20060918Weiss direct and exhibits.pdf

William M. Eddie (ISB #5800)
ADVOCATES FOR THE WEST
610 SW Alder S1., Suite 910
Portland , OR 97205
Ph: [phone]
Fax: [phone]
RECEIVED
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UTIU\\ES COMf,,\lSSIOh
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE PETITION OF
IDAHO POWER COMP ANY FOR
MODIFICA TION OF THE LOAD GROWTH
ADJUSTMENT FACTOR WITHIN THE POWER)
COST ADJUSTMENT (PCA) METHODOLOGY
CASE NO.IPC-06-
DIRECT TESTIMONY OF
STEVEN D. WEISS
ON BEHALF OF NW ENERGY COALITION
lJ ORIGINAL
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PLEASE STATE YOUR NAME AND BUSINESS ADDRESS.
My name is Steven Weiss. I am employed by the NW Energy Coalition, 219 First
Ave. South, Suite 100 , Seattle, W A 98104.
WHAT ARE YOUR POSITION AND RESPONSIBILITIES?
I am a Senior Policy Associate and frequently represent the Coalition in regulatory
proceedings with the Bonneville Power Administration and in the State of Oregon. I
am also an advocate for clean and affordable energy in many other forums including
the NW Power and Conservation Council, Columbia Grid and the Oregon
Legislature.
PLEASE SUMMARIZE YOUR EDUCATIONAL BACKGROUND AND
PROFESSIONAL EXPERIENCE.
I received a Masters in Science Education from Bucknell University in 1976 and a
Bachelor of Arts in Physics and Math from the University of California at Berkeley in
1968. Previous professional experience includes employment as Assistant Professor
at Clarion State College in Pennsylvania from 1975-, and I was elected to the
Board of Salem Electric (Co-op) four times from 1982-94. I also owned and operated
a retail bicycle shop from 1980-96. I have been employed by the Coalition since
1994 and have participated in numerous Oregon, BP A and regional policy forums and
rate cases. I also co-authored Oregon s electricity restructuring law (SB 1149). My
resume is included as Exhibit 301.
Weiss, Steven - Di
NW Energy Coalition
HAVE YOU APPEARED BEFORE UTILITY REGULATORY COMMISSIONS IN
OTHER PROCEEDINGS?
Yes, I have represented the Coalition in numerous dockets, including rulemakings.
Examples in Oregon include Northwest Natural's filings regarding its Weather
Adjusted Rate Mechanism (UG 152) and decoupling (UG 143), Portland General
Electric s decoupling filing (UE 126), and Cascade Natural Gas Corporation
Conservation Alliance Plan, inclusive of a decoupling mechanism (UG 167). In
Washington, I served as a witness for the Coalition in the 2004 Puget Sound Energy
(PSE) rate case, focusing on rate design issues; and in the ongoing PSE gas
decoupling rate case (UG-060267 & UE-060266). Also I have represented the
Coalition in numerous Integrated Resource Planning Processes , as well as at
workshops and conferences over the past dozen years.
PLEASE SUMMARIZE THE CONTENTS OF YOUR TESTIMONY.
My testimony is arranged as follows: (1) I first discuss how traditional ratemaking
impacts the utility s (and customers ) incentives and risks between rate cases. (2)
Second I describe the effect on Idaho Power s net revenues resulting from each new
kWh and each new customer hookup. (3) I then discuss how the policy implications
of the PCA cannot be discussed in a vacuum. On this point, I believe the PCA issues
at stake here are linked to the outcome of the decoupling proposal in IPC-04-15 (a
proposal that essentially guarantees that Idaho Power s recovery of fixed costs for
existing customers regardless of changes in their loads, and would allow the
Company s fixed cost recovery to grow along with growth in customer numbers). (4)
Finally, I will make a proposal that, assuming a decoupling mechanism is approved in
Weiss, Steven - Di
NW Energy Coalition
IPC- E-04-, will lead to a revenue-neutral proposal regarding new customer
numbers while providing an incentive for IPC to encourage reduced usage per
customer. By modifying Idaho Power s proposal in this case, and approving a
decoupling mechanism in IPC-04-, the Commission would both maintain
traditional shared risks, while also creating a strong incentive for the utility to fully
obtain and advocate for conservation and efficiency improvements, which are by far
the least-cost resources available to customers. Currently Idaho Power likely enjoys
net positive revenues from load growth, providing both a disincentive to the
Company to promote conservation and an unwarranted windfall unrelated to its
actions. To reflect that fact in the PCA, a Load Growth Adjustment must be added
but the methodology must be different than presently used. The scope of my
testimony does not include a specific recommended amount, but does provide an
example of how that could be developed.
I. Traditional Ratemaking
WHAT INCENTIVES AND DISINCENTIVES ARE EMBEDDED IN
TRADITIONAL UTILITY REGULATION AND WHAT EFFECT DO THEY
HA VE?
Utilities have traditionally been regulated based on their costs, including an
opportunity to earn a reasonable rate of return. In periodic rate cases, a review of
revenue and cost levels occurs, and rates determined such that the utility can earn that
rate of return. But just as important an element of regulation is how the rate structure
and any trackers, affects the Company betvveen rate cases. This is known as
Regulatory Lag. For it is between rate cases that any reduction in costs and/or
Weiss, Steven - Di
NW Energy Coalition
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increase in revenues go straight to the utility s bottom line. Thus the incentives
provided by the rate structure are important motivators for utility actions.
Regulatory lag, in my opinion, is one of the most important considerations
regulators should be aware of when designing or approving rates. On the cost side
regulatory lag is largely beneficial for customers because it provides the utility the
incentive to reduce costs and improve productivity, which are then incorporated into
10weLrates in the next rate case.! But on the revenue side, the issue is more
complicated. That is because regulatory lag can produce utility incentives that are at
cross-purposes with customer interests, promote unabated load growth and lead
ultimately to higher costs.
WHAT FACTORS INFLUENCE REVENUES BETWEEN RATE CASES?
Broadly, two factors are important: (a) changes in revenue per customer from load
changes; and, (b) changes in the number of customers. To understand the utility
incentives, it is necessary to determine what the financial impact to the utility is from
increases or decreases in these two factors. Revenue per customer between rate cases
has two determinants: First is change in usage per customer multiplied by the
marginal rate for that customer. Second is change in the number of customers.
All ratemaking regulation provides utilities with incentives or disincentives to
behave in a certain malmer. By focusing on how the addition (or reduction) of one
kWh of load or one new customer affects the utility s bottom line between rate cases
one can describe those incentives and disincentives. In addition, one can see if the
rate structure causes undeserved increases or decreases in a utility s net revenues that
I This is not an unalloyed benefit. Many regulators also require utilities to have in place strong service quality
and reliability standards to ensure that cost-cutting is not over done.
Weiss, Steven - Di
NW Energy Coalition
are unrelated to the utility s actions. Such a result is simply an undeserved loss or
windfall to the utility, and even if symmetric (i., equally likely to benefit
shareholders or customers over the long term) may increase net revenue volatility
unnecessarily.2 Ideally, utilities should be rewarded based on how well they meet
their customers' energy service needs , but that is not always the case. Sometimes the
utility s incentive is to encourage load growth even though cost-effective
conservation would be less costly to customers. (This issue is thoroughly covered in
the decoupling discussion in IPC- E-04-, so I will not repeat it here.) And
sometimes the utility is rewarded or punished with windfall profits or losses unrelated
to its activities. Thus it is important to examine the issue closely in order to have a
result that is fair to all parties and in the public interest
II. The Effect of Marginal Changes in Load and Customer Count
WHAT HAPPENS TO IPC'S NET REVENUES UNDER CURRENT POLICY
WHEN LOAD INCREASES BY 1 KWH?
For this discussion, I first assume that this increase in load is not accompanied by a
higher customer count and that it is a residential load (and, of course, decoupling has
not been implemented). Perhaps someone adds a battery charger after the rate case
has set load levels. Below I address a scenario where the load growth occurs from
the addition of a customer.
2 For example, changes in weather, totally out of the utility s control, can produce volatility
in its returns that serve no purpose other than simply raising its cost of capital-a cost that
must eventually be paid by customers. A weather decoupling mechanism, however, can
reduce that volatility.
Weiss, Steven - Di
NW Energy Coalition
A number of things determine how much IPC's net revenue changes. First, its
revenues increase by about 6.5~, because that is how much extra the customer pays
for the kWh.3 But its costs also increase, and this is where it gets a little complicated.
To serve this new load, Idaho Power must either purchase the electricity from the
market (or forego the same amount of money from reduced sales). Let's assume for
discussion a market price of 4~ ($40/MWh-note: all prices per MWH have been
converted to cents/kWh in this discussion). While a portion of those costs would be
covered by the PCA, I will put aside the PCA for the moment and focus on what it
really costs the Company.
- In addition to the 4~ for additional power, the Company also incurs some
incremental "fixed" costs. While the embedded costs of its hydro and coal facilities
won t change, each additional increment of load will incur an incremental cost for
additional O&M, bigger or more numerous transformers, substations, etc., that
kWh's share if incremental distribution costs. But, for the most part, these
distribution costs will not increase between rate cases, especially in this scenario
where the load growth is not associated with a new customer. The system is built
robustly enough that incremental load growth in existing neighborhoods will not
increase distribution and O&M costs much. The "robustness" (i.e. the headroom
available to accommodate load growth) has already been included in the capital costs
of the system, which will not change. Larger distribution costs, such as new
substatioi1s and larger transformers may eventually be needed if average loads
increase substantially, but their costs will be added into rate base at the next rate case.
3 I have assumed that the additional kWh is priced at the higher, marginal block rate.
Weiss, Steven - Di
NW Energy Coalition
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So though I cannot precisely say how much new distribution costs the new kWh will
cause, it most likely is less than 0.5~. An exact number is not important for my point.
My point is that it is very likely that the costs of serving the new kWh will not
match the added revenue from that kWh. In my example, the additional costs totaled
5~ while the additional revenue was 6.5~. In this likely situation, the Company
will see an increase in its net revenue of 2~ and thus have a powerful incentive to
encourage increased load and to be less-than-enthusiastic about conservation.
WHAT HAPPENS TO IDAHO POWER'S NET REVENUES WHEN IT ADDS A
NEW CUSTOMER?
I will assume for this example that this is a residential customer, and his or her load is
exactly the same as the average of all other customers.
This customer s load also pays about 6.5~ for each kWh. (Not exactly true
due to Idaho Power s 2-block rate plus the customer charge, but close enough for this
discussion.) For each kWh used by this customer, Idaho Power s power cost is about
4~ as in the previous example. But because this is a new hook-up, the Company
added distribution costs are higher than in that case. The Company has to string wire
install a new meter and perhaps a (portion of) a new transformer-all between rate
cases. Ignoring any construction costs paid by the new customer due to IPC's line
extension policy, perhaps this costs 2~ per kwh for the average new customer. IPC
therefore receives 0.5~ in net revenues. So now, the mismatch between cost and
revenue is less than the first scenario (0.5~ on each new kWh compared to 2~). That
would reduce the utility s incentive to increase loads from new customers compared
to the previous example, but it would still exist.
Weiss, Steven - Di
NW Energy Coalition
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PLEASE SUMMARIZE YOUR CONCLUSION THUS FAR.
Putting aside regulatory treatment of all this, I draw two conclusions. (a) If the
incremental cost of increased load or increased customers does not match the
incremental net revenue produced, the utility will have incentives that mayor may not
be in the public interest; and, (b) the critical numbers one must look out to understand
what is really happening are the incremental costs (and revenues) of new load and
new customers, not the embedded costs.
PLEASE EXPLAIN THE CURRENT REGULATORY TREATMENT OF THE
TWO SCENARIOS DISCUSSED ABOVE.
The two regulatory mechanisms that bear on this issue are the PCA and any
decoupling mechanism that might be approved. I will start with the PCA.
The first thing to point out is that the PCA is not affected by customer count.
Therefore the PCA impact is the same for any increase in load regardless of whether
it came from an existing or new customer--'--the PCA only adjusts the power cost
impact, but does not address the different distribution cost impacts of the two
scenarios. Therefore, the PCA cannot provide an appropriate regulatory impact for
both scenarios at the same time, since the PCA treats these two scenarios-though
they have quite different net revenue impacts - as if they were the same. Second, the
PCA formula depends on embedded costs. The added base rate revenue from each
additional kWh is partly allocated toward PCA costs (about 0.7~ and the rest to non-
PCA costs). Yet it is clear that the incremental power cost to serve the new load is
higher, in the 4~ or more range, and the incremental fixed cost is different in the two
scenarios (and certainly much less than the embedded fixed cost).
Weiss, Steven - Di
NW Energy Coalition
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In short, the PCA adjustment is not linked to the actual incremental changes
in costs and revenues that I went through above. Only by extraordinary luck could it
avoid a result that either rewards or punishes IPC for new loads and/or new customers
due to the almost inevitable mismatch between the increinental costs and revenues
that result from growing loads. The result-either a reward or a penalty-becomes
the incentive to either encourage or discourage load growth. I believe it is poor
public policy to have this key result driven by the arbitrary and essentially random
differences between the incremental costs of serving new loads and customers.
Currently the PCA reduces the amount the utility can recover from its
additional power costs by about ~/kwh (using the current $16.84/MWh load growth
adjustment minus the $6.71/MWh embedded PCA cost). Gregory Said's direct
testimony (p. 12) describes a "penalty" of around 1.16~/k Wh using older numbers
but the calculation is the same. As I estimated above, without the PCA the
Company s actual net revenues increase by 2~/kWh for load growth of existing
customers, so including the PCA would probably result in the Company still having a
positive incentive of 1 ~/k Wh to increase load. But for new customers, the PCA
would penalize the Company through a net revenue loss of 0.5~/kWh. Clearly this
a bizarre result. IPC is proposing to remove this "penalty," which would mean all
load growth would benefit the Company.
DO YOU AGREE WITH THE COMPANY THAT THE PRESENT PCA
PENALIZES IDAHO POWER FOR LOAD GROWTH?
Seen in isolation, it would seem that way. However, the PCA only deals with the cost
of new power, not the cost of incremental distribution nor the effect of increased
Weiss, Steven - Di
NW Energy Coalition
revenue. In addition there is another reason to suspect that it is not really a penalty.
If it really were true that the Company was not allowed to recover a significant
amount of money because of load growth, one would expect it to be aggressively
pursuing conservation. Sadly, that is not really the case.
DOES IDAHO POWER'S INVESTMENT IN DEMAND-SIDE MANAGEMENT
OVER THE LAST DECADE EVINCE A COMPANY THAT SUFFERS A
PENALTY FROM GROWING LOADS?
No. Idaho Power has beenvery slow to implement demand-side management, even
in the face of growing loads. Idaho Power s system load in its 1994 rate case was
about 14.5 million MWh's. The Company s system load increased over the next six
(6) years up to a high point of about 15.8 million MWh's in 2000-2001. Over that
same six (6) year period, Idaho Power s spending on demand-side management
dropped precipitously from about $6.19 million in 1995 down to about $1.7 million in
2000 and 2001. In response to the energy crisis of 2000-0 1 , system loads dropped
before resuming their growth. See Exhibits 302 at pages 2, 5 (Idaho Power Response
to Production Requests).
WHY DO YOU BELIEVE THOSE FACTS ARE IMPORTANT?
The fact that Idaho Power dis-invested in DSM in the late 1990's in the face of
growing loads indicates that the Company is not penalized enough by the Load
Growth Adjustment in the PCA, as indicated in the Direct Testimony of Gregory Said
(page 12) to overcome the underlying marginal increase in the net revenues it
receives from adding load. If there was a detectable penalty in the PCA (as part of
Idaho Power s overall rate design), the Company was behaving irrationally.
Weiss, Steven - Di
NW Energy Coalition
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IS IDAHO POWER INVESTING IN ENOUGH DSM TODAY?
NW Energy Coalition believes the Idaho Power is rapidly improving its DSM
program. I understand that the Company s draft 2006 Integrated Resource Plan
proposes to further accelerate DSM program investments nearly up to the
approximately levels of DSM potential estimated by the Northwest Power and
Conservation Council in 2004. That said, the Company s actually estimated savings
are still very low (3.25 MWa in 2004, and 4.71 MWa in 2005 , both including
estimated savings from programs run by Northwest Energy Efficiency Alliance).
Exhibit 302 at page 9. I am certain those savings will accelerate rapidly in coming
years, but they are still low compared to other Northwest utilities. It is NW Energy
Coalition s position that all cost-effective DSM resources should be acquired before
supply resources are acquired. Very simply, there is no easier, cheaper, or cleaner
way to keep both rates and customer bills low.
GIVEN THIS WEAK RECORD ON CONSERVATION, IS THE COMPANY
BEHAVING IRRA TIONALL
No. As I noted above, even with the PCA's "penalty," the Company likely has an
incentive to promote load growth, especially by existing customers. Therefore it is
serving its shareholders well by having a lukewarm attitude toward conservation
even though it is compensated completely for its conservation costs.
WHAT IS YOUR CONCLUSION REGARDING THE PCA?
The PCA, as presently designed, can never result in rates that are exactly "right" in
balancing the impact of new load on the Company. But because of that mismatch, it
is never neutral. Instead it provides an incentive (for or against load growth)
Weiss, Steven - Di
NW Energy Coalition
depending on the level of the load growth adjustment. If the Commission wishes to
provide Idaho Power an incentive toward conservation by providing a penalty, it
should do so directly. I do not believe the Commission should address this important
policy issue obliquely through the load growth adjustment.
WHAT WOULD BE A BETTER DESIGN FOR A PCA ADJUSTMENT?
A better design would be ensure the PCA has a neutral impact by reflecting as close
as possible the actual incremental changes in costs and revenues that load growth and
new customer growth creates. That is, the PCA should reimburse the Company for
(90% 4 of) the incremental cost of new power, less the incremental revenues received
from the customer, rather than relying on embedded costs that have little relation to
the actual net revenue impacts. That calculation would necessarily be different for the
two scenarios examined-load growth from existing customers versus load growth
from new customers-because they have different incremental revenues. Therefore
there would be two different PCA adjustments: one for load growth from existing
customers, and the other for load growth from new customers.This design is
neutral to the Company in that it does not provide any incentive or disincentive to
encourage load growth. If the Commission wishes to provide an incentive for the
Company to reduce load growth, it should do so directly, and not rely upon this
opaque mechanism to achieve that policy result.
IS YOUR SUGGESTION FOR MANY DIFFERENT ADJUSTMENT FACTORS
TOO COMPLICATED?
4 If the Commission wishes to provide a stronger incentive to the Company to make smart
purchases between ratecases, it could lower this percentage.5 These two would apply to residential customers. Different adjustments would also have to
be used for the other customer classes.
Weiss , Steven - Di
NW Energy Coalition
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I don t believe that two factors for each customer class is all that complicated.
However, a second best solution is to set the load growth adjustment rate such that the
PCA results in an adjustment that reflects the average incremental change that load
growth causes for each class, and not differentiate between new and existing
customers. There should still be a different adjustment for each other customer class
however, as the incremental cost changes for commercial and industrial load
increases are quite different than for residential customers.
COULD YOU PROVIDE AN EXAMPLE USING THE NUMBERS YOU HAVE
BEEN USING SO FAR?
Yes. Please note that this example does not assume a decoupling adjustment. I
assumed that a new kWh to serve an existing residential customer was acquired at a
cost of 4~. That new kWh produced incremental revenues for the Company of 6~
(rate of 6.5~ minus the incremental increase in distribution costs of 0.5~). Without a
PCA, the utility would enjoy a windfall of2~. Therefore the load growth adjustment
must be set at a level that produces a refund to customers of 2~ (this would calculate
to $26.71/MWh, or $20/MWh plus the $6.71/MWh embedded PCA amount). Using
this amount as the adjustment makes the Company neutral in regard to load growth
from existing customers. A different load growth adjustment can similarly
designed for the case of load growth due to a new customer hookup. Using my
example, it would be $11.71 ($5 + $6.71).
COULD THE COMMISSION USE YOUR DESIGN TO SHIFT LOAD GROWTH
RISK TO THE COMPANY?
Weiss, Steven - Di
NW Energy Coalition
Yes. If the Commission wanted the PCA to provide a stronger incentive to the utility
for pursuing conservation, it could raise the load growth adjustment higher so as to
penalize the company when load growth occurs. Another effective way to motivate
the Company that we favor is to set concrete DSM targets and benchmarks connected
to rewards and penalties.
THE SECOND MECHANISM THAT HAS AN IMP ACT ON THIS ISSUE IS
DECOUPLING. HOW DOES DECOUPLING AFFECT THE TWO SCENARIOS?
While the PCA addresses changes in power costs between rate cases, decoupling
addresses changes in fixed costs. Under the decoupling proposal being discussed in
IPC- E-04-, revenue changes between rate cases resulting from loads being higher
or lower than normal for existing customers are adjusted to provide the Company
with the same embedded fixed costs per customer as approved in the most recent rate
case. As such, the mechanism is neutral in relation to existing customers and
provides neither an incentive nor disincentive for IPC to encourage load growth (or
promote conservation). In addition, the proposed decoupling mechanism would also
maintain that same average level of embedded non-power related costs for new load
created by new hookups regardless of their usage level. However, the incremental
non-power costs of serving a new customer are most likely lower than the embedded
cost imputed to existing customers of about 3 .25 ~/kwh. 6 That is because the
incremental cost of serving a new customer is just the cost of additional distribution.
There is no additional impact to the other embedded costs of the system such as
6 The non-power costs of about $138 million are divided into average usage of about 4.5 billion kWh. I
obtained these figures from the direct testimony of Mike Youngblood in the decoupJing docket (IPC-O4-15)
pp.
14-16.
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NW Energy Coalition
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generation costs and other debt. Thus, the Company will receive a windfall from new
customers (regardless of their usage) by recovering average embedded fixed costs
rather than the much smaller incremental amount. So while the mechanism does
indeed remove the incentive to encourage load growth, it is not neutral. It provides
an incentive to hook up more customers. (A discussion of whether or not this is a
desired outcome is not part of this proceeding, however.)
MODIFYING THE DECOUPLING PROPOSAL IS NOT A SUBJECT OF THIS
DOCKET, HOW IS IT RELEVANT TO THIS DISCUSSION?
It is important for the Commission to understand the connection between the PCA
discussion and the decoupling discussion. The incentive the Company will see, and
the overall fairness of the rates, depends on how they are both designed.
In summary, it is necessary to look at the complete package. It is impossible
to understand how the PCA and decoupling mechanisms will reward or penalize
Idaho Power for pursuing and encouraging conservation without looking at their
combined effects on marginal changes in load.
DOES THE COALITION HAVE A RECOMMENDATION?
Yes.
We recommend that the PCA be redesigned so that it is based on the different
incremental costs of load growth caused by existing customers versus load
growth caused by new customers, thus making it neutral to the Company and
customers. In the alternative, the load growth adjustment should be set to come
as close to that result as possible. I have provided an example of how that could
be done. All that is missing to do the calculation are estimates of the incremental
Weiss, Steven - Di
NW Energy Coalition
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costs of serving new load and new customers based on Idaho Power s system
data. Staff and the Company are best equipped to identify those numbers.
To provide the Company with a clear incentive to encourage conservation: (a)
decoupling should be approved in order to remove the disincentive on the
revenue side; and, (b) either: (i) raise the load growth adjustment another $10.
or so from the number determined in #1 above to provide a clear incentive for
conservation; or, (ii) use direct conservation targets and benchmarks with
incentives and penalties.
DOES THIS CONCLUDE YOUR TESTIMONY?
Yes.
Weiss , Steven - Di
NW Energy Coalition
CERTIFICATE OF SERVICE
I hereby certify that on this 15TH day of September 2006, true and correct copies
of the foregoing DIRECT TESTIMONY OF STEVE WEISS were delivered to the
following persons via the method of service noted:
Via Hand-Delivery:
Commission Secretary (nine copies provided)
Idaho Public Utilities Commission
427 W. Washington St.
Boise, ID 83702-5983
Via u.S. Mail:
Bart Kline
Monica Moen
Idaho Power Company
O. Box 70
Boise, ID 83707-0070
Greg Said
Idaho Power Company
O. Box 70
Boise, ID 83707-0070
Lawrence A. Gollomp
Assistant General Counsel
United States Department of Energy
1000 Independence Ave., SW
Washington, DC 20585
Peter Richardson
Richardson & O'Leary
515 N. 2ih St
Boise, ID 83702
Dale Swan
Exeter Associates, Inc.
5565 Sterret Place , Suite 310
Columbia, MD 21044
to Eijckelhof
Paralegal
PETITION TO INTERVENE --
Steven Weiss
Current Position Senior Policy Associate, NW Energy Coalition
Experience 1995 - Present NW Energy Coalition
Senior Policy Associate
Sr. member of the policy team implementing NWEC's policy goals relating to a clean
and affordable energy future.
Areas of responsibility include Bonneville Power Administration, Oregon PUC
Oregon Legislature, NW Power Planning Council, Grid West/Columbia Grid" Oregon
Advisory Committee on Energy (low-income issues), occasional DC lobbying.
Seattle, WA
1993-1995 Clients: NW Energy Coalition, OR Dept. of Energy, W A Utilities
and Transportation Commission
Consultant
Policy development and advocacy on Regional energy issues.
Published newsletter on BPA's Power Sales Contract Negotiations.
1984-1996 Salem Electric Co-op
Director - Elected to four 3-year terms
. Chair, 1989-
. Initiated, or major co-sponsor ofthe following initiatives:
Inverted residential rates
. Low-income energy assistance program
Efficient appliance rebates, recycling rebates, at-cost CFLs, etc.
Salem Electric "Building Code" which gives builders incentives for efficient building
practices.
Integrated Resource Planning.
Representative to NWPP A, PPC, NRECA
Salem, OR
1980-1996
Owner - 2 stores
Staff of 8
Sales of $450 000 annually
Bicycle Doctors bicycle shops Salem, OR
1971-1985
Instructor/Professor
J 971-1977 Physics Instructor, Bucknell University
J 977-1979 Assistant Professor, Clarion State College. Research and teaching on
campus demonstration high school.
. 1980-1985 Math/statistics instructor (part-time), Chemeketa Community College
Salem, OR
Exhibit No. 301 Page 1
2003-Present
Board of Directors
Elected to Citizens ' Utility Board board of directors , 2002 and 2005
Prepared testimony and participated as key Witness for NW Energy Coalition:
Regulatory and other 1996 2001 2002, 2006 Bonneville Power Administration ratecases
Policy Experience Numerous BPA proceedings including Power Function Review, Resource Adequacy
Forum, Comprehensive Review, Subscription process, Regional Dialogue, etc.
1998 2000 2003 2006 PacifiCorp and Portland General Electric Integrated Resource
Planning dockets.
1996 docket on purchase ofPGE by Enron
1999 docket on purchase of PacifiCorp by Scottish Power
2001 PGE decoupling docket
2001 PacifiCorp and PGE restructuring dockets following passage of SB 1149
2002 UM1066 docket on Regulatory Policies affecting resource development
2002 NW Natural dockets establishing decoupling, public purpose charges
2004 Puget Power gas and electric docket on rate design
2005 Oregon dockets on competitive bidding, and Least Cost Planning requirements
2004-5 Oregon dockets instituting decouplinglpublic purposes for Cascade Natural
Gas
Lead negotiator for NW Energy Coalition:
1996 BP A contract negotiations on tiered rates
Development of Grid West (RTO)
2001 BPA's "Safety-Net" rate adjustments
2002-05 BPA's Regional Dialogue
Education 1968 BA Physics and Math, Univ. of California, Berkeley
1975 MS Education, Bucknell Univ., Lewisburg, Pennsylvania
1997 1999 Oregon Legislative sessions -- Co-authored and lobbied to pass SB 1149
Accomplishments Oregon s electricity restructuring law.
with NW Energy Co-founded the Fair and Clean Energy Coalition, Oregon public interest lobbying
Coalition coalition
Expert witness in numerous Oregon PUC dockets and rulemakings, including
proposals to decouple PGE and NW Natural's distribution rates, least-cost plans, etc.
Expeli witness in BPA rate caSes, including developing rate adjustment mechanisms
now pmi ofthe agency s rates.
Environmental representative to GridWest development group. Filed testimony and
comments to FERC on RTO West and other transmission and market issues.
Serve on Governor s Advisory Committee on Energy which advises Oregon agencies
on low-income issues. Served on Portfolio Advisory Committee which develops
portfolio choices for Oregon consumers under SB 1149. Serve on Energy Trust of
Oregon s Conservation Advisory Council.
Provide analysis and coordination with salmon advocates and tribes relating to
energy/salmon issues.
Exhibit No. 301 Page 2
BARTON L. KLINE ISB #1526
MONICA B. MOEN ISB #5734
Idaho Power Company
O. Box 70
Boise, Idaho 83707
Phone: [phone]
FAX: [phone]
bkline
(g)
idahopower.com
mmoen
(g)
idahopower.com
Attorneys for Idaho Power Company
Express Mail Address
1221 West Idaho Street
Boise, Idaho 83702
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE PETITION OF
IDAHO POWER COMPANY FOR
MODIFICATION OF THE LOAD
GROWTH ADJUSTMENT RATEWITHIN THE POWER COST
ADJUSTMENT METHODOLOGY
CASE NO. IPC-06-
IDAHO POWER COMPANY'
RESPONSE TO THE FIRST
PRODUCTION REQUEST OF NW
ENERGY COALITION TO IDAHO
POWER COMPANY
COMES NOW, Idaho Power Company ("Idaho Power" or "the Company ) and, in
response to the First Production Requests of NW Energy Coalition to Idaho Power
Company dated August 8, 2006, herewith submits the following information:
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST
OF NW ENERGY COALITION TO IDAHO POWER COMPANY - Page
EXHIBIT
3Q~
Friday, September 15, 2006.max
REQUEST FOR PRODUCTION NO.
Please state Idaho Power company s normalized system loads for each year
starting with year 1995 through 2005.
RESPONSE TO REQUEST FOR PRODUCTION NO.
Idaho Power company s normalized system loads for 1995 through 2005 in MWh'
are as follows:
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
14656029
15141574
1 51 80588
14758836
15240817
15837958
15759779
14276689
14193837
14536634
14819152
The response to this request was prepared by Gregory W. Said, Manager of
Revenue Requirement, Idaho Power Company, in consultation with Barton L. Kline
Senior Attorney, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST
OF NW ENERGY COALITION TO IDAHO POWER COMPANY - Page 2
Friday, September 15 , 2006.max
REQUEST FOR PRODUCTION NO.
Please explain the basis for Witness Greg Said's use of normalized system load to
calculate the current embedded PCA-related cost of serving load (which he states to be
$6.81/MWh), as opposed to using normalized firm system sales to calculate the same
figure..
RESPONSE TO REQUEST FOR PRODUCTION NO.
The Load Change Adjustment , as calculated in the Company s PCA Deferral
Report is based upon the change from Normalized System Load to Actual System
Load. It would be inappropriate to use an adjustment rate based upon sales unless the
growth measured was also based upon sales, i.e. a sales change adjustment rather
than a load change adjustment. Please also see the Company response to Staff
Request for Production No.
The response to this request was prepared by Gregory W. Said, Manager of
Revenue Requirement, Idaho Power Company, in consultation with Barton L. Kline
Senior Attorney, Idaho Power Comf1::my-
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST
OF NW ENERGY COALITION TO IDAHO POWER COMPANY - Page 3
Friday, September 15, 2006.max
REQUEST FOR PRODUCTION NO.
Please state Idaho Power Company s current average unit cost of serving load
growth.
RESPONSE TO REQUEST FOR PRODUCTION NO.
From the Company s perspective average unit cost is synonymous with embedded
cost. As stated in Mr. Said's testimony, the current embedded PCA related cost of
serving load is $6.81 per MWh.
The response to this request was prepared by Gregory W. Said, Manager of
Revenue Requirement, Idaho Power Company, in consultation with Barton L. Kline,
Senior Attorney, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST
OF NW ENERGY COALITION TO IDAHO POWER COMPANY - Page 4
Friday, September 15 , 2006.max
REQUEST FOR PRODUCTION NO.
Please state Idaho Power Company s total amount of spending on demand-side
management ("OSM") programs or initiatives (including payments to the Northwest
Energy Efficiency Alliance ("NEEA") for each year starting with year 1995 through 2005.
RESPONSE TO REQUEST FOR PRODUCTION NO.
The following table details Idaho Power Company s total amount of spending on
demand-side management ("OSM") programs or initiatives (including payments to the
Northwest Energy Efficiency Alliance (lithe Alliance )) for each year starting with year 1995
through 2005 as provided in the Company s respective DSM Annual Reports (previously
termed ConseNation Plan) filed with the Commission.
Total System
(nominal $)
1 ~~5 $6 186,558
1996 $4 350 128
1997 $3 189 173
1998 $2 681,668
1999 $2 127 840
2000 $1 609,217
2001 $1 694 314
2002 $2 143,103
2003 $2,482 972
2004 $3 707 280
2005 $6,700 973
Notes:
Expenses are reported on a cash basis.
The response to this request was prepared by Tim Tatum , Senior Analyst, Idaho
Power Company, in consultation with Barton L. Kline , Senior Attorney, Idaho Power
Company-
IDAHO POWER COMPANY'S RESPONSE TO I HI:: FIRST PRODUCTION REQUEST
OF NW ENERGY COALITION TO IDAHO POWER COMPANY - Page 5
Friday, September 15 , 2006.max
REQUEST FOR PRODUCTION NO.
Please state an estimate of Idaho Power Company s expected total amount of
spending on DSM programs or initiatives (including payments to NEEA) in 2006.
RESPONSE TO REQUEST FOR PRODUCTION NO.
Idaho Power Company s expected total amount of spending on DSM programs or
initiatives (including payments to the Alliance) in 2006 is $12 670 000.
The response to this request was prepared by Tim Tatum, Senior Analyst, Idaho
Power Company, in consultation with Barton L. Kline, Senior Attorney, Idaho Power
Company.
IDAHO POWER COMPANY'S RESPONSe. 10 fHE FIRST PRODUCTION REQUEST
OF NW ENERGY COALITION TO IDAHO POWER COMPANY - Page 6
Friday, September 15, 2006.max
REQUEST FOR PRODUCTION NO.
Please state the total amount collected by Idaho Power Company under Schedule
91 ("Energy Efficiency Rider ) for each year starting with year 2002 through 2005.
RESPONSE TO REQUEST FOR PRODUCTION NO.
The total amount collected by Idaho Power Company under Schedule 91 ("Energy
Efficiency Rider") on a system basis for each year starting with year 2002 through 2005 is
provided in the following table.
Idaho Power Company
DSM Rider Funds - GL Account 254201 & 254202
Idaho & Oregon Yearly Data from 2002.2005
2002 2003 2004 2005 2002-2005 Total
761 727.43 12,575,298.44
105,269.200 885.15
866 997.776,183.
101,742.42 101 742.42
3,475.475-
105 217.105 217.
Idaho Rider
Funding
Interest
Idaho Total
577,984.
063.
592 048.
587,753.98 ~ 2 647,832.
044.19 . 39,507.40
629 798.17 2 687 339.
Oregon Rider
Funding
Interest
Oregon Total
**Oregon Rider approved in August 2005. In August 2005, $141 089.64 was transferred into the rider account from a
dcfcrITal account. Year end available funding balance wa~ $246,307.14-
The response to this request was prepared by Tim Tatum, Senior Analyst, Idaho
Power Company, in consultation with Barton L. Kline , Senior Attorney. Idaho Power
Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST
OF NW ENERGY COALITION TO IDAHO POWER COMPANY - Page 7
Friday, September 15, 2006.max
REQUEST FOR PRODUCTION NO.
Please state an estimate of Idaho Power Company s expected total collections
under the Energy Efficiency Rider in 2006.
RESPONSE TO REQUEST FOR PRODUCTION NO.
Idaho Power Company s expected total collections under the Energy Efficiency
Riders in Idaho and Oregon in 2006 is approximately $8 740 979 based upon forecasted
normalized sales. Idaho customers are expected to provide approximately $8,334,415
and $406 564 is expected from Oregon customers.
The response to this request was prepared by Tim Tatum , Senior Analyst, Idaho
Power Company, in consultation with Barton L. Kline, Senior Attorney, Idaho Power
Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST
OF NW ENERGY COALITION TO IDAHO POWER COMPANY - Page 8
Friday, September 15, 2006.max
REQUEST FOR PRODUCTION NO.
Please state the total amount of estimated energy savings (expressed as average
megawatts) Idaho Power Company and its customers have achieved as a result of DSM
programs (including any savingsj achieved as a result of NEEA programs) for each year
starting with year 1995 through 2005.
RESPONSE TO REQUEST FOR PRODUCTION NO.
The following table details the total amount of estimated energy savings
(expressed as average megawatts) Idaho Power Company and its customers have
achieved as a result of DSM programs (including any savings achieved as a result of
Alliance programs) for each year starting with year 1995 through 2005 as provided in the
company s respective DSM Annual Reports (previously termed Conservation Plan) filed
with the Commission.
Year
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
005
Annual Energy
Savings
excluding
Alliance
(Mwa)
2.42
Alliance
Reported
Energy
Savings
(Mwa
29**
Total
Annual
Energy
Savings
(Mwa)
3.26
Noles:
Alliance Savings not available prior to 2004. The Alliance savings based on regional load allocation
percentage of 6.5%.
Preliminary estimate from the Alliance, February 24 2006
IDAHO POWER COMPANY'S RESPONSE TO THE: f-IHST PRODUCTION REQUEST
OF NW ENERGY COALITION TO IDAHO POWER COMPANY - Page 9
Friday, September 15, 2006.max
The response to this request was prepared by Tim Tatum, Senior Analyst, Idaho
Power Company, in consultation with Barton L. Kline, Senior Attorney, Idaho Power
Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST
OF NW ENERGY COALITION TO IDAHO POWER COMPANY - Page 10
Friday, September 15, 2006.max
REQUEST FOR PRODUCTION NO.
Please state the total amount of estimated energy savings (expressed as average
megawatts) Idaho Power Company and its customers are expected to achieve as a result
of DSM programs (including any savings achieved as a result of NEEA programs) in
2006.
RESPONSE TO REQUEST FOR PRODUCTION NO.
Idaho Power Company and its customers are expected to achieve energy savings
of approximately 3_6 average megawatts in 2006 as a result of DSM programs. This
estimate does not include savings achieved as a result of Alliance programs as such
estimate is not available to Idaho Power at this time.
The response to this request was prepared by Tim Tatum, Senior Analyst, Idaho
Power Company, in consultation with Barton L. Kline, Senior Attorney, Idaho Power
Company.
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST
OF NW ENERGY COALITION TO IDAHO POWER COMPANY - Page
Friday, September 15, 2006.max
REQUEST FOR PRODUCTION NO. 10:
Please provide any studies , reports, memoranda , or similar analyses which
estimate the potential energy or peak demand savings which may be achievable through
DSM programs in Idaho Power s service territory.
RESPONSE TO REQUEST FOR PRODUCTION NO.1 0:
Idaho Power objects to this request on the grounds that it does not specify any
timeframe for producing studies , reports , etc.This objection notwithstanding, the
enclosed CD contains copies of the studies, reports , etc. addressing the Company
most recent estimates of DSM potential.
The response to this request was prepared by Tim Tatum, Senior Analyst, Idaho
Power Company, in consultation with Barton L. Kline, Senior Attorney, Idaho Power
Company.
DATED this 5th day of September, 2006, at Boise, Idaho.
(J~r9-:--
BARTOJ L. KLINE
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S RESPONSE TO THE FIRST PRODUCTION REQUEST
OF NW ENERGY COALITION TO IDAHO POWER COMPANY - Page 12
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