20050418Schwendiman 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 IMPLEMENT POWER
COST ADJUSTMENT (PCA) RATES FOR
ELECTRIC SERVICE FROM JUNE I,
2005 THROUGH MAY 31, 2006
CASE NO. IPC-05-
IDAHO POWER COMPANY
DIRECT TESTIMONY
CELESTE SCHWENDIMAN
Please state your name and business address.
My name is Celeste Schwendiman 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 a
Senior pricing Analyst in the pricing and Regulatory
Services Department.
Please describe your educational background.
In 2000, I received a Master s degree in
Business Admini tra tion from Northwes t Nazarene Uni versi ty
In 1993, I received a Bachelor of Arts in Psychology from
Eastern Oregon Uni versi ty.
Please describe your work experience wi
Idaho Power Company.
I became employed by Idaho Power Company in
1997 as a Research Assistant II in the pricing & Regulatory
Services Department.I have been promoted follows:
February 1998,En t Analys t;August 1998,Analys t;and July
2001,Senior Analyst.One my responsibili ties wi thin the
pricing & Regulatory Services Department (from 1999 through
the current year) has been to assist in the preparation
the Power Cost Adjustment (PCA) filings.
What is this year s proj ection of PCA
expenses?
SCHWENDIMAN, DI
Idaho Power Company
The proj ection of PCA expenses for the period
April 1, 2005 through March 31, 2006 is $155,390,805.This
amount is $61,289,648 more than the $94,101,157 normalized
level of PCA expenses included in the Company s revenue
requirement approved in Order Nos. 29505 and 29547 issued in
Case No. IPC-E- 03 -13 .
What is the basis for the proj ection of
April 1, 2005 through March 31, 2006 PCA expenses?
The Idaho Public Utili ties Commission (IPUC)
ln Order No. 24806 issued in Case No. IPC-92-25, the
proceeding which created the PCA, adopted a natural
logari thmic function of proj ected April through July
Brownlee reservoir inflow to compute the projection of April
through March PCA expenses.The equation was updated as
result of Order Nos. 29505 and 29547.The present PCA
regression equation is:
Annual PCA Expense = $1,140,615,325
- $70,685,112 *In (Brownlee inflow)
+ $46,413,057
Details of the regression equation are contained in
Exhibi t
In this formula, the $1,140,615,325 is the constant
that represents the prediction of annual net power supply
expense that would occur if there was zero April through
July Brownlee reservoir inflow.For each uni t increase in
SCHWENDIMAN, DI
Idaho Power Company
the natural logari thm of the Brownlee reservoir inflow, the
proj ection of annual power supply expenses will be reduced
by $70,685,112, the second of the constants in the equation
above.The $46,413,057 is the constant for Qualifying
Facilities (QF) purchase expense as reflected in Order Nos.
2 9 5 05 and 2 954 7 .
What is the April through July Brownlee
reservoir inflow forecast that you used to arrive at the
projection of PCA expenses?
The National Weather Service I s Northwest
River Forecast Center (NWRFC), in its Official (final) April
forecast, proj ected April through July Brownlee reserVOlr
inflow to be 2.18 million acre-feet.Inserting this value
into the equation results in a projection of net PCA
expenses of $155,390,805 for the period April 1, 2005
through March 31, 2006.This amount is $61,289,648 more
than the normalized level of PCA expenses of $94,101,157.
The forecast information supplied by the NWRFC is contained
on Exhibi t
You have stated that the proj ected net PCA
expenses are more than the normalized level of PCA expenses
by 61, 2 8 9 , 6 4 8 .What is the rate adjustment associated with
the proj ected increase in PCA expenses of $61,289,648 from
the normalized level of PCA expenses?
The normalized PCA expense of $94,101,157,
SCHWENDIMAN, DI
Idaho Power Company
divided by the normalized system firm sales of 12,863,484
Megawatt-hours, is used to arrive at the normalized base
power cost of 0.7315 cents per kilowatt-hour.For the
period April 1, 2005 through March 31, 2006, the customer-
level projected power cost of serving firm loads is 1.2080
cents per kilowatt-hour which is computed by dividing the
projected net PCA expenses of $155,390,805 by the 12,863,484
Megawatt-hours normalized system firm sales.The Company
adjusts its rates by 90 percent of the difference between
the customer-level projected power cost of serving firm
loads (1.2080 cents per kilowatt-hour) and the normalized
base power cost (0.7315 cents per kilowatt-hour.) Restated,
this year s computation is (.9) (1.2080 - 0.7315) = 0.4288.
The resulting adjustment is a 0.4288 cents per kilowatt-hour
increase from the normalized base power cost.
Please describe the True-Up required from the
comparison of the April 1, 2004 through March 31, 2005
actual resul ts to last year I S proj ections.
The PCA Deferral Expense Account (True-up)
report for the April 1, 2004 through March 31, 2005 PCA year
is attached as Exhibi Thi s sheet compares the actual
results to last year s projections, month by month, with the
differences accumulated in the True-up account.Interest
has been applied to the account monthly.The True-up report
balance at the end of March 2005 was $36,285,912 as shown on
SCHWENDIMAN, DI
Idaho Power Company
This amount was under-collected during the PCAExhibi t 3.
year and is the True-up component of the 2005/2006 PCA.The
Accounting Department has advised me that the deferral will
be amortized during the current PCA year.
Wha t change has been made to the True-up
report as a result of Order No. 29600?
As a result of Order No. 29600, which
approved a settlement of specific 2003 general revenue
requirement case issues, a PCA True-up adjustment to reflect
the settlement of the disputed Valmy outage replacement
power, expense adjustment growth rate, and non-recurring tax
credi t issues was added (see line no. 51 in Exhibi t 3.) This
line i tern will provide a total credi t of $19.3 million to
customers through a monthly adjustment of $804,166.67 over a
year term (June 2004 through May 2006.
Were there any PCA changes as a resul t of
Order Nos. 29505 and 29547?
Yes.The base constants in the PCA True-
report including Normalized Idaho Jurisdictional Sales,
Normalized Firm Load, base expenses and base QFs, have been
These updates reflect the Commission Order Nos.updated.
29505 and 29547 issued in the Company I s general revenue
requirement filing, Case No. IPC-03-13.
Have there been any other addi tions to the
True-up report since the last PCA filing?
SCHWENDIMAN, DI
Idaho Power Company
- 4
Yes.First, a line item to reflect the one-
time Bonneville Power Administration (BPA) water option
agreement that occurred in July of 2004, has been added (see
line no. 1 7 in Exhibi t 3.) The $4 million revenue was
treated as an expense offset in the PCA to the benefit of
the Company I s cus tomers
Second, in Order No. 29670, the Commission
authorized the Company to defer cloud seeding program costs
during the winter of 2004/2005 for inclusion in the PCA
True-up computation.Program costs incurred through
March 31, 2005, amounting to $690,550 are listed on line 18
of the True-up report (Exhibi t 3.
Third, in Order No. 29669, the Commission authorized
the Company to collect $13,482,882 of lost revenues as part
of the 2005/2006 PCA.Adding $13,482 882 to the True-up
balance of $36,285,912 results in $49,768,794 to be
collected by implementing a new PCA True-up component rate.
Q. What is the PCA True-up component rate when
2001 lost revenues are included to the PCA deferral balance?
In accordance wi th Order No.2 9 3 3 4 from Case
No. IPC-03-05, the True-Up component is calculated by
dividing the True-up report balance of $49,768,794 by the
Company s "best estimate of the total Idaho jurisdictional
sales that will be made during the ensuing PCA year (Order
29334, page 4, paragraph 2) .The Company has computed the
SCHWENDIMAN, DI
Idaho Power Company
normalized Idaho jurisdictional firm sales updated to year-
end 2004, of 12,453,880 Megawatt-hours and believes this is
the best estimate of Megawatt-hours sales for the 2005/2006
PCA year.The resul t of dividing the deferred expense
balance by the Idaho jurisdictional firm sales is 0.3996
cents per kilowatt-hour, which is the True-Up portion of the
PCA.
What is this year I s True-up of the True-
rate?
The Company collected all but $635,653 of the
$44,841,982 2004/2005 PCA True-up balance.Dividing the
$635,653 by the Idaho jurisdictional sales value of
12,453,880 Megawatt-hours resul ts in 0.0051 cents per
kilowatt-hour as the True-up of the True-up rate.
What is the PCA rate as a result of (1) the
adjustment for the 2005/2006 projected power cost of serving
(2) the 2004/2005 True-Up portion of the PCA,firm loads,
and (3) the True-up of the True-up?
The Company s PCA rate for the 2005/2006 PCA
year is 0.8335 cents per kilowatt-hour.The rate is
(1) the 0.4288 cents per kilowatt-hourcomprised of:
adjustment for 2005/2006 projected power cost of serving
(2) the 0.3996 cents per kilowatt-hour for thefirm loads,
2004/2005 True-Up portion of the PCA, and (3) the 0.0051
cents per kilowatt-hour for the True-up of the True-up.The
SCHWENDIMAN, DI
Idaho Power Company
components used to calculate the 0.8335 cents per kilowatt-
hour are shown in Exhibi 4, the Company I s proposed
Schedule 55.
How does the new PCA rate of 0.8335 cents per
kilowatt-hour compare to the existing PCA rate?
The 2005/2006 PCA rate of 0.8335 cents per
kilowatt-hour is 0.2296 cents per kilowatt-hour greater than
the 0.6039 cents per kilowatt-hour PCA rate currently in
place for all customers except those served under
schedules 7, 19 and 24.These three classes had different
PCA rates as a result of a class-specific credits.However,
these class specific credi ts expire and all classes will
receive the single, uniform PCA rate adjustment to their
base rates of 0.8335 cents per kilowatt-hour.Schedules for
each cus tomer c las s are attached as Exhibi t
What is the percentage increase to Company
revenues by customer class based on a 0.2296 cents per kWh
increase to the current PCA rate of O. 6039?
Due to the fixed cents per kilowatt-hour PCA
rate adjustment, customer classes will receive differing
percentage increases.Exhibi t 6 details the percentage rate
change by customer class.Overall, the percentage increase
in Company revenues due to this year s PCA computations
would be 4.75 percent.
Does that conclude your testimony?
SCHWENDIMAN, DI
Idaho Power Company
Yes.
SCHWENDIMAN, DI
Idaho Power Company