20040503Said Direct.pdf

. RECEIVED
" 1C tL.-L.J
10114 ~PR 3 0 Pt~4:
PUBLIC
UT\L n\ES COMMISSION
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IDAHO POWER COMPANY,
Complainan t ,
vs.
CITY OF EAGLE, IDAHO.
Respondent.
CASE NO. IPC-O4-
IDAHO POWER COMPANY
DIRECT TESTIMONY
GREGORY W. SAID
please state your name and business address.
My name is Gregory Said and my business
address is 1221 West Idaho Street, Boise, Idaho.
whom employed and ' in whatareyou
capaci ty.?
I am employed by Idaho Power Company as the
Manager of Revenue Requirement in the Pricing and Regulatory
Services Department.
Please describe your educational background.
recei ved Bachelor1975,May
Science Degree in Mathematics wi th hono~s from Boise State
uni versi ty.1999,attended the Public Utili ty
Executives Course at the U~iversity of ,Idqho.
Please describe your, work experience with
Idaho Power Company.
I became employed by Idaho Power Company in
1980 as an analyst in the Resource Planning Department.
1985,the Company applied for a general revenue requirement
increase.I was the Company witness addressing power supply
expenses.
In August after nine years in the1989,
Resource Planning Department, I was offered and I accepted a
posi tion With thetheRateDepartmen t .Company
Company s application for a temporary rate increase in 1992,
my responsibilities as a witness were expanded.While
SAID, Di
Idaho Power Company
continued to he the Company witness concerning power supply
expenses,I also sponsored the Company s rate computations
and proposed tariff schedules in that case.
In 1994,I was asked to become the Meridian
District Manager for a one-year crQ8s-training opportunity.
In 1995,I returned to my position in the Rate Department.
In October 1996,I was promoted to lead a team of analysts
the reorganized Regulatory Servicespricingnewly
Departmen t ,formerly known as the Rate Department.In tha
role,installationbecamethe Company contact .for line
disputes Company compliance with tariffconcerning
provisions.
the Revenue Requiremen t ,Manager
continue for line installationto be the Company .contact
disputes before the Idaho Public Utili ties Commission.
Why has Idaho Power Company filed a complaint
against the Ci ty of Eagle?
Sikes has testified,the Company hasAs Mr.
been seeking approval from the City of Eagle to construct a
transmission line through the City of Eagle for a number of
years now.While the Company has attempted to identify a
route and design alternative acceptable to all interested
parties,City the economicallyhasrej ectedthe all
prudent alternatives.Mr.Sikes has also stated that the
Company is concerned that future service to the Eagle area
SAID , Di
Idaho Power Company
may be degraded by the inability of the Company and the City
of Eagle to identify a route and design acceptable to all
parties.Idaho Power has been diligent and prudent in its
efforts to site new transmission facilities.However,
denying the Company s applications,' the City of Eagle has
jeopardized the Company s ability t? meet its obligation to
provide service its areaEagleelectricaladequate
cus tomers .I have been advised by my legal counsel that,
under circumstances,provides IdahoIdaholawthethese
Public Commission with au thori ty directUtilit;Les the
Idaho Power to construct the facilities required to serve
cus tomer loads.
sikes testifies the Ci ty of EagleMr.that
has requested that the Company use underground construction
techniques to mitigate the perceived adverse aesthetics of
overhead construction but Idaho Power maintains thatthat
the addi tional alternative undergroundroutescost
construction responsibili ty Citythewouldthe
Eagle.Why does the Company believe that the City of Eagle
should pay for the addi tional costs that may be required to
satisfy their aesthetic concerns?
Ul timately,
paid for its cus tomers .
the cost facilities,
Idaho Power arecosts borne by
If Idaho Power initially bears
theincludedthatcost
Company s rate base as an investment that is funded by the
SAID, Di
Idaho Power Company
Company The theCompanyreturncustomers.earns
undepreciated investment theThebalance.return
Company investment Idahoalsofunded by customers.
Power stri ves provide reasonably pricedreliableand
electrical seryice to its customers.
When city,City of . Eagle,such the
determines Idaho standards forthatPowermus t meet
aesthetics stringent standardsthanthethatare more
place Idaho service terri tory theandthroughou t Power
resul t of the application of the more stringent standard is
higher cost,the question then becomes ,who should pay for
the addi tional attributable the City Eaglecosts
more stringent aesthetics" the City of Ea,gle or other Idaho
Power being ' facilities underbuiltcustomersserved
different believesstandards? Idaho Power
inappropriate for the City of Eagle to pass the costs of its
aesthetic standards onto other customers who are willing to
be served at lower costs under different standards.
this Commission have the authori tyDoes
decide who should pay for the transmission solution that it
directs the Company to pursue?
Yes.advised legalIdahoPower
counsel that the Idaho Public Utili ties Commission has the
authori ty to determine the prudence of Company investment in
SAID, Di
Idaho Power Company
facili ties included the Company revenue
requirement.
In this case the Company believes that $2.
million is the prudent investment level that should be made
by the Company.When costs of facilities exceed the prudent
level investment includedthatshould revenue
requirement,the Commission requires that the Company seek
contributions in aid of construction (CIACs).In this case,
it is the Company s posi tion that if the Commission directs
the alternate transmission projectCompany, t;o pursue any
with grea ter then$2.million,thancost
appropriate for the City of Eagle to be responsible for the
addi tional Typically.paidC lAC scost.prlorare
construction of facili ties.
the City anyexpressedEagleHas
willingness to have Eagle residents pay the additional costs
associated with alternates to the Company s proposed route?
The City of Eagle has never expressed No.
willingness to pay for any additional expenses.However, as
Mr.Sikes his testimony,has stated the Company has
discussed a number of funding alternatives available to the
City.
What are some of the ways that the City
Eagle could fund a required CIAC?
SAID , Di
Idaho Power Company
Idaho Code Title 50 allows mayors and city
councils to create local improvement districts to fund line
extensions existing overheadconversionfund
electric to an underground. tonfigurat~on.Thefacilities
City of , Eagle could create a local improvement district to
fund a required CIAC.
In the alternative,Idaho Bower would be willing to
accept installment payments,including interest,to recover
any required CIAC.The Ci ty could 'apply the proceeds of the
franchise to make thecollectsfromIdahofeesPower
installment paYments.The City currently levies a franchi
but that level could be increased iffee at the 1% level,
such an increase is accept~ble to the ~i t~zens of the City.
This is the procedure Idaho Power followed with the
Ci ty when Ketchum desired to relocateKetchum,Idaho
Idaho Power s overhead power lines in downtown Ketchum to an
underground configuration.The Ci ty of Ketchum continues to
collect franchise fees, and as funds are available, directs
Idaho to underground selected distribution circuitsPower
they have prioritized and coordinated with the Company. The
Ci ty of Ketchum has not chosen to have any portion of the
138-kV transmission line placed underground.
What is the annual revenue received by Idaho
Power for service to the City of Eagle?
SAID, Di
Idaho Power Company
In 2003,Idaho Power received approximately
$7 million for electric service provide9 to customers wi thin
the Ci ty of Eagle.Eagle currently requires a 1 percent
franchise collected $70,000 from ~ity Eaglefeethat
residents in 2003.
franchise increasedfeethewas
percent, how much additional revenue would be generated?
franchise increasedfeethewas
percent,the addi tional revenue above the 1 percent level
would be app~Qximately $140,000.
Assuming Commission thethewould. allow
Company to finance a CIAC for the City 'of Eagle for 5 years,
what level of CIAC could be financed by $140,000 recovered
via an increased franchise fee?
Assuming monthly andequalpaYments
interest rate at the Company s currently authorized rate of
return the $140,000 revenueannual199percent,
recei ved increasing City franchise fromfeethe
percent percent would approxima te lyfundCIAC
$560,000 to be recovered over 5 years.
Would the Company be willing finance
CIAC for more than five years?
No.The prefers not financeCompany
CIACs,and believes financing of a CIAC for longer than
years to be unreasonable.
SAID, Di
Idaho Power Company
Has the City of Eagle identified a preferred
route?
No.As I have stated, the route supported by
Idaho Power and the Citizen s Advisory Committee was denied
by the City of Eagle.While the City of 'Eagle continues to
desire evaluation of additional alternatives, none have been
identified by the City as a preferred route.
What does the Company recommend that the
Commisslon direct the Company this case?
Based upon the City Eagle refusal
commi t to any expenses to be borne by t0e City s residents,
the recommends the Commission direct theCompanythat
Company to construct the ~ransmission pr?ject described as
Option 1 on Exhibit 2 tha,t was previcmsly denied by the Ci
$2.associated with thatmillionEagle.The cost
proj ect is a reasonable investment for the Company to make.
Any other plan would result in additional costs that the
City unprepared and that wouldEagleseemsaccept
inappropriately be funded by the greater body of Idaho Power
customers.
If the Commission does not direct the Company
to construct the transmission proj ect previously denied by
the City of Eagle, what does Idaho Power recommend that the
Commission do in this matter?
SAID, Di
Idaho Power Company
City willing fundthe CIAC
required selection al ternateresul t the
transmi s s i on design,Power respec t fullypathIdaho
requests that the Commission issue its order speci'fying how
the Ci ty of Eagle will pay for the CIAC.The alternatives
in order of preference are as follows:
The City financingcanacqulreindependent
and pay the CIAC up front,
City franchiseincrease feesThecan
sufficient)pay the CIAC plus carrying charges over
five-year period time,
The Commlssion can order the Company
create new tariffs appliGablethat yvould be customers
wi thin the City of Eagle, that would, include a surcharge to
recover the CIAC with carrying charges wi thin five years.
Does this conclude your testimony?
Yes, it does.
SAID, Di
Idaho Power Company