HomeMy WebLinkAbout20040318Peseau Rebuttal.pdfConley E. Ward (ISB No. 1683)
GIVENS PURSLEY LLP
601 W.Bannock Street
O. Box 2720
Boise ID 83701-2720
Telephone No. (208) 388-1200
Fax No. (208) 388-1300
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Attorneys for Micron Technology, Inc.
S:\CLlENTS\4489\I7\Rebuttal Testimony of Dennis Eo PeseauoDOC
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
AUTHORITY TO INCREASE ITS INTERIM
AND BASE RATES AND CHARGES FOR
ELECTRIC SERVCE
Case No. IPC-03-
REBUTTAL TESTIMONY OF
DENNIS E. PESEAU
ON BEHALF OF
MICRON TECHNOLOGY, INc.
March 19 2004
OR\G\NAL
PLEASE STATE YOUR NAME AND BUSINESS ADDRESS.
My name is Dennis E. Peseau. My business address is Suite 250, 1500 Liberty Street
, Salem, Oregon 97302.
ARE YOU THE SAME DENNIS PESEAU WHO PREVIOUSLY FILED DIRECT
TESTIMONY IN THIS PROCEEDING?
Yes, I am.
WHAT COST OF SERVICE AND RATE DESIGN ISSUES DOES YOUR REBUTTAL
TESTIMONY ADDRESS?
I will briefly address the cost of service and rate design issues raised by Idaho Irrigation
Pumpers' witness, Anthony Yankel. I address his issues only briefly because his
conclusions and recommendations in regard to cost of service and rate design are so
deviant from every other party in these proceedings. All other parties, whether or not
they agree precisely with Idaho Power s cost of service studies, recognize the general
reliability of the Company s studies, as well as the fact that, with one exception I
discussed in my direct testimony, they follow prior Commission-approved
methodologies.
Mr. Yankel's testimony, on the other hand, professes confusion about the
Company s study to such a degree that he claims he has no other choice but to fall back
on his recommendation to raise each customer class' rates by a uniform average
percentage.
REBUTT AL TESTIMONY OF DENNIS E. PESEAU- 2
IPUC Case No. IPC-O3-
WHAT IS THE REAL ISSUE HERE?
Mr. Yankel is facing the imposing task of having to deny what is evident and obvious to
everyone - that irrigation pumpers have been receiving huge and growing rate subsidies
for many years. These subsidies have been paid by residential, commercial, industrial
and special contract customers. From my reading of other parties ' testimony, I conclude
that all customer classes want this subsidy to cease and allow such customers' rates to be
based on the respective costs of serving them.
WHAT SPECIFIC PORTIONS OF MR. YANKEL'S TESTIMONY DO YOU
ADDRESS?
I address his allegations wherein:
Mr. Yankel claims that Idaho Power ... cost-of-service study produces
erroneous and unreliable results..." (pg 3 , lines 4-5) and Idaho Power s study has
modeling problems because ... the Company s cost-of-service model is little
better that a "Black Box
...
" (pg 23 , lines 13-14).
Mr. Yankel implies that a differential growth rate among customer classes is a
legitimate basis for attributing costs of service.
Mr. Yankel' s suggests that returning to a distant policy of allocating demand costs
on the basis of an average 12-CP is somehow superior to the more recent but
longstanding policy of using a weighted 12-CP allocator.
REBUTTAL TESTIMONY OF DENNIS E. PESEAU- 3
IPUC Case No. IPC-O3-
DID YOU FIND THE COMPANY'S COST OF SERVICE MODEL TO BE EITHER
ERRONEOUS AND UNRELIABLE, OR MYSTERIOUS?
No. As I concluded in my direct testimony ... In general, I conclude that Idaho Power
cost of service study is consistent with sound costing methods and prior Commission
orders..." (Peseau, pg 19 lines 9-10). From my brief review of other parties' testimony,
all others but the irrigation pumpers concluded the same. Furthermore, I disagree with
Mr. Yankel's assertion that Idaho Power s cost of service study is an unintelligible
Black Box." I encountered no difficulties in independently changing assumptions in the
Company s model and re-running it to test its veracity and reasonableness of the results.
WHAT IS THE ISSUE WITH RESPECT TO MR. YANKEL'S TESTIMONY ON
DIFFERENTIAL GROWTH RATES AMONG IDAHO POWER'S CUSTOMER
CLASSES?
On page 21 , lines 4-18 ofMr. Yankel's testimony, he suggests that irrigation loads are
not" .
. .
fueling the need for a rate increase. .
. "
. While it may be tempting to attribute
blame for rate increases on relative customer growth rates, it is not valid to do so.
Customers that place demands on Idaho Power s system disproportionately in high-cost
peak load periods cause higher costs to be incurred whether or not the particular class is
growmg.
Any new capital expenditures made by Idaho Power, in the course of its cost of
service study, are allocated according to the relative customer demands by season.
Irrigation loads contribute relatively more to coincident system peak due to their
concentration of demand in the high cost summer season.
REBUTT AL TESTIMONY OF DENNIS E. PESEAU- 4
IPUC Case No. IPC-O3-
MR. YANKEL PROPOSES ON PAGE 3, LINES 6-8 OF HIS TESTIMONY THAT
THE COMMISSION USE AN AVERAGE 12-CP ALLOCATOR BECAUSE AN
AVERAGE 12-CP ALLOCATOR IS USED IN THE COMPANY'S JURISDICTIONAL
STUDY. DOES CONSISTENCY REQUIRE THIS?
, absolutely not. The average 12-CP allocator referenced in the jurisdictional study is
often required by FERC. But even at FERC , after a jurisdictional separation is made, the
actual allocation of transmission demand costs is required to be made on any number of
CP allocators, including a l-, 3-, 4-CP or other coincident peak basis. I
recently filed testimony before FERC where a 4-CP transmission cost allocator is
proposed in spite of a 12-CP jurisdictional allocator.
Further, I recommend that this Commission remain with the weighted 12-CP on
the basis of merit and not defer this important issue to FERC.
DO YOU HAVE ANY OTHER NEW OBSERVATIONS ABOUT THE IRRIGATION
SERVICE ISSUES?
I am offering two exhibits that explain how my proposed deferred regulatory asset or
Subsidy Account would work if the Commission accepted the Staff s proposed revenue
requirement in this case.
WOULD YOU PLEASE EXPLAIN THE TWO EXHIBITS?
Exhibit 709 summarizes the effects of a 5-year recovery of this account. Irrigation
customers would experience a 15% increase in the first year and 13.21 % each year
thereafter, until reaching parity. Exhibit 710 contains the same calculations with a 10
REBUTTAL TESTIMONY OF DENNIS E. PESEAU- 5
IPUC Case No. IPC-O3-
year deferral. In this alternative, the initial 15% increase would be followed by annual
11 % increases.
DOES THIS CONCLUDE YOUR TESTIMONY?
Yes.
REBUTTAL TESTIMONY OF DENNIS E. PESEAU- 6
IPUC Case No. IPC-O3-
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 18th day of March 2004, I caused to be served a true
and correct copy of the foregoing by the method indicated below, and addressed to the following:
Jean Jewell
Idaho Public Utilities Commission
472 W. Washington Street
O. Box 83720
Boise, ID 83720-0074
John R. Gale
Vice President Regulatory Affairs
Idaho Power Company
O. Box 70
Boise, ID 83707
S. Mail
Hand Delivered
Overnight Mail
Facsimile
Mail
S. Mail
Hand Delivered
Overnight Mail
Facsimile
Mail
S. Mail
Hand Delivered
Overnight Mail
Facsimile
Mail
S. Mail
Hand Delivered
Overnight Mail
Facsimile
Mail
Barton L. Kline
Monica B. Moen
Idaho Power Company
O. Box 70
Boise, ID 83707
Lisa Nordstrom
Weldon Stutzman
Deputy Attorney Generals
Idaho Public Utilities Commission
472 W. Washington Street
O. Box 83720
Boise, ID 83720-0074
Peter 1. Richardson
Richardson & O'Leary
99 E. State Street, Ste. 200
O. Box 1849
Eagle, ID 83616
u.S. Mail
Hand Delivered
Overnight Mail
Facsimile
Mail
Don Reading
Ben Johnson Associates
6070 Hill Road
Boise, ID 83703
S. Mail
Hand Delivered
Overnight Mail
Facsimile
Mail
REBUTTAL TESTIMONY OF DENNIS E. PESEAU- 7
IPUC Case No. IPC-O3-
Randall C. Budge S. Mail
Eric L. Olsen Hand Delivered
Racine, Olson, Nye, Budge, Bailey Overnight Mail
201 E. Center Facsimile
O. Box 1391 Mail
Pocatello, ID 83204-1391
Anthony Yankel S. Mail
29814 Lake Road Hand Delivered
Bay Village, OH 44140 Overnight Mail
Facsimile
Mail
Lawrence A. Gollomp S. Mail
Assistant General Counsel Hand Delivered
u.s. Department of Energy Overnight Mail
1000 Independence Ave. SW Facsimile
Washington, DC 20585 Mail
Dennis Goins u.s. Mail
Potomac Management Group Hand Delivered
5801 Westchester Street Overnight Mail
Alexandria, VA 22310-1149 Facsimile
Mail
Dean J. Miller u.S. Mail
McDevitt & Miller Hand Delivered
420 W. Bannock Street Overnight Mail
O. Box 2564 Facsimile
Boise, ID 83701 Mail
Jeremiah J. Healy S. Mail
United Water Idaho Inc.Hand Delivered
8248 W. Victory Road Overnight Mail
O. Box 190420 Facsimile
Boise, ID 83719-0420 Mail
William M. Eddie S. Mail
Advocates for the West Hand Delivered
1320 W. Franklin Street Overnight Mail
O. Box 1612 Facsimile
Boise, ID 83701 Mail
REBUTTAL TESTIMONY OF DENNIS E. PESEAU- 8
IPUC Case No. IPC-O3-
Nancy Hirsh u.s. Mail
NW Energy Coalition Hand Delivered
219 First Ave. South, Ste. 100 Overnight Mail
Seattle, W A 98104 Facsimile
Mail
Dennis E. Peseau, Ph.S. Mail
Utility Resources, Inc.Hand Delivered
1500 Liberty Street SE, Ste. 250 Overnight Mail
Salem, OR 97302 Facsimile
Mail
Brad M. Purdy S. Mail
Attorney at Law Hand Delivered
2019 N. 17th Street Overnight Mail
Boise, ID 83702 Facsimile
Mail
Michael Karp S. Mail
147 Appaloosa Lane Hand Delivered
Bellingham, W A 98229 Overnight Mail
Facsimile
Mail
Michael L. Kurtz u.S. Mail
Kurt J. Boehm Hand Delivered
Boehm, Kurtz & Lowry Overnight Mail
36 E. Seventh Street, Ste. 2110 Facsimile
Cincinnati, OH 45202 Mail
Thomas M. Power S. Mail
Economics Department Hand Delivered
Liberal Arts Building 407 Overnight Mail
University of Montana Facsimile
32 Campus Drive Mail
Missoula, MT 59812
REBUTTAL TESTIMONY OF DENNIS E. PESEAU- 9
IPUC Case No. IPC-O3-
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