20050303Said Direct.pdf

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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
DUE TO THE INCLUS ION OF THE
BENNETT MOUNTAIN PROJECT INVEST-
MENT IN REVENUE REQUIREMENT
CASE NO. IPC-05-
IDAHO POWER COMPANY
DIRECT TESTIMONY
GREGORY W. SAID
March 2005
Please state your name and business address.
My name is Gregory W. Said and my business
address is 1221 West Idaho Street, Boise, Idaho.
By whom are you employed and in what
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.
In May of 1975, I received a Bachelor of
Science Degree in Mathematics with honors from Boise State
Uni versi ty.In 1999, I attended the Public Utility
Executi ve ' s Course at the Uni versi ty of Idaho.
Please describe your work experience wi
Idaho Power Company.
I became employed by Idaho Power Company in
1980 as an analyst in the Resource Planning Department.
1985 I was the Company witness addressing power supply
expenses ln the Company s general revenue requirement case,
1006-265.
In August of 1989, after nlne years in the
Resource Planning Department, I was offered and I accepted a
position in the Company s Rate Department.Wi th the
Company s application for a temporary rate increase in 1992,
my responsibilities as a witness were expanded.While I
SAID, DI
Idaho Power Company
continued to be the Company wi tness concerning power supply
expenses, I also sponsored the Company s rate computations
and proposed tari f f schedules.
Because of my combined Resource Planning and
Rate Department experience, I was asked to design a Power
Cost Adjustment (PCA) which would impact customers ' rates
based upon changes in the Company s net power supply
I presented my recommendations to the Idahoexpenses.
Public Utilities Commission in 1992 at which time the
Commission established the PCA as an annual adjustment to
I sponsored the Company s annual PCAthe Company s rates.
adjustment in each of the years 1996 through 2004.
In 1994, I was selected to become the
Meridian District Manager as a one-year cross training
opportuni ty. In 1996, after my return to the Pricing and
Regulatory Services Department I was promoted to Director of
At year-end 2002, I was promoted toRevenue Requirement.
the Manager of Revenue Requirement.
During 1999 and 2000, I directed the
preparation of the Company s 2000 Integrated Resource Plan
I managed the Request for Proposals (RFP) process(IRP)
that resulted from the Near-Term Action Plan identified in
I also participated in the preparationtha t Resource Plan.
The RFPof the 2002 IRP and subsequent 2003 RFP process.
issued as part of the Near-Term Action Plan outlined in the
SAID, DI
Idaho Power Company
2002 IRP report resulted in the selection of the Mountain
View Power, Inc. proj ect as the Company s preferred addi tion
of a new peaking resource.
Are you the same Gregory W. Said that
provided testimony in Case No. IPC-03-12, the application
of Idaho Power Company for a certificate of convenience and
necessity for the ratebasing of the Bennett Mountain Power
Plant?
Yes, I am.
Please summarize your testimony in Case No.
IPC-E- 03 -12 .
My testimony in Case No. IPC-03-12 provided
a brief history of the Bennett Mountain Project as of that
time including Idaho Power s issuance of the RFP on February
24, 2003; the bid evaluation process that led up to the
selection of Mountain View Power , Inc.(MVP) as the
successful bidder, some of the significant provisions of the
agreement wi th MVP for the proj ect, and the Company
proposed ratemaking treatment of the costs associated wi
the Bennett Mountain proj ect.For the convenience of the
Commission, I have included my prior testimony in Case No.
IPC-03-12 as Exhibit
For purposes of this testimony, the power
plant and the related transmission and interconnection
facilities are collectively referred to as "the Bennett
SAID, DI
Idaho Power Company
Mountain proj ect.
Since you filed your tes timony in Case No.
IPC-03-12, have there been any changes to the Bennett
Moun tain Power Plant Agreement?
The Bennett Mountain Power PlantNo.
Agreement has not been changed, however, MVP did assign the
Bennett Mountain Power Plant Agreement to an Idaho LLC, TR
Did the Commission issue an order in Case No.
IPC-03-12 approving the Company s application for a
Certificate of Public Convenience and Necessi ty for the
Bennett Mountain Project?
Yes. The Commission, in Orders Nos. 29410 and
29422, issued on January 2, 2004 and January 26, 2004
respectively, approved the Company s application for a
Certificate of Public Convenience and Necessity.
January 8, 2004 the Commission issued Certificate No. 420
A copy of Certificate No.for the Bennett Mountain Plant.
420 is attached as Exhibit
What is the Company requesting from the
Commission in this case?
The Company is asking the Commission to
review the investments that the Company has made to develop
and integrate the Bennett Mountain Power Plant into the
Company s operating system and approve an adjustment to the
Company s rates to reflect those investments and certain
SAID, DI
Idaho Power Company
rela ted expenses.The Company proposes that the rate
adjustment associated with the Bennett Mountain Project
occur on June 1, 2005 to coincide with other adjustments to
rates that will occur on that date.
Will the Bennett Mountain Project be in
commercial operation on June 1, 2005?
In accordance wi th the agreementYes.
between IPC and TR , care, custody and control of the
Bennett Mountain Power Plant will be transferred to Idaho
Power on the Provisional Acceptance Date, which is scheduled
for early March, 2005.Final acceptance and ti tle transfer
will occur soon after.
Will testing of the power plant occur prior
to provisional acceptance of the proj ect?
Provisional acceptance of the PowerYes.
Plant is subj ect to performance tests to verify that plant
characteristics such as net capaci ty, net heat rate, and
emission levels are within tolerances contained in the
purchase agreement.
In your oplnlon, will the Bennett Mountain
Project be used and useful on June 1, 2005?
Yes.
Why has the Company filed this application
for inclusion of the Bennett Mountain Project prior to
Provisional Acceptance of the power plant?
SAID, DI
Idaho Power Company
The Company plan has been to have the
Bennet t Mountain Proj ect avai lable to serve summer loads
The Company is trying to time thebeginning in June 2005.
change in rates to coincide wi th the Proj ect' s availabili ty
A benefi t to a June 1 rate changeto serve loads in June.
is that other rate changes such as the PCA will also occur
on June 1, 2005, thus avoiding multiple rate changes within
Provi sional Acceptance and Commercialthe same year.
Operation will occur during the period when the Commission
is reviewing the Company s application and auditing costs.
The Bennett Mountain Project will be fully operational in
time to serve anticipated summer peak loads.
What is the total investment related to
Bennett Mountain Project that the Company anticipates will
have been booked by June 1, 2005 and that the Company is
asking be reflected in rates?
The Company anticipates $58,022,983 of
investment associated wi th the Bennett Mountain Proj ect will
be booked by June 1, 2005.That amount is the basis for the
June 1 rate change that the Company is requesting in this
proceeding.
What are some of the components that make up
the above-referenced $58,022,983 investment in the Bennett
Mountain Proj ect?
The $58,022,983 investment estimate consists
SAID, DI
Idaho Power Company
of two primary areas of investment relating to the Proj ect.
First, the largest amount of investment associated wi th the
Bennett Mountain Project is related to the construction of
the power plant by TR As of January 31, 2005, Idaho Power
had booked $42,932,458 as Construction Work In Progress
Included in this amount is $1,358,291 of Allowance( CWI P)
for Funds Used During Construction (AFUDC)Dur ing the
months of February, March and April, the Company anticipates
booking an additional $7,366,034 related to the Bennett
Moun tain power plant.This will bring the total investment
in the Bennett Mountain Power plant to $50,298,492.
Second, the total investment in transmission
and interconnection facili ties required to integrate the
Bennett Mountain power plant into the Company s system has
As of January 31, 2005, $7,279,985 ofalso been quantified.
investment in transmission and interconnection facilities
for the Bennett Mountain Project had been closed to plant.
The Company had also booked $104,005 as CWIP for
transmission and interconnection facili ties.AFUDC for
transmission and interconnection facili ties amounted to
During the months of February, March and April,$132,641.
the Company anticipates booking an addi tional $340,501
related to Bennett Mountain transmission and interconnection
This will bring the total investment in theinvestment.
transmission and interconnection facili ties associated wi
SAID, DI
Idaho Power Company
the Bennett Mountain Power Plant to $7,724 491.
It is anticipated that all of the power
plant, transmission and interconnection investments will be
closed to plant by June 1, 2005.
How does the $50,298,492 of investment in the
Bennet t Mountain power plant compare to the Company
commi tment estimates noted by the Commission in Order No.
29410?
The $50,298,492 investment in the Bennett
10 . Mountain power plant is $3,702,508 less than the $54,000,000
As noted bycommi tment estimate provided by the Company.
the Commission in Order No. 29410, the Company had added
$9,400,000 to the $44,600,000 bid price of the Bennett
Mountain power plant to cover certain addi tional costs such
as: sales taxes, AFUDC, Idaho Power oversight of the
proj ect, the cost of capi talized start-up fuel, construction
change orders and other unforeseen events.AFUDC amounts to
$1,358,291 of the $5,698,492 of capitalized expenses above
the $44.6 million bid price.
How does the $7,724,491 of investment in the
transmission and interconnection facili ties associated wi
the Bennett Mountain Project compare to the Company
estimates noted by the Commission in Order No. 29410?
The $7,724,491 of investment in transmission
and interconnection facilities associated with the Bennett
SAID, DI
Idaho Power Company
Mountain Proj ect is well wi thin the $5.5 million to $11.
million range estimated by the Company and acknowledged by
the Commission in Order No. 29410.
Did you request and superVlse the preparation
of a quantification of the change in the Company s revenue
requirement as a result of the addition of the $50,298,492
inves tmen t in the Bennet t Mountain power plant and the
$7 ,724,491 investment in transmission and interconnection
facilities associated with the Bennett Mountain Project?
I requested and supervised theYes.
preparation of Exhibi t 3 that demonstrates the change in the
Company s revenue requirement from the level determined in
Order Nos. 29505 and 29547 issued in Case No. IPC-03-13.
The change in revenue requirement is due solely to the
addition of the Bennett Mountain power plant and the
transmission and interconnection facili ties necessary to
integrate the power plant to the Company s system.
Please describe Exhibi t No.
Exhibi t No.3 is a two-page exhibi Page 2
of Exhibit No.3 show the major category detail of changes
in the rate base components and net income components
associated with the Bennett Mountain Project from levels
approved by the Commission in Order Nos. 29505 and 29547.
These changes are shown on a system and Idaho jurisdictional
All jurisdictional allocations of FERC accounts werebasis.
SAID, DI
Idaho Power Company
fixed such that the addition of the Bennett Mountain Project
did not result in a re-allocation of non-Bennett Mountain
The Bennett Mountain Plant investment ofProj ect expenses.
$50,298,492 can be seen at line number 48.Interconnection
investment associated with the Bennett Mountain Plant can be
found on lines 49 through 51.
Page 1 of Exhibi t No.3 summarizes the Idaho
jurisdictional rate base and net income components and
quantifies the revenue deficiency associated wi th the
addi tion of the Bennett Mountain Proj ect.Tha t revenue
deficiency is $13,482,146, which can be seen at line 40 on
page 1 of Exhibi t No.
Does the $13,482,146 addition to the
Company s revenue requirement include expenses that arise as
a result of the addition of the Bennett Mountain Project?
Yes, changes ln expenses for items such as
property taxes, property insurance and depreciation expense
have been included because these items are a direct cost
the new plant that can be quantified at this time.Expenses
such as operating or maintaining the new plant or addi tional
labor cost have been excluded because such expenses are not
readily known at this time.
Has an adjustment for reduced power supply
expenses resulting from the addition of the Bennett Mountain
proj ect been made in the Company s incremental revenue
SAID, DI
Idaho Power Company
requirement computations?
As noted in Commission Order No. 29410,No.
the Commission intends to track Bennett Mountain Project
fuel expenses and related power supply impacts through the
A reduction in incremental revenue requirementPCA process.
associated wi th reduced power supply expenses compounded
with reduced power supply expenses in PCA computations would
result in some doubling of benefits to customers at Company
expense.To eliminate the double counting the normalized
basis for power supply expenses in PCA computations would
need to be updated and the associated PCA regression formula
would also need to be updated.It is typical that these PCA
foundations are changed during general rate cases.The
Company is not recommending any adjustment for power supply
expense benefi ts associated wi th the Bennett Mountain
proj ect.
Recognizing that the Company is not
recommending an adjustment to its determination of the
incremental revenue requirement associated wi th the addi tion
of the Bennett Mountain Project, did you request and
supervise the quantification of power supply benefits
associated with the addition of the Bennett Mountain
Proj ect?
Yes, I requested and supervised the
preparation of Exhibi t 4 which is a new normalized power
SAID, DI
Idaho Power Company
supply expense determination using all inputs per Case No.
IPC-03-13 with the addition of the Bennett Mountain
Power supply expenses were reduced by $ 5 08, 300 .Proj ect.
The Idaho jurisdictional portion of this amount is $478,300.
If this normalized reduction of Idaho jurisdictional power
supply expenses actually occurs, customers will benefi t by
90% or $430,500 through PCA computations.The Company will
benefi t by the other 10% or $47,800.If the Commission
believes that an adjustment to the additional revenue
requirement associated with the Bennett Mountain Project
should be made to reflect a normalized benefit not already
captured by PCA computations, the appropriate adjustment
would be the 10% value, $47,800.
Did you request and supervise the preparation
of tariff rates to reflect the incremental increase in the
Company s revenue requi remen t ?
Yes, I requested and supervised the
preparation of Exhibi 5, which provides the proposed tariff
rates reflecting the incremental increase in the Company
revenue requirement.Pages 1 through 22 of Exhibi t 5 are
the proposed tariffs and pages 23 through 44 are the
proposed tariffs in legislative format to show the changes
in tariff components.The changes in rate components
represent a uniform percentage adjustment to all classes and
a uniform percentage adjustment to the energy and demand
SAID, DI
Idaho Power Company
charges.
What percentage increase in revenue
requirement will each of the customer classes see as a
resul t of the incremental change in revenue requirement due
to the addition of the Bennett Mountain Project?
Exhibit 6 was prepared under my supervision
to show the percentage change in the revenue requirement of
Because of the uniform nature of the Companyeach class.
proposal, the revenue requirement for each customer class
has been increased by approximately 2.6 percent.
Does this complete your testimony?
Yes.
SAID, DI
Idaho Power Company