Loading...
HomeMy WebLinkAbout20051028Baggs direct.pdfBEFORE THE IDAHO PUBLIC UTILITIES COMMISSIONIN THE MATTER OF THE APPLICATIONOF IDAHO POWER COMPANY FOR AUTHORITY TO INCREASE ITS RATESTO ELECTRIC CUSTOMERS IN THE STATEOF IDAHO. CASE NO. I PC - E - 05 - 28 IDAHO POWER COMPANY DIRECT TESTIMONY JAMES L. BAGGS Please state your name and business addressMy name James Baggs,and my businessaddress 1221 West Idaho Street,Boise,Idaho.By whom are you employed and in whatcapaci ty?I am employed by Idaho Power Company General Manager of Strategic Initiatives and CompliancePlease describe your educational backgroundand professional experienceIn May 1975, I received a Bachelor of ArtsDegree in Economics from the University of Colorado Boulder , Colorado.In May 1977 I graduated from theUniversity of Arizona with a Master of Science Degree Agricultural Economics From September 1978 to August 1979, I worked toward a Doctor of Phi losophy Degree in Agricultural Economics at the University of California, Davis Beginning August 1979, I was employed Senior Water Resource Analyst for the Idaho Department Water Resources performing economic analyses and planning related to complex multi-objective water and related resource 1ssues In August 1982 I accepted the position Rate Analyst with Idaho Power Company ("Idaho Power " or "the Company In September 1986, I became Supervisor of Rates, BAGGS-DI Idaho Power Company and in August 1989, I was promoted to the posi tion ofManager of Rates and Contracts for Idaho Power.In July 1991 became Manager of EnergyServicesIn that position was responsible for amongother things, managing the planning, design , implementationand evaluation of the Company s energy conservation andother demand-side management efforts In August 1995, I waspromoted to General Manager of Retai 1 Support In thatcapacity, I was responsible for a wide variety of aspects support to the Retail Services business unit includingcustomer satisfaction measurement and management I as sumedthe posi tion of General Manager of Customer Service andMetering in June 1997 In that capacity I was responsiblefor all quantitative aspects of metering, as well billing, customer account management and the Company Customer Service Center.In January 1999, I was named General Manager of Regional Operations, a posi tion with broad energy delivery operations responsibility for the Southern and Eastern Regions of Idaho Power Company. In September 2 a a 1 I became General Manager of Grid Operations and Planning.In that capacity I lead the operation of both the Company s integrated bulk power transmission grid and its distribution system. Responsibili ties included administration of the Company Open Access Transmission Tariff , and coordination of plans BAGGS-DI Idaho Power Company for the transmission and distribution system.I also leadthe Company s policy development and regional negotiationsassociated with energy utility industry restructuring,market design , and Regional Transmission Organizationformation.In October 2004 I was again assigned as GeneralManager of Customer Service and Metering.I assumed mycurrent position as General Manager of Strategic Initiativesand Compliance in July 2005What are your current job responsibilities?In my current role I am responsible formanaging community and customer relations and customerresearch; technology strategy and applications support forthe Delivery Business Unit; strategic issues and proj ectoversight; and workforce staffing strategies and attrition management These duties include the development and implementation of the Company s energy efficiency and demand response efforts I also serve as the Company s Standards of Conduct Compliance Officer and am responsible for ensuring operations compliance with FERC Standards Conduct and North American Electric Reliability critical infrastructure requirements What is the purpose of your testimony? I will describe Idaho Power s most significant customer program offerings and customer research changes that have occurred since the last general rate case BAGGS-DI Idaho Power Company was decided less than a year and a half ago.I wouldcharacterize our significant customer-related changes in thetime since the last rate case as more of a progression thana maj or shift in direction.In part icular , the Company hasmade steady progress on implementing energy efficiency anddemand response programs, expanding energy efficiencyeducation, increasing its focus on customer relationshipsand offering the Green Power Program option.Furtherstrides have been taken to expand the CompanyWeatherization Assistance for Qualified Customers Program(also referred to as Low Income Weatherization Assistance orLIWA"Idaho Power has continued to explore advancedmeter reading technology.Finally, the employee incentiveprogram has been redesigned to incorporate a customer satisfaction element in order to better align employee efforts with the Company s overall customer satisfaction goals Are you sponsoring any exhibi ts in support your testimony? I am sponsoring Exhibit No. Yes consisting of four pages, which includes a summary of the results of Idaho Power s customer satisfaction research. Please describe the progress made since the last rate case related to energy efficiency and demand response programs BAGGS-DI Idaho Power Company As we evaluate the various ways we canaccommodate customer load growth we have increasinglyconsidered demand-side alternatives for meeting both peakand energy requirements Our most recent IntegratedResource Plan (" IRP" filed with the Idaho Public UtilitiesCommission ("the Commission ) in August 2004 and accepted bythe Commission in April 2005, calls for 124 MW of demandresponse and energy efficiency programs over the ten-yearplanning horizon.The Commission , in its Order No. 29762accepting our IRP filing, indicated it is pleased with theCompanys efforts in this regard.However , the Commissionwent on to say,Idaho Power could and should do more toimplement conservation.Has the Company increased the pace of its conservation implementation efforts? In May 2005, the Commission approved Yes Company-requested increase in the Company s Energy Efficiency Tariff Rider ("Rider The Rider serves primary source of Demand-Side Management ("DSM") funding. The addi tional Rider funding will be used to implement the six DSM programs identified in the 2004 IRP and to cover the costs of the Company s various other DSM programs, administration , research and studies The increased funding also allows for continued involvement in regional programs such as the Distribution Efficiency Initiative and the BAGGS-DI Idaho Power Company Northwest Energy Efficiency Alliance ("the AllianceInternally our program delivery capabilities have grown.budgeted approximately $8 million for DSM in 2005 and ourexpendi t ures are proj ected to increase each year toapproximately $12 8 million in 2009 These acti vi tiesdemonstrate the Company s intention to continue makingcustomer-focused DSM programs available to our customers inthe future.Increased customer growth and/or the 2006 IRPresults could drive even more DSM activity.Is there opportunity for public input to yourenergy efficiency planning process?Idaho Power relies on the input of theYesEnergy Efficiency Advisory Group ("EEAG") to providecustomer and public interest guidance on DSM program design and implementation strategies The EEAG consists of members spanning a cross-section of the public including residential , industrial , commercial , irrigation , the elderly, and low income customers; state agencies, including regulatory commissions; environmental interests; and representatives from Idaho Power.The EEAG meets several times a year and has been instrumental in the development our recent programs and studies Have you implemented more programs since the last general rate case? In addition to our continuedYes BAGGS-DI Idaho Power Company participation in the Alliance, we now have nine activeenergy efficiency/demand response programs in place Idaho, operating effectively in the residential , industrialcommercial, and irrigation customer segments Our activityhas increased dramatically in 2005 with five of theseprograms being launched this year.Are Idaho Power s DSM programs proving to beeffecti ve?Many of the DSM programs are new enoughYesthat we have not yet done complete program evaluations, butwe anticipate most of our programs will meet or exceed their2005 activity targets Based upon operational experienceand regionally accepted energy savings estimates, we areconfident about their effectiveness For examp 1 e , our Energy House Calls program has reached over 2 800 homes as of September 2005 and resulted in over four million kilowatt -hours of savings Also, the Industrial Efficiency Program is slated to meet its 2005 goal of saving over nine million kilowatt-hours In fact, this past summer , on some of our hottest peak days, we reduced our load by about 40 MW through a combination of two demand response programs rather than relying as extensively on more expensive peaking resources Does the Company participate in or offer efficiency-related activities other than the programs you BAGGS-DI Idaho Power Company mentioned?The Company is actively involved withYeshosting specialized training and seminars for customers andothers on efficient technology and its application. Justrecently, the Company hosted the fall meeting of theAdvanced Load Control Alliance, a national organizationbringing together utilities actively implementing loadcontrol programs In addition , the first regional NaturalVentilation Summi t was sponsored by Idaho Power to explorethe potential of reducing summer peak load by al ternati vemethods. The Company completed a total of seven workshops far thi s year for industrial customers The workshoptopics range from Refrigeration Best Practices to MotorSystem Management to Fan System Assessment Training.The participation levels have been high with an average attendance of 35 people per event The Company sponsored the Integrated Design Lab in downtown Boise and has, for the second year , supported the BetterBricks Awards recognizing local leaders in energy efficient design and implementation. Company employees also actively participate in a variety of regional programs and activities beyond those associated with the Alliance.Our energy efficiency and demand reduction efforts are not carried out in isolation.We remain actively engaged and are constantly looking for the best ways to offer and apply technology. BAGGS-DI Idaho Power Company Do Idaho Power s DSM activities also helpcontribute to healthy customer relationships?Energy efficiency and demand responseYesprograms are not only resource oriented, but also serviceoriented in that these programs help the Company maintain along-term partnership wi th its customers, fulf ill customerenergy-related needs, and overall , enhance customersatisfaction.In fact, through the customer satisfactionresearch we do each year , customers are asked if the Companycurrently meets their expectations with regard to providinginformation that will help them save energy and reduce theirbills, and how well we encourage energy conservation.TheCompanys scores in these areas have shown steadyimprovement over the past two years as can be seen on page of Exhibi t No. 55 Does Idaho Power offer additional energy efficiency-related programs besides those you have already described? Another program wi th both energyYes efficiency and broader customer benefits is the Weatherization Assistance for Qualified Customers Program. Weatherization Assistance is an ongoing program the Company has offered since 1989 to make energy services more affordable for qualified customers provide grants to local communi ty action partnership BAGGS-DI Idaho Power Company agencies participating in state-run programs to supplementfederal funding of weatherization proj ects In Idaho, thestate program is administered by the Department of Heal and Welfare.Has the Company increased its WeatherizationAssistance program activity since the last general ratecase?In May 2004 , the Commission directedYesIdaho Power to increase annual Weatherization Assistancefunding for three years, which it has The Company has alsohired a program manager responsible for managing theprogram, interacting with the Community Action PartnershipCAP") Agencies and assisting them in completing additionalweatherization jobs Idaho Power worked with the CAP agencies to revamp the weatherization program.Change s have been implemented in Idaho to better align Idaho Power program with the Department of Energy ("DOE") weatherization program.Idaho Power also increased the amount of funding available for each job from 50 percent to a maximum of percent, with a minimum funding contribution of 15 percent from the DOE Additionally, as directed by the Commission an allowance has been made for any funds remaining at the end of a contract year wi th a CAP Agency, to be rolled over into the following year s contract In addi tion to providing services for BAGGS - DI Idaho Power Company qualified customers, does the Weatherization AssistanceProgram have a component available to non-profitorgani za t ions?The Company also provides funding forYesweatherization of buildings occupied by tax-exemptorganizationsHas funding for this component of theCompanys program increased as well?Funds to be utilized by non-profitYesorganizations have more than doubled since the last ratecase and the energy efficiency of several buildings occupiedby non-profit entities throughout our service area have beenimproved as a resul What was the Assistance spending 2004 2005? level of Idaho Weatherization and how much is anticipated Over $550,000 was spent on the Weatherization Assistance program in Idaho in 2004 and over $1 5 million is expected in 2005, which includes a $300,000 carryover from 2004 . This compares to a spending level of approximately $200,000 in previous years You suggest that the Company s increased Weatherization Assistance funding level is evidence of a significant change or steady progress on the part of the Company; however , the Commission directed the Company to BAGGS - DI Idaho Power Company increase the level of weatherization activity.Is IdahoPower claiming credit for something it was ordered to do?As I acknowledged earlier in my testimony,the Company was directed to increase its WeatherizationAssistance funding in 2004 However , the Company not onlyincreased its funding level , but further embraced thisobligation by hiring a program manager to specifically focuson Weatherization Assistance and to work wi th CAP agenciesto ensure that available funds are effectively used for thebenefit of qualified customersOne of the key accomplishments related Weatherization Assistance has been to develop an electronicdatabase invoicing system utilized by the CAP agencies simplifying the processing of weatherization jobs This successful system not only reduces the amount of paperwork produced by the agencies, but also streamlines the processing for swift response to the clients served. You stated earlier that Idaho Power has increased its focus on customer relationships In what way? Since the last general rate case was filed, we have organized a department called Customer Relations and Research and assigned a new senior manager to manage the effort Included in this group are the employees responsible for our energy efficiency and demand response programs We have further beefed-up our efforts to improve BAGGS-DI Idaho Power Company service and increase customer focus by adding market segmentcoordinators, each of whom is responsible for a particularcustomer sector.Segment coordinators are now in place forthe residential , commercial , industrial and agriculturalsectors, and a special-needs coordinator has also beenadded.You mentioned the Company s Green PowerProgram as another area showing continuing progress Whatis the nature of that progress?As described by Mr. Gale in the Companylast general rate case, the Green Power Program has beenoffered since 2001 as a program that provides a choice forthose customers interested in supporting renewable energyabove and beyond what their standard purchases would provide.Through the Green Power Program , cus tomers may direct the Company to add any dollar amount they choose to their monthly bill toward the purchase of resources from the Stateline Wind proj ect How is the program performing with regard to enrollment? The Green Power Program continues to grow. Al though the total customer count has not increased substantially, the total amount of green power purchased by our customers has Contributions have increased by percent over the same period two years ago and most of the BAGGS-DI Idaho Power Company charter customer base since program inception remainsenrolled.Purchases from the subscription base have grownto approximately $13 , a 00 per month.What cus tomer segments are attracted to theGreenPowe r Program offering?Wh i 1 e most the Green Powe r Programsubscription base is from residential customers, the Companyhas seen an increase in commercial or business customersubscriptions over the past year.The u. S. Green BuildingCouncil's Leadership in Energy and Environmental Designrating system for environmentally responsible commercialbuildings includes a renewable/green tag component as a menuqualification in the certif ication process Thi s addedcomponent is a recent development making the program even more appealing for commercial customer enrollment Several commercial customers have also stated that their decision to support addi tional renewable resources provides an advantage when attracting new employees Describe any additional benefits of having a Green Power Program. The Green Power Program not only provides an avenue for those who choose to further "green up" their energy beyond the largely renewable energy Idaho Power normally provides but also provides a platform from which Idaho Power personnel can educate the general public about BAGGS - DI Idaho Power Company renewable resources When packaged with energy efficiencyinformationtheGreenPowe r Program provides sustainablesolutionforthos e who seek such optionsArethereany new deve 1 opmen t s wi th the GreenPower Program?Because of the relationship Idaho PowerYeshas bui 1 t through the Green Power Program wi th theBonneville Environmental Foundation ("BEF") , two new solarinstallations will be offered to schools in partnership withBEF wi thin the Company s service terri tory in 2 a 05 .The. I-kilowatt systems will be similar to the system hosted byCastleford School in Idaho.The effort, called Solar forSchools, includes the photovoltaic array as well as aneducation curriculum for teachers and students to learn about renewable generation , study the consumption behavior of the school facility, and learn the importance of energy conservation. What has Idaho Power been doing to explore the capabilities of Advanced Meter Reading ("AMR" technology? In October 2003 , the Company was directed by the Commission to implement a Phase One Advanced Meter Reading proj ect in selected service areas . Idaho Power subsequently filed an implementation plan with the Commission in December 2003 and completed the Phase One AMR BAGGS-DI Idaho Power Company installation in November 2004 This system has operatedsuccessfully since that time.Describe the scope of the AMR installation.AMR was installed for residential , small andlarge general service business, and irrigation customers the Company s Emmett and McCall operating areasApproximately 23 500 AMR meters were installed and theCompany is retrieving daily and hourly data for all AMRcustomersWhat was Idaho Power s experience with AMRmeter installations?While it was a substantial effort to installthe required meters and related substation and communicationequipment by the end of 2004 , the Company managed the proj ect successfully.Our installations have resulted virtually 100 percent retrieval of daily readings and about 98 percent successful read rate on hourly consumption. Considering that the Company s meter system installations have been successful and the data collection system is working well , what has been the Company experience wi th respect to meter data management? The data management aspect of our Phase One AMR proj ect continues to be a challenge, but the Company devoting a large amount of time and effort to make it a success and will continue to do so.The Company remains BAGGS - DI Idaho Power Company committed to completing a comprehensive assessment of AMRviabili ty wi th the Company s service area.We anticipate solution to the meter data management woes in 2006Has Idaho Power been able to make hourlyconsumption data available to AMR customers in McCall andEmmett?The Company offers its customers accessYesto the Nexus Energy Software System through the Companyweb si te Nexus software tools are designed to providecustomers the ability to evaluate their specific energyusage habits as well as a typical or "model" homes energyusage.Depending on the type of customer , the energy usageinformation may be displayed in hourly increments, dailyincrements or monthly usage In addition , users of the Nexus tool can research energy conservation options that may be suited to their homes or businesses Has this information been utilized by customers? Use of the information has been sparse far; however , we have been cautious in promoting its availability because of the data management difficulties described earlier.I believe, however , that the Nexus tool can and will be a valuable resource for our residential and business customers What is the Company doing to determine the BAGGS-DI 1 7 Idaho Power Company customers ' impressions of the Phase One AMR effort?Last month , we contracted with NorthwestResearch Group to conduct a telephone survey of AMRcustomersResul ts of this survey will be incorporated inthe Company s Phase One AMR Report to be filed with theCommission at year-end.You previously testified that Idaho Power hasincreased its focus on customer satisfaction improvement bymaking it a major factor in employee incentive compensation.Please elaborate on this statementCompany wi tness Luci McDonald discusses thedetails of the Company s compensation program and its linkto customer satisfaction in her testimony.I will describethe Company s customer satisfaction research efforts and my belief , from a customer service perspective, in the appropriateness of a strong linkage between employee performance and customer satisfaction. Please describe Idaho Power s continuing practice of surveying its customers about their levels of satisfaction. Idaho Power has contracted wi th Burke Customer Satisfaction Associates ("CSA") to conduct quarterly customer relationship surveys since 1995 addi tion to the Burke CSA surveys, Idaho Power acquires the resul ts of the annual J. D. Power and Associates Electric BAGGS - DI Idaho Power Company Utility Residential Customer Satisfaction Study.The J. D .Power and Associates study is used primarily as a benchmarkto other electric utilitiesPlease describe the Company s customersatisfaction performance results in recent yearsDuring the 200 0-2001 energy crisis, IdahoPowers satisfaction levels dropped in tandem with those other western utilities However I daho Power cus tomersatisfaction has steadily improved since 2001 and theCompany is now exceeding pre-energy crisis satisfactionlevelsPlease describe the Burke survey methodologyand the resulting information made available to the Company.Idaho Power provides a data file of randomly selected accounts to Burke CSA each quarter from four customer segments - residential , small and medium business, large commercial and industrial , and irrigation. Annually, Burke surveys 400 residential customers, 200 small and medium business customers, 200 irrigation customers and approximately 100 large commercial and industrial customers These customer sample numbers are large enough to supply statistically valid results Surveys are conducted by telephone and an average survey takes approximately minutes On a quarterly basis, Idaho Power receives BAGGS - DI Idaho Power Company resul ts from Burke based on these customer interviewsQuarterly results include an overall index score, theCustomer Relationship Index ("CRI", as well as moredetailed information in the form of average response datacollected for numerous questions in six general categoriesCompany Image, Quality of Service, Cost & Pricing,Responsiveness to Customers, Communicating and Billing andPaymentWhat is Idaho Power s primary way measuring its success in providing customer satisfaction?Idaho Power s primary measure for customersatisfaction is the CRI derived by Burke from customersurveysThe CRI is comprised of five key questions wherecustomers, representing all customer segments, rate Idaho Power on each question on a scale of zero to four points The five questions relate to overall satisfaction , overall quality, overall value, likelihood to recommend, and Idaho Power s car1ng.For each customer a total score is computed for all five questions, ranging between zero and 2 a points Each customer s individual score is divided by 20 to determine a percentage for that customer.All individual customer data are accumulated to establish the overall CRI which can range from a low of zero to a maximum of 100 percent The CRI is the best single satisfaction measure available to Idaho Power because it depicts the customers BAGGS - DI Idaho Power Company overall atti tudes toward the Company.It is a statisticallyreliable measurement of customer opinions and it provides ahistorical trend that allows us to track our performanceover time.Would you please describe the Companycustomer satisfaction performance since the last generalratecase?The CRIpercentfor the twelve has reached an all time high of 80months ending third quarter of 2005,which indicates a higher level of satisfaction than at anyother time since Burke has been conducting surveys for IdahoPower and an improvement from a level of 77 percent at mid-year 2003 Not only has Idaho Power improved its overallcustomer satisfaction level since mid-year 2003 improvements have been made in every indi vidual customer segment The residential CRI has improved from 74 percent to 77 70 percent, small and medium business results have increased from 76 45 percent to 80 70 percent, large commercial and industrial from 84 55 percent to 89 percent and irrigation from 69 8 percent to 76 35 percent on a twelve-month rolling average basis Please refer to pages 2 and 3 of Exhibi t No. 55 for a detailed representation these results Has Idaho Power made customer satisfaction an element in its employee compensation? BAGGS - DI Idaho Power Company As described by Company witnessYesMcDonald, the 2005 employee compensation plan includes anincentive related to customer satisfaction improvementThat incenti ve is based on the CRI The 2006 plan willinclude a customer satisfaction component as wellWhy is the CRI the most appropriate customersatisfaction measurement to use for employee compensation?The CRI represents the overall relationshipcustomers have wi th Idaho Power.It measures thesatisfaction levels of all the primary customer segmentsserved by Idaho Power (residential , small and medium sizebusiness, large commercial and industrial , and irrigation) The CRI is based on research that is conducted at variouspoints in time throughout the year.This eliminates the potential for any one event or circumstance to have a significant influence on the overall customer satisfaction levels Do you believe it is appropriate, from customer service perspective, for the Company to include a measure of customer satisfaction in its incentive compensation? Absolutely.While we engage in a multitude of activities in an effort to provide quality service to the customers in our service area, many of which are measurable, in my mind none is a more appropriate measure of our success BAGGS - DI Idaho Power Company than the customers ' spoken assessment of our performance.Does this conclude your testimony?Yes, it does BAGGS - DI Idaho Power Company