expenses should be reduced to take into consideration that the Company did not reach the employment level in December that was expected when the case was filed.This impacts three items:the year-end annualizing payroll adjustment, the Structural Salary Adjustment ("SSA"), and the incentive on pay-at-risk adjustment.We agree with Mr. Holm s reduction to the year- end payroll annualizing adjustment of $2,052,264 and Mr. GALE, DI-Reb Idaho Power Company Holm s reduction to the SSA of $116,675. The Company does not agree with the Staff's complete removal of the pay-at-risk incentive portion of the employee total compensation as discussed by Mr. Minor in his rebuttal testimony.We do believe its appropriate to reduce this amount to reflect year-end employment levels also. Accordingly, the pay-at-risk/ incentive adjustment has been decreased by $277 463. After considering the direct testimony of Staff wi tness Mr. English on pension expense and conferring with the Company s actuary, Mr. Brad Fowler, we have decided to not ask for Service Cost treatment for pension expense and have accepted the more traditional FAS 87 approach.As a resul t, we no longer request an adjustment to expense of $2,170,160 and our requested expenses drop by that same Mr. Fowler s rebuttal testimony supports thisamount. decision. Finally, there are some expenses uncovered by Staff in their review that should not have been included in the These include political and chari tableCompanys expenses. contributions and other expenses that were recorded incorrectly.We do continue to argue for the legitimacy of other business expense related to EEl, service club, and Chamber memberships, and legal expenses related to Idaho Power s in teres t in the wes tern refund proceedings. GALE, DI-Reb Idaho Power Company In conclusion, the Company s rebuttal testimony has been directed at our posi tion on the issues, not fixing the Staff's position.We cannot do both in the time frame allowed.Ultimately, if Staff prevails on some of their disallowances, there will be secondary effects that must be addressed at that time. In total, Idaho Power Company acknowledges a $9,066,310 decrease to our originally proposed expense adjustments.The corresponding tax gross up impact is $5,820,571.The Company s requested revenue increase drops to $70,675,029 from the original $85,561,910. Does this conclude your direct rebuttal testimony? Yes, it does. GALE, DI-Reb Idaho Power Company BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION CASE NO. I PC-03~ 13 IDAHO POWER COMPANY EXHIBIT NO. 79 J. GALE IPCo Resonse to 3rd Production Request of Commission Staff Request 40 fIj tfj 2003 0 liP fu age er ormance Call Jan Feb Mar Apr \ May Jun Jul Aug Sep Oet Nov Dee Total Volume IVR 318 332 867 889 145 033 20.522 10,346 596 800 92,848 AGent 467 819 364 210 538 295 367 6.469 765 478 52,772 Service Level IVR 100%100%100%100% \ 100%100%100%100%100%100%100% Aoent 94.90,90.61,6% I 91,93,94,97'.2%91,95.90. The response to this request was prepared by Sue Fullen, General Manager 01 Customer Services and Metering, Idaho Power Company, in consultation with Barton L. Kline , Senior AHorney, Idaho Power Company. REQUEST NO. 40: Please provide studies or other evidence to support Maggie Brilz s testimony stating that the increase in the customer charge from $2.51 to $10.00 per month will not be detrimental to low income customers. (Re1erence page 36, line 18 , Direct Testimony). RESPONSE TO REQUEST NO. 40: The increase in the service charge from $2.51 to $10.00 under the proposal filed by the Company and detailed on page 2 01 Exhibit No. 22 , results in approximately 16% 01 the total residential class revenue requirement of $255 076 295 being recovered through the 1ixed charge. If the service charge were to remain at $2., the amount 01 revenue requirement recovered through the fixed charge would be less than 4%. Because Schedule 1 , Residential Service, includes only two rate components , the service charge and the energy charge , an increase in the amount of revenue recovered through the service charge results in a decrease in the amount of revenue recovered through the energy charge. With a higher service charge, the energy charge can be set lower than it otherwise would be in order to recover the revenue requirement. If the service charge were to remain at $2. IDAHO POWER COMPANY'S RESPONSE TO 3rd PRODUCTION REQUEST OF COMMISSION STAFF Exhibit No. 79 Case No. IPC-O3- J. Gale, IPCo Page 1 of13 Page 9 rather than increase to $10.00 as proposed by the Company, the energy charge would need to be increased by 14 % over that included in the Company s filing in order for the revenue requirement to be recovered. Page 1 01 the attachment to this response details this computation. As is shown on page 1 01 Exhibit No. 44 , the percent increase for various monthly usage levels declines as more energy is consumed. Customers consuming more than 700 kWh during the non-summer months experience an increase less than the 19% average requested 1or the class as a whole (line 8 , column 5, page 1 01 Exhibit No. 44). This decline in the percentage impact as more energy is consumed is a direct e1fect of increasing the fixed charge and including in the energy charge less non-energy related costs. Pages 2 through 7 01 the attachment to this response detail the bill frequency data 1or low,income customers (based on those customers who received LlHEAP 1unds during the winter of 2002-2003) during the non-summer months of September through May, the typically high heating months of November through March and the summer months 01 June through August. The Company s data for low-income customers indicates that the average monthly usage during the non-summer months 1or low-income cu~tomers is greater than 700 kWh for approximately 70% of the customers. The data also indicates that during the heating months of November through March approximately 86% of low-income customers have average monthly usage greater than 700 kWh while approximately 62% of the customers have usage equal to or greater than 1200 kWh per month. Although the average usage per low- income customer is less during the summer months than during the non-summer Exhibit No. 79 Case No. IPC-O3- J. Gale, IPCo Page 2 of 13 IDAHO POWER COMPANY'S RESPONSE TO 3rd PRODUCTION REQUEST OF COMMISSION STAFF fIj months , approximately 55% 01 the low-income customers have average monthly usage greater than 700 kWh during the summer. For both the summer and non-summer months , but particularly during the heating season , the lower energy charge resulting 1rom the increase in the service charge to $10.00 is ber:1e1icial to a large percentage 01 low-income customers. Pages 8 and 9 01 the attachment to this response detail the number customers receiving LlHEAP funds by city, the percentage distribution 01 customers who receive LlHEAP 1unds by city, the number 01 housing units in each city based on U. S. Census data , and the percentage 01 households receiving LlHEAP 1unds by city. can be seen 110m pages 8 and 9 , the areas with the largest percentage 01 households receiving LlHEAP 1unds tend to be the more rural areas 01 the Company s service territory where alternative 1uel sources 1or space heating are less likely to be available. The response to this request was prepared by Maggie Britz , Pricing Director , Idaho Power Company, in consultation with Barton L. Kline , Senior Attorney, Idaho Power Company. REQUEST NO. 41: Company witness Fullen stated in her testimony that Idaho Power gave an additional $100 000 to Project Share during recent high energy cost years. On what date(s) was the additional money given to Project Share? Were there any conditions or restrictions 1or its use? 11 so, please explain. RESPONSE TO REQUEST NO. 41: The requested material is attached. Idaho power placed no restrictions on the monies. The funds are managed through the Salvation Army. Exhibit No. 79 Case No. IPC-E'-O3- J. Gale, IPCo Page 3 of 13 IDAHO POWER COMPANY'S RESPONSE TO 3rd PRODUCTION REQUEST OF COMMISSION ST AFF Page 11 IDAlIO PO'~VER COMPANY CASE NO. IPC..E..03.. lIII~D PRODUC1'lON REQUEST OF COl\1J\11SSI0N STAFF TT A CI-Il\1EN T RESPONSE TO REQUEST NO. Exhibit No. 79 Case No. IPC-O3- J. Gale , IPCo Page 4 of 13 ,., Idaho Power Company SIa1e of Idaho Nolmali2ed 12-Monlh~ ending December 31 , 2003 Impac1 on Enelgy ChOlge of $2.51 Service Charge Residen1ial Service Schedule 1 Revenue w / $ 1 0.00 Service Chalge Minimum Service Charge lOlAl $40.189.993 107,836 $40.297.829 Revenue wi $2.51 Service Charge Minimum Service Charge lOlAl 10.087.688 26.959 10.114 647 Revenue Ditielence (line 3 - line 6)$30.183.182 Proposed Revenue 1rom Energy ChargE Plus: Service Chorge Revenue DitierencE10 lOlAl 214.786.819 30,183.182 244.970.001 11 Required InCleose in Energy Charge 14% Exhibit No. 79 Case No. IPC-03- J. Gale , IPCo Page 5 of 13 PAGE I Av e r a e k W h / M o n t h To t a l C u s t o me r Co u n t "" d tT 1 'I t No n S H m m e r M o n t h s ( S ! ' . I ' I l ' ! m h e r t h r o l l g h M a y ) T o t a l C u s t o m e r Co l l n t h y A v e r a g e M o n t h l y k W h Pe r c e n t ~ Ac c u m u l a t e d , P e r c e n ~ 10 1 8 1 0 , 05 1 0 1 0 0 00 1 % !\ I I ~ i f ~ ~ ? ~ l t ! ~ 1 ~ \ 1 1 \ i ~i 1 : i i ia j ' iii " ' i 4 ' OO ' i'o ' "2 7 0 0 " " " " . . . . . . . . . . . . . . . . . . . . . . . . . . . . " " " " " ' 1 ' 3 " " " " , . . ' . . " . . . " , . . " . . . . " " 3 ' . ' 2 ' o) ~ " " " "" " , . , . . " . . " .. . . . " 9 6 - : 2 8 i9 ~ ' 0 i ' i i i " i7 0 0 ' i'0 " 3 0 0 0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . " . . " . " o" " " ' " " . . . . " , . . . . . " " " " " " : 8 9 ' 0;1 ; " " " "" " , . . . . . . . . . " , . . . . ' 98 ' 18 ; ; i ~ ' ia i ' i i i " ' 3 o o O ' 33 0 0 " " " " " " " " " " " " " " " " " " " " " ' " " " ' aT " " ' " . . , . . .. , . . . . . " , . . . . . . . , . . 0 ' )3 s ' o) ~ " " " " " " " "" " " " " " " 9 9 ' : 0 3;; i ~ ' ai ' i i i " ' 3 3 0 0 " i'0 " 36 0 0 " " " " " " " " " " " " " " " " ' " . . . . , . . " . . . . . . ' 3 ' 9" " " " " " . . . . . . . . . . . . . , . . . . . . . . 0 ' '4 ' 1 ' O)~ ,.. . . . . . . . . . . . . . . . . . . . . . " " " 99 ' : 4 ' 4 ' ;;, i ; ' ... i a i a i " ' 3 6 0 ' 39 0 0 " " " " " " " " " " " " " " " " " ' " " " " " " " " 9" " " " " " "" " " "" " " " " " 0'. " 3 1 ' o; i ; " " " ' " . . . . . . . . . . . . . . , . . . . " 9 ' 9- : 7 ' s o , i ; ' ia j ' iii " 39 0 0 " i'0 " 4" 2 0 0 " " " " ' " . . . . . . . . . . , . . .. . . . . . . . . . . . . . . . . . . " . . . " " j" " " " "" " " ' " " " " " " " " ' 0 : ' 07 0 Z " " " " " " " " " " " " " " " 99 ' :8 2; ; k ' ia j ' ii i " 4 " 2 0 0 ' i'0 " 45 0 0 " " " " " " " " " " ' " .. . . . . . . . . . , . . . . . . . . . " . . " " ' r" " . . . . . . . . . , . . . . . . . . . . . . . . . . . ' ~o ' ;;i ~ " " " " ,.. . . " , . . , . . " . . . " " 9 9 ' : 8 9 ",i ; ' ia i ' i i i " ' 4 5 0 0 " i'0 " 4 a o o " " " " " " " " " " . . . . . . . . . . . . . . . . . . , . . . . . " " " " ' 4" " " " " " " . . . . . . . . . . . . . . . . . , . . 0 ' : 0 4 ' O) ~ " " " " " " " " " "" " " " " 99 ' : 9 4" i ~ ' .. ' i a t ' a i " ' 4 ' 8 ' 6 ' if t 0 " 6" 2 6 ' 5 " . . . . . . . . . . . , . . . . , . . . . . . . " " " " " " " " " " " " " ' 6" " " " " " " " " " " " " " " " " 0 ' :0 6 ' %" " " " " " " . . . . . . . . . . . . T o o ' : 0 0 ' i~ ' ... . . . . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . . . , . . . . . . . , . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , . . . . . . . . . . " . . . . . . . . . . . . . . . . . . , . . . ... . . . . . . . . . . , . . . . . . . . . , . . . . . . . . . . . . . . . , . . 50 1 10 0 . 00 % 80 0 60 0 dO O ~ 1 20 0 ~ 1 00 0 u; 80 0 :;: ! -; ; ; dO O 60 0 - 20 0 ' 8 8 0 0 0 0 8 0 0 8 0 0 0 0 g 8 g g 0 8 g O m - N g ~ - ~ ~ - g ~ 0 ~ ~ ~ g - - - ~ ~ N ~ g ~ m g ~ ~ ~ ~ ~ ~ ~ 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 9 ~ = ~ ~ ~ ~ ~ ~ ~ ~ g ~ ~ ~ g ~ ~ ~ g g g g ~ ~ g 5 ~ ~ ~ ~ ~ ~ ~ ~ - - - - - - N N N n n n n - - - 9 9 9 9 9 9 9 9 ~ 5 5 5 5 5 5 5 5 5 5 5 5 ~ ~ 5 - 9 Av e r a g e k W h / M o n t h Ex h i b i t N o , 7 9 Ca s e N o , I P C - O3 - J, G a l e , I P C o Pa g e 6 o f 1 3 Av e r a Q e k W h / M o n t h To t a l k W h No n S u m m e r M o n t h s ( s e p t " , m b e r t h r o u g h M : l Y ) T o t a l k W h s b y C u s t o m e r A v e r : l g e M o n t h l y k W h Pe r c e n t a g e ... ~9 , ~~ ! , 9~ , ~Q . . 9Q . . ' dd 0 , 00 % "'0 tT 1 IJ ) 12 . 59 0 , 15 8 10 0 . 00 " 1 . Ac c u m u l a t e d Pe r c e n t a g e 50 0 00 0 00 0 , 00 0 .c : 1 50 0 , 00 0 ' ii j I- 1 00 0 , 00 0 50 0 , 00 0 ' - - 0 0 0 0 0 0 g g g g g ~ g g ~ ~ g 8 g ~ ~ ~ g g ~ ~ g ~ g g g ~ g g g g ~ ~ ~ 0 ~ ~ i g g g g g g g g g 0 - N M ~ ~ ~ ~ ~ ~ g ~ ~ ~ ~ N ~ ~ g ~ ~ ~ ~ ~ ~ I I I I I B, B B a I j I I I I I I I I I I I I I I Av e r a g e k W h / M o n t h Ex h i b i t N o . 7 9 Ca s e N o . I P C - O3 - j, G a l e , I P C o Pa g e 7 o f 1 3 "'d ';P o 'I t Wi n t , ! r M o n t h s ( N O v ! ! m b ! ! r t h r o l l g h M a r c h ) T o t a l \ ( W h s b y C l l s t o m ! ! r A v ! ! r a g ! ! M o n t h l y \ ( W h 43 3 10 0 . 00 " 1 0 Av e r a e k W h/ M o n t h To t a l C u s t o m ! ! r Ac c u m u l a t ! ! d Pe r c e n t a g e Co u n t Pe r c e n t a M ~g , \~ ~ " Q~ . . \~ , , 90 3 0 , 03 % lo i ' a i ' " 1 ' 16 0 " o" T : 2 6 6 " . . " " . . ' , " . . " . . . " , . . " " " , . . , " " " ' " " 49 9 - " "" , " " , " " " " " " " " " . . , 5 " - 2 9 " ; ~ " " . . " "" , , " , . . " , " " " "3 8 ' j 8 "i; ~\ ~ l r ~ i \ U : : : = : =: t : l 1 I = = = 1i 1 t i :~ 1 . i! ~ io i ' a i " 2 ' 1'6 6 " 24 0 0 " " " ",. . , . . . . , , . . " . . " ... " . . , " , " . . " " , 8 4 0 "'" " . . ' , . . . . " " , " , . . , . . , , . . ' 8 " -9 0 " ; ; " , . . " " ", ' " " . . . " " " " " 83 " -9 d " i; ' lo i ' a i ' " 2 4 0 0 ' 21 0 0 " " " " " " " " " " " " " " " " " " " " " " " ' 56 0 ' " , . . , . . . . . . . . . " ,. . . . . . . . , " " " 5 " - 1 3 i ; ~; ; " , . . " , " " , " . . . " , . . . . , , ' " 89 " - 8 8 "i; 10 i ' a i ' " 2 7 0 0 " "3 0 0 0 " " " " " " " " " " " " " " " " " " " " " " " ' "3 8 0 ' " " " " . . . . . . . " .. . . . . , . . . . . . , . . 4" - 0 3 " 2 ; " " " " " , " , ... . " " " " " g i ' 9 0 "i; ' lo i ' ;; i ' " 3 0 0 0 " 3 3 0 0 " " "" " " " " " " . . " " , . . " . . . . " , . . " " " ' Zi 1 ' " " . . . . " " " , " . . . . . . . . , . . , . . . " : 5 5" i ~ "" . . . " " " , " " " " , , " , " ' 96 ' : 4 6 "i ; ' lo i ' ; ; i ' " 3 3 0 0 ' 3 6 0 0 " " " " " " " " " " " " " " " " " " " " " " " ' 1" 3 9 " " " " " " " " " " . . " .. . . . . , . . . ' i: ; ' ;; ; " " " " " " " " " " " " " " " :; ' : 9 3 ' " i~ ' lo i ' ; ; i " 36 0 0 " 3 9 6 6 " " " " " " " " .." " " . . . . . . . . . . , . . . . , . . . . . . . . . ' 82 ' . . " , . . . . , . . . . " , . . . . . . , .. . . . . . " O ' :8 : ; ' ;;h " "" " " " " " " " " "" " " 98 ' : 8 0 ' ok ' ., ( ; ~ \ \ ~ . ~l l 40 0 20 0 C 1 00 0 ' :: I (. ) 80 0 ... . 60 0 :: I (. )ii i 40 0 -.- 20 0 0 0 0 0 0 0 8 g 8 8 8 8 8 8 ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ g N M ~ ~ ~ - ~ m 0 = ~ ~ ~ ~ ~ ~ ~ M ~ . ~ - ~ - 9 9 9 9 9 9 9 9 ~ 9 9 9 9 0 0 9 9 9 9 9 9 9 9 g ~ 8 ~ ~ 8 8 8 8 0 ~ 0 8 0 g g 8 ~ ~ 8 ~ 8 8 ~ ~ g - m ~ - ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ - ~ ~ ~ ro ro ro ro r o ro ro ro r o ro 9 - Av e r a g e k W h / M o n t h Ex h i b i t N o , 7 9 Ca s e N o , I P C - O3 - J, G a l e , I P C o Pa g e 8 o f 1 3 Wi n t e r M o n t h s ( N o v e m b e r t h r o u g h M a r c h ) T o t a l k W h ! ; b y C u s t o m e r A v e r a g e M o n t h l y k W h Av e n J Q e k W h / M o n t h To t a l k W h Pe r c e n t a ~ e Ac c u m u l a t e d Pe r c e n t a ~ e ,.. ~g \ ~ ! . Q~ , . ~~ . , q9 . . . . . . . 1 5 2 0 , 00 " :~ m 1 1 ~ f \ ~ 1 ~ ~ ~ = = : : : : ~ : ~ ~ ! ~ ~ 1 r : : ~U ; : F 1~ ; ~ ~ 93 6 . 84 1 10 0 . 00 " 1 0 "t j :P - tT I 50 0 , 00 0 00 0 , 00 0 .! : 1 50 0 . 00 0 - ii i .. . .:= . 1 00 0 , 00 0 so o , oo o g g g g 9 9 g g - m ~ ~ ~ ~ ~ , ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 9 9 f;1 0 M Av e r a g e k W h / M o n t h Ex h i b i t N o . 7 9 Ca s e N o - I P C - O3 - J. G a l e , I P C o Pa g e 9 o f 1 3 Av e r a Q e k W h / M o n t h To t a l C u s t o m e r Co u n t "'d): . tT 1 Su m m e r M o n t h s ( J u n ! ' . . J u l y . A u g u s t ) T o t a l C l l s t o m e r C o l l n t b y A v e r a g e M o n t h l y k W h Pe r c e n t a g e Ac c u m u l a t e Pe r c e n t a g e 00 0 90 0 80 0 .. . . 70 0 ::1 60 0 .. . 50 0 ;; ;:: 1 40 0 30 0 20 0 10 0 ... !g , !~ ! . . 9~ , " t9 . . . q. 9 " , 72 O , 8d % 1\ \ ' i l t ! l g ~~ I I I ~ : ~I ; I ! I ~ : :l ~ t ! I ! 1 =: ~ : j f ~ ~ ~ \ ~ ~ ; : = = : = = ~~ : : := : n ~ ~ : = : = = : : ~ ~ ~ ~: ~ : ~ % ~ n ~ F = ~ = = : = ~ : m : = : = : : : : = = H t ~ f : : : : : ti ~ ~ ~ f Ia t a j " 1' 2 " o i f t ' o" ' s 0 0 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . , , " . . . . " "'" 90 " :;' . ... . . . . . . . . . . . , . . , . . . . . . . . , . . " :; 0 ' ." 5 2 0 ; ~ , . . . . " . . . . . . . . . . " . . , " " " " " g 0 " ." 1 2 0 1 ; ; " la i a i " ' 1 ' so o " 0" ' i" 8 0 0 " " " " " " " " " " " " " " " " " " " " " " " 44 " 2" " " " " " " " "" " " " " " " " " ." 1 3 o l ; ; " " " " " " " " " " " " " " " g 5 ' ::1 ;j~ i ~ ' ia i " a j " 1' B o o " io " Z1 " 0 0 " " " " " " " " " " " " " " " " " " " " " " " " 2 2 7 " " " " " " " " "" " " " " " " " " 2:' i 3 3 0 ; ~ " " " " " " " " " " " " " " " " " i. " 8 8 ; ; j ; ; " ia i " a i " Z1 " 00 " io " z 4 0 0 " " " " " " " " " " " " ' " . . . . . . . . . " . .. . . " . . 1 ' 0 " (" " " " " " " " " " " " " " " " " 1" ' . " 1 ' :;" ;;; ; ; " " " " " " " " " " " " " " " : 0 5 " ~i ~ ' la t a i " ' Z 4 ' O'i f i o " Z7 0 ' 0 " " " ' " . . . . . . . . " . . " " " " " " " " " " " " " " " 4T " " " " " " ' " " " " " " " " " " ' 0 ' ." 4 ;; i ~ " " " " " ' " .. . . . . . . . " " " " 99 ' : S 2 ; ; ' ; ~ ' Ia j ' ai " z 7 0 i f i ' 30 0 0 " " " " " " " " " " . . " , . . . ... . . . . , . . "" " " " " 1'7 " " " " " " " " " " " " " " " " ." 2 0 ' ;;; ~ " " . . . . . . " . . " " " " " " " ' " 9 " :: ; 2 ; ; ; ~ ' io j " ai " 3 0 0 0 " io " 33 0 0 " " " " " " " " " " " . . . . . . . . " . . . . . . . . . . . . . . . . . . :; ' : ; . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 0 ' ." 1 " ;; i ~ " " " " " " " " ' " "" " " " ' 99 ' : 8 5;; i ~ ' Ia j a i " ' 3 3 0 0 ' 36 0 0 " " " " " " " " " " " ' " . . . . . . . " " " " " " " " " " ' 4" " " " " " " " " " ' " " " " " " ' ." 0 5 " ;;; ~ " ' " " , . . . . " " " " " " " " " ' ." 9 0 ; ; i ~ ' :~ : ~ ~ ~ ~ % ~ : : : : = = : : : : : : : I :~ j ~ = : ~ : : ~ j ~ Ji l f ~~ ~ 3 i i E ~ : ~1 6 r ~ 62 2 10 0 . 00 " 1 0 8 g g 9 9 9 on 0 co c o ~ ~ ~ 9 9 9 ~ ~ ~ ~ ~ ~ g 8 g ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ 9 9 9 9 9 9 ; 9 9 g O 9 9 9 9 9 9 9 9 9 9 g ~ ~ ~ e g g g g ~ g g g g g g g g g g g - - ro ro ro ro ~ ~ ~ ~ ~ ~ N ~ ~ g ~ ~ ~ ~ ~ ; ~ ~ 9 9 = '" r o ro ro ~ ~ ~ ~ ~ ~ ~ ~ ~ - - - Av e r a g e k W h / M o n t h Ex h i b i t N o . 7 9 Ca s e N o , I P C - O3 - j, G a l e , I P C o Pa g e 1 0 o f 1 3 41 1 Su m m e r M o " t h s ( . Iu " " - . J u l y . A u g u s t ) T o t a l k W h s b y c u s t o m e r A v e r a g e M o " t h l y k W h Av e r a Q e k W h / M o n t h To t a l k W h Pe r c e n t a ! 1 e Ac c u m u l a t e d Pe r c e n t a ! 1 e ... . \~ . ~~ 1 .Q : 9~ t o 1 0 0 - 1 26 2 06 " lo l a l 3 9 0 0 1 0 4 2 0 0 , 02 7 0 : 1 ~~ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ~9 ~ . il l i i f d ~ ~ : ~ ~ ~ = : : J l I ~ 29 5 . 69 6 10 0 . 00 % '" d): . tT 1 -. J .1 0 0 , 00 0 20 0 , 00 0 00 0 , 00 0 .r: . BO O , OO O 60 0 , 00 0 40 0 , 00 0 . 20 0 , 00 0 -- - -- - -- - - ;; ; Av e r a g e k W h / M o n t h Ex h i b i t N o . 7 9 Ca s e N o , I P C - O3 - j, G a l e , I P C o Pa g e 1 1 o f 1 3 Exhibit No. 79 Case No. IPC-O3- J. Gale, IPCo Page 12 of 13 LlHEAP City Study Non-Summer Months Segment (Sep1ember 2002 - May 2003) Percent of Customers Percent of Number Households Receiving 10tal Housing Percent 01 Receiving LlHEAP LlHEAP Units (US Housing LlHEAP City Funds Recipients Census)Units Funds Aberdeen 55%887 86% American Falls 12A 31%557 96% Arbon 01%n/a nla n/a Banks 02%n/a n/a n/a Bellevue 06%72A 83% Black1oot AA 1 64%929 11 22~1c Bliss 15%147 52% Boise 308 24.29c'/c 77 ,850 35%96% Bruneau 05%n/a nla nla Buhl 110 16c 689 51O Burely 04%633 11% Caldwell OAB 11 ,03%603 10.91% Cambridge 23%173 12.72% Carey 02%187 07% Carmen 06%n/a n/a n/a tI' Cascade 71%562 11.92% Castlelord 03%105 86% Chubbuck 124 31%377 67% Council 055%425 12.24% Dietrich 03%84% Donnelly 16%20.83% Eagle 81%OAB 90% Eden 14%165 88% Emmett 23/2.49%83A 36% Fairlield 15%211 64% Filer 0.41%676 77% Fort Hall 36%n/a n/a n/a Fruitland 113 19%518 A4% Garden Valley 09%n/a n/a n/a Glenns Fery A9%707 65% Gooding 72%397 87% Grand View 23%228 65% Greenleaf 31%284 10.21% Hagerman 29%324 64% Hailey 0.47%557 76% Hammett 04%n/a n/a n/a Hansen 28%378 14% Hazelton 38%270 13.33% Homedale 197 07%933 21.11% Horseshoe Bend 23%290 59% Idaho City 26%257 73% Indian Valley 02%n/a n/a n/a Inkom 13%263 56% Jerome 187 97%966 30% Ketchum 03%920 10% Kimberly 0.49%965 87% PAGE 8 Exhibit No. 79 Case No, IPC-O3- J. Gale , IPCo Page 13 of 13 LlHEAP City Study Non-Summer Months Segment (September 2002 - May 2003) Percent of Customers Percent of Number of Households Receiving lotal Housing Percent of Receiving LlHEAP LlHEAP Units (US Housing lIHEAP City Funds Recipients Census)Units Funds King Hill 03%n/a n/a nla Kuna 66%793 51% Leadore 05%58% Letha 12%n/a nla n/a Lowman 05~'k nla n/a n/a Marsing 91 ole 366 23.50% McCall 81c 241 43% Melba 38c 164 21.95% Meridian 219 31O 293 78% Mesa 01c n/a n/a n/a Middleton 99O 066 82% Midvale 08%64% Mountain Home 226 38O 738 77% Murphy 01O n/a nla nla Murtaugh 12%21.57% Nampa 702 39%19,379 62% New Meadows 18%6.49% New Plymouth 62%566 10.42% North Fork 02%n/a nla n/a Notus 15%156 97% Oakley 14%257 06% Ontario 02O n/a n/a nla Parma 106 12o 676 15.68% Paul 05%430 16% Payette 238 50%264 10.51% Pineid 01%n/a n/a nla Pingree 14%n/a nla nla Placerville 03%90% Pocatello 789 30%20,627 83% Pollock 03%n/a nla n/a Richfield 11%180 56% Riggins 34%253 12.65% Rockland 14%117 11.11% Rupert 02%204 09% Salmon 202 13%576 12.82% Shoshone 19O 615 93% Springfield 02%n/a nla n/a Star 21%681 94% Sterling 05%nla nla n/a Sun Valley 01%339 04% Sweet 05%nla n/a n/a Twin Falls 443 66%14,162 13% Weiser 24%207 04% Wendell 56%654 10% Wilder 113 19%421 26.84% 501 100.00%222,143 100% PAGE 9 BEFORE THE IDAHO PUBLIC UTiliTIES COMMISSION CASE NO. IPC-O3- IDAHO POWER COMPANY EXHIBIT NO. 80 J. GALE Summary of Idaho Power Company s Revenue Requirement Position on Rebuttal Su m m a r y o f I d a h o P o w e r C o m p a n y s R e v e n u e R e q u i r e m e n t P o s i t i o n o n R e b u t t a l Be f o r e t h e I d a h o P u b l i c U t i l i t i e s C o m m i s s i o n Ca s e N o , I P C - 03 - C'0 ., -C'0 00 0 ~o . . . O . , - 0. . . - Z 0 - 0 :t o Z m ., - ,Q m r o m ~~ l ' ) ~ UJ O - ; o . . . Is s u e (P C D i r e c t St a f f C a s e IP C R e b u t t a l IP C C h a n g e Re t u r n Re t u r n o n C o m m o n E q u i t y 11 . 20 0 % 10 , 00 0 % 11 . 20 0 % 00 0 % Lo n g T e r m D e b t 98 3 % 63 0 % 85 9 % 12 4 % OR O R 33 4 % 65 0 % 33 4 % 00 0 % Ra t e B a s e 54 7 44 3 , 53 0 1, 4 8 1 82 4 , 4 9 2 54 7 , 4 4 3 53 0 Ch a n g e t o R e t u r n o n R a t e B a s e 12 8 96 3 94 4 11 3 35 9 57 4 12 8 96 3 94 4 Ex p e n s e A d j u s t m e n t s Pe n s i o n E x p e n s e 18 8 , 16 0 01 8 00 0 17 0 16 0 Me m b e r s h i p s & C o n t r i b u t i o n s 32 2 17 7 28 4 11 1 06 6 Ma n a g e m e n t E x p e n s e s 89 9 89 9 Le g a l E x p e n s e s - - R e f u n d C a s e s 35 2 54 4 35 2 54 4 Ye a r e n d P a y r o l l A d j u s t m e n t 91 3 24 4 86 0 , 59 0 86 0 59 0 05 2 65 4 SS A P a y r o l l A d j u s t m e n t 24 1 59 5 12 4 92 0 12 4 92 0 11 6 67 5 PA R / I n c e n t i v e A d j u s t m e n t 11 4 , 82 1 83 7 35 8 27 7 , 4 6 3 De p r e c i a t i o n S e t t l e m e n t A d j u s t m e n t 4, 4 1 1 29 2 4, 4 1 1 29 2 4, 4 1 1 29 2 Ca p i t a l i z e d I n c e n t i v e D e p r e c i a t i o n E x p 23 0 59 4 23 0 59 4 In s u r a n c e A d j u s t m e n t s 74 8 60 0 74 8 60 0 Ex p e n s e a s s o c i a t e w / a n n u a l i z i n g R B 87 3 , 12 9 87 3 12 9 Ot h e r i t e m s 72 0 19 , 94 4 99 , 72 0 Ch a n g e s t o E x p e n s e A d j u s t m e n t s 06 6 31 0 1 Ta x Gr o s s u p f a c t o r 64 2 0. 4 4 6 64 2 Ta x o n S t a f f D e f i c i e n c y 56 9 56 9 56 3 90 7 Ta x o n C o m p a n y D e f i c i e n c y 45 3 56 0 24 0 32 4 Ta x o n R e b u t t a l D e f i c i e n c y 82 0 57 1 1 To t a l C h a n g e t o R a t e R e q u e s t 14 , 88 6 , 88 1 1 Re q u e s t e d I d a h o J u r i s d i c t i o n a l I n c r e a s e o n R e b u t t a l 67 5 02 9 I