20040730Lobb Direct.pdf

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Lilli.lllES COl,ji"'1!SSfON
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
) CASE NO. IPC-O4-
IDAHO POWER COMPANY
Complainant,
CITY OF EAGLE, IDAHO
Respondent.
DIRECT TESTIMONY OF RANDY lOBB
IDAHO PUBLIC UTiliTIES COMMISSION
JULY 30, 2004
Please state your name and business address for
the record.
My name is Randy Lobb and my business address
472 West Washington Street, Boise, Idaho.
By whom are you employed?
I am employed by the Idaho Public Utilities
Commission as Utilities Division Administrator.
What is your educational and professional
background?
I received a Bachelor of Science Degree in
Agricultural Engineering from the University of Idaho in
1980 and worked for the Idaho Department of Water Resources
from June of 1980 to November of 1987.I received my Idaho
license as a registered professional Civil Engineer in 1985
and began work at the Idaho Public Utilities Commission in
December of 1987.My duties at the Commission currently
include case management and oversight of all technical
staff assigned to Commission filings.I have conducted
analysis of utili ty rate applications, rate design, tariff
analysis and customer petitions.I have testified in
numerous proceedings before the Commission including cases
dealing with rate structure, cost of service, power supply,
line extensions, regulatory policy and facility
acquisitions.
What is the purpose of your testimony in this
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R. LOBB (D i)
STAFF
case?
The purpose of my testimony is to provide a
policy recommendation to the Commission regarding how Idaho
Power s complaint should be resolved in this case and how
similar situations should be addressed in the future.
Please summarize your testimony.
Simply stated, Idaho Power Company needs to
extend its sub transmission facilities from the existing
substation through the City of Eagle to the new Star
substation.These new facilities will serve west Eagle and
the Star service areas.The Ci ty has twice denied the
Company s application to construct overhead facilities
through the City that exceed 35 feet in height.The
alternative would require underground facilities or
alternative overhead alignments at significantly higher
cost.
The alternatives available to the Commission
include: 1) directing the Company to extend its overhead
facili ties through Eagle 2) directing the Company to
install underground facilities provided the incremental
additional cost is contributed by the City and/or its
residents 3) directing the Company to install underground
facilities and spread all costs over the general body of
ratepayers 4) directing the Company to pursue a lower cost
overhead alignment 5) or a combination of the above.
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STAFF
I recommend that the Commission direct the
Company to install overhead facilities unless or until the
City of Eagle provides the incremental difference in cost
required to place those facili ties underground.
addition , I recommend that the Commission establish a
policy that allows the Company to reasonably extend its
overhead facilities through existing utility corridors.
While I do not necessary dispute the potential economic
impact such overhead lines may have on adj acent property, I
believe it is inappropriate to requlre the general body of
Idaho Power customers to pay significantly higher rates to
provide underground facilities for the aesthetic benefit of
local communi ties and landowners.
The Complaint
Would you please briefly provide your
understanding of the situation between Idaho Power Company
and the Ci ty of Eagle that has lead to the Company
complaint in this case?
My understanding of the situation is basedYes.
on discussions with the various parties to this case and a
review of production requests and previously filed
testimony.Both Company witness Sikes and City of Eagle
witness Merrill have described the detailed history leading
to Idaho Power s complaint so I will not repeat it here.
Simply stated, Idaho Power has an existing substation
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STAFF
within the City limits of Eagle served from the east along
State Street by an overhead 138-kV transmission line.The
City of Eagle has denied Idaho Power s request to extend
its overhead transmission facilities from the Eagle
substation westward through the City to the Star
substation.The first request made by Idaho Power for
conditional use permit (CUP) to exceed the 35 foot height
limitation was opposed by the Eagle Planning and Zoning
Commission and was withdrawn by the Company. The City
Council unanimously rej ected the second request made by the
Company stating:
The proposed conditional use for the
construction of overhead sub-transmissionline...is not in accordance with the general
obj ecti ves of the Comprehensive Plan norEagle Ci ty Code Title 8. ...the design and
construction of an overhead sub-transmission
line conflicts with the City s goal ~to protect
important views, vistas, and panoramas of the
community s natural setting and environment"
...
The council went on to say ~the overhead line also
conflicts with the city s goal to 'Strive to create an
aesthetically pleasing communi ty and protect the unique
natural beauty and small town character of the City.
Exhibit No. 119 page 12 of 13 Section Eagle Findings of
Fact and Conclusions of Law , Case No. CU-02.
What do you believe the Commission must determine
in order to resolve this complaint?
I believe the Commission must determine whether
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STAFF
facilities are needed, what facilities are necessary, the
appropriate alignment and who should pay for any facilities
constructed.
Do any of the parties dispute that additional
facilities are needed to meet load in the Eagle/Star Area?
Not really.
quest ions the urgency
lack of demand side
While City of Eagle witness Teinert
for upgraded facilities and points to
management (DSM) implemented by the
Company in prior years, he too seems to recogni ze that some
new facilities are needed.Typically, DSM can dampen
demand caused by load growth.However, it cannot eliminate
construction necessary to promote system reliability.
Alternatives
What are the al ternati ves available to Idaho
Power to provide service to the Star substation given the
Ci ty ' s opposi tion to the proposed overhead alignment?
The overhead proposal rej ected by the Ci ty was to
be located along the State Highway 44 bypass beginning at
Edgewood Street.Al though not specifically rej ected by the
City Council, it is unlikely that a previously proposed
overhead alignment adj acent to State Street through the
City would be any more acceptable.Consequently, the only
138-kV alternatives from the Eagle substation to the Star
substation would seem to be either underground or consist
of an overhead alignment that proceeds north from the
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STAFF
substation and then west around the City along either
Floating Feather or Beacon Light.
What is the estimated incremental increase in
cost associated with these alternatives?
Exhibit No.4 of Company witness Sike s testimony
shows that al ternati ve overhead options 5 and 6 would cost
$1.42 million and $2.37 million more respectively than the
proposed overhead option rej ected by the Ci ty.The
additional cost of underground options with alignments
through the Ci ty and along the Highway 44 bypass are
estimated to range from $5.25 to $7 million.
Are there other problems associated wi th these
alternatives besides additional cost?
Yes, there certainly could be.It is likely that
any al ternati ve overhead alignment chosen will encounter
similar opposition from adjacent landowners.The Communi t y
Advisory Committee (CAC) established by the Company to
assist in transmission siting recommended that overhead
facilities not be placed through residential areas.The
Company indicates that even without landowner opposition
it is unlikely that alternative overhead facilities could
be completed by the time they are needed to serve the Star
substation.
Other problems with underground facilities are
cited on pages 3 through 5 of the Black and Veatch study
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STAFF
conducted for the City of Eagle and on pages 18 and 19 of
an Idaho Power Routing Study attached as Appendix A to the
Black and Veatch study (Exhibit No. 115)These problems
include difficulty in identifying and repairing line
problems and the need to obtain highly trained technicians
to maintain such facili ties.It is my understanding that
Idaho Power currently has no underground transmission
facilities.
Are there other alternatives described by the
parties?
Yes, City of Eagle witness Teinert maintains
there are other methods and technologies such as demand
side management (DSM), mobile generators and Aluminum
Conductor Steel Supported (ACSS) cable that the Company
should have explored as alternatives to the 138-kV options.
What is your opinion of the al ternati ves proposed
by Mr. Teinert?
I don t believe pointing out DSM activities that
the Company could have undertaken in the past is helpful in
solving the transmission constraints experienced in the
Eagle area today.Mr. Teinert speculates that a number
demand side management programs described by Idaho Power in
2002/2003 could have been put in place in the Eagle area
early as 1999.He also speculates that these programs,
many of which are untried or in the pilot stage, could have
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STAFF
reliably reduced transmission loadings and eliminated the
need for transmission upgrades at issue in this case.
He would seem to imply that Idaho Power was
imprudent in its implementation of DSM and therefore, it
the shareholders and not the general body of customers or
the citizens of Eagle that should pay for costly
transmission upgrades.I do not believe that is an
appropriate conclusion in this case nor do I believe that
is the position of Mr. Teinert.
I also believe that placement of mobile
generators in the Eagle/Star area as suggested by Mr.
Teinert as an alternative to the transmission upgrade
not a reasonable long-term solution.The Company
experlence with the location or placement of mobile
generators during the 2000/2001 energy crisis demonstrated
significant customer opposition and a high cost of
operation.
What is your opinion of Mr. Teinert' s ACSS
al terna t i ve?
I am not an expert in ACSS.Howeve r , I be 1 i eve
this al ternati ve has considerably more potential to provide
addi tional transmission capaci ty at reasonable cost than
the other al ternati ves described by Mr. Teinert. I would
look to the Company to explain why ACSS would not be a
viable al ternati ve to expand the capaci ty of existing
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facilities.
What facilities do you believe should be
installed to meet the growing load in the Eagle/ Star area?
In my oplnlon, the Company should be allowed in
situations like these to reasonably extend and upgrade its
transmission/distribution facilities, as it deems
appropriate.In this case, an existing 138-kV overhead
transmission line enters the City of Eagle from the east to
serve the Eagle substation.The most logical and
economical alternative is to upgrade existing overhead
facilities to the west in established utility right of ways
uslng structures that meet the lowest allowable clearances
under the National Electric Safety Code.Consequently, the
State Street alignment makes the most economic sense from
the standpoint of the general body of Idaho Power
customers.
Is this al ternati ve consistent wi th Idaho Code
and the Ci ty ' s Comprehensive Plan?
Yes. The Idaho Land Use Planning Act at section
67-6508 (h) requires local comprehensive plans to contain an
analysis for ~utility transmission corridors The Ci ty ' s
Comprehensive Plan Exhibit 106, section 4., page 10 of
54 states that:
Appropriate placement of electric utili
facilities on public right of ways
encouraged. Public streets and road rights-
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of -ways typically serve as corridors for
electric facilities. Transmission lines
are usually located on easements that IPC
acquires from private property owners. The
joint use of utility corridors is also
encouraged, provided that such j oint use
is consistent with limitations as may beprescribed by appl icable law and prudent
utility practice for existing and proposed
utility facilities.
Both the State Street and bypass routes are along public
roadways.
Both Eagle River LLC witness Carlise and City
Eagle wi tness Reading point to the economic inj ury that
adjacent land owners will experience if 138-kV transmission
lines are placed overhead.Do you dispute their claim?
Not necessarily.I believe it likely that large
overhead power lines can negatively affect local property
values wherever they are located.If the standard for
constructing overhead transmission lines were that they
couldn t negatively impact local property values then
overhead lines would rarely be constructed.Even the
alternative overhead alignments suggested by the City would
not be viable on that basis.
If overhead alternatives are eliminated due to
property value impact, doesn t that leave just underground
transmission as the only viable alternatives?
Wi th the possible exception of ACSS, it appears
so based on the testimony of Mr. Teinert, Mr. Calise,
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Dr. Reading and Ms. Merrill.
Has the City offered to pay the higher
incremental cost of underground transmission facilities in
order to protect its vistas and property values?
No, it has not.
Who would pay the higher incremental cost of
underground facilities if the City and its citizens did
not?
These costs would almost certainly be passed on
and paid for by the general body of Idaho Power ratepayers.
Is that reasonable?
No, I don t believe it is.City of Eagle wi tness
Reading in describing the Eagle Community in testimony
states: ~The City of Eagle was the 3 fastest growing city
in Idaho between 1990 and 2000 increasing its population
233%.He also indicates that population has increased
another 23% since 2000.He goes on to state ~the City of
Eagle has the highest property values in the state among
residential communi ties. "Finally, Dr. Reading states,
What is clear is that people want to move to Eagle and are
willing to pay a premium to live there.
The Ci ty of Eagle has experienced rapid growth
that has required substantial electrical facilities
including 138-kV overhead transmission to provide cost
effective reliable service.It is commendable that the
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City and its citizens have created a community that
prosperous and desirable.However, I believe overhead
transmission facilities are the standard of construction
for Idaho Power Company.Underground transmission
facilities exceed this standard and are more expensive to
construct.The residents of Eagle should be willing to pay
a premium that reflects the increased cost of meeting local
concerns of the Ci ty When the standard of construction
overhead, the incremental cost of these facili ties should
not be passed on to other Idaho Power customers that
receive no aesthetic benefit of placing the facilities
underground.
Wouldn t you agree that the rate impact is very
small when the incremental additional cost of placing
transmission facilities underground through the City of
Eagle is spread over energy consumed by all Idaho Power
customers?
I would agree if this were the only such special
request that could be expected.However, I believe that
other cities and counties would make similar requests
the Commission allows the additional costs described in
this case to be spread among all Idaho Power customers.
How would you recommend the City and its
residents pay the increased incremental cost of underground
transmission facilities?
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STAFF
I believe the City should provide a Contribution
In Aid of Construction (CIAC) that reflects the additional
incremental cost of underground facilities prior to
commencing construction.The City rather than the utility
should be responsible for assessing its citizens for the
additional cost.
Why do you recommend an up front CIAC paid for
and collected from City residents by the City rather than
an energy surcharge assessed and collected by Idaho Power
Company?
From a policy standpoint, I believe it is more
efficient to require cities, counties or other governmental
entities requesting special facilities to assume
responsibility for CIAC payment and collection.Requiring
an energy surcharge on local residents whenever special
facilities are requested could lead to a hodgepodge of
pancaked surcharges and rate structures across Idaho Power
Company s entire service territory.The resul t would be
administratively burdensome and confusing to electric
customers.
How might the Ci ty generate funds for the CIAC?
Idaho Power Company wi tness Said describes in
testimony ways in which the City could fund the additional
costs associated with underground facilities.These
options include creation of a Local Improvement District
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(LID) and short-term financing through the Company paid for
through franchise fees assessed by the Ci ty on local
residents.
Would the franchise fees assessed by the City be
sufficient to cover the incremental additional cost of
placing transmission facilities underground in this case?
Even if franchise fees are set at theNo.
maximum rate of 3% of electric revenues, the City could
only generate
each year.
Then
$140 000 of the estimated $1.8 million needed
based on your recommendation , the Ci ty must
either accept an overhead alignment or create an LID to pay
the incremental additional cost of underground facilities?
Yes , unless ACSS is shown to be a viable
alternative to 138-kV facilities.
Is it also your recommendation that the
Commission establish a similar CIAC policy when underground
or special utility facilities are requested by other
municipal or county governments?
First, cities and counties should recognlzeYes.
that electric transmission structures typically e~ceed
feet and local comprehensive plans should reflect that
fact.Comprehensive plans should designate transmission
corridors with the understanding that tall electric
transmission structures will be located there.Second,
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STAFF
these entities should be put on notice that the general
body of ratepayers will not be responsible for incremental
additional costs associated with special utility facilities
requested for the benefit of local residents.Such notice
will incent planning for overhead utili ty corridors or
funding methods to provide CIAC to cover the higher cost of
special facilities.
Does this conclude your testimony?
Yes it does.
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R. LOBB (Di) 15
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CERTIFICATE OF SERVICE
HEREBY CERTIFY THAT I HAVE THIS 30TH DAY OF JULY 2004
SERVED THE FOREGOING DIRECT TESTIMONY OF RANDY LOBB, IN CASE
NO. IPC-04-, BY MAILING A COpy THEREOF POSTAGE PREP AID, TO THE
FOLLOWING:
BARTON L KLINE
MONICA B MOEN
IDAHO POWER COMPANY
PO BOX 70
BOISE ID 83707-0070
SUSAN BUXTON
BRUCE SMITH
JOHN McFADDEN
MOORE SMITH BUXTON & TURCKE
225 N 9TH ST SUITE 420
BOISE ID 83702
B. NEW AL SQUYRES
MARY V. YORK
HOLLAND & HART LLP
PO BOX 2527
BOISE ID 83701
CITY OF EAGLE
PO BOX 1520
EAGLE ID 83616
EA G LE RIVER LLC
C/O A. ENNIS DALE
485 E. RIVERSIDE DR.
EAGLE ID 83616
CERTIFICATE OF SERVICE