20080307Youngblood 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 INCLUSION OF THE
EVANDER ANDREWS PROJECT
INVESTMENT IN RATE BASE
CASE NO. IPC-E-08-01
IDAHO POWER COMPAN
DIRECT TESTIMONY
OF
MICHAEL J YOUNGBLOOD
1 Q.Please state your name and business address.
2 A.My name is Michael J. Youngblood and my
3 business address is 1221 West Idaho Street, Boise, idaho.
4 Q.By whom are you employed and in what
5 capacity?
6 A.I am employed by Idaho Power Company as a
7 Senior Pricing Analyst in the Revenue Requirement section of
8 the Pricing and Regulatory Services Department.
9 Q.Please describe your educational background
10 and work experience with idaho Power Company.
11 A.In May of 1977, I received a Bachelor of
12 Science Degree in Mathematics and Computer Science from the
13 University of Idaho. From 1994 through 1996, I was a
14 graduate student in the MBA program at Colorado State
15 University.
16 i became employed by Idaho Power Company in
17 1977. During my career, I have worked in several departments
18 and subsidiaries of the Company, including Systems
19 Development, Demand Planning, Strategic Planning and IDACORP
20 Solutions. Most relevant to this testimony, is my
21 experience wi thin the Pricing and Regulatory Services
22 Departmen t .
23 From 1981 to 1988, I worked as a Rate Analyst
24 in the Rates and Planning Department where I was responsible
25 for the preparation of electric rate design studies and bill
YOUNGBLOOD, DI 1
Idaho Power Company
1 frequency analyses. I was also responsible for the
2 validation and analysis of the load research data used for
3 cost of service allocations. From 1988 through 1991, I
4 worked in Demand Planning and was responsible for load
5 research and load forecasting functions including sample
6 design, implementation, data retrieval, analysis and
7 reporting. I was responsible for the preparation of the
8 fi ve-year and twenty-year load forecasts used in revenue
9 projections and resource plans as well as the presentation
10 of these forecasts to the public and regulatory commissions.
11 In 2001, I returned to the Pricing and
12 Regulatory Services Department and have worked on special
13 projects related to deregulation, the Company's Integrated
14 Resource Plan, and filings with this Commission and the
15 Oregon Public Utility Commission. In 2005, I was a member of
16 the Peaking Resource RFP Bid Evaluation Team that selected
17 the Evander Andrews plant which is the subject matter of
18 these proceedings.
19 Q.Are you the same Michael J. Youngblood that
20 provided direct rebuttal testimony in Case No. IPC-E-06-09,
21 the Application of Idaho Power Company for a Certificate of
22 Public Convenience and Necessity for the Evander Andrews
23 Power Plant?
24 A.Yes I am.
25 Q.Please describe the distinction between the
YOUNGBLOOD, DI 2
Idaho Power Company
1 names "Evander Andrews Power Plant" and the "Danskin CTl
2 Power Plant" we are discussing in this proceeding.
3 A.They are both the same plant. When the
4 winning bid for the 2005 Peaking Resource Request for
5 Proposal was awarded to Siemens Power Generation, Inc., the
6 project, then called the "Evander Andrews Power Plant", was
7 to be located at the existing, approximate 40-acre Evander
8 Andrews Power Complex located north of Mountain Home, idaho.
9 The new unit was to be adjacent to two 45 MW gas-fired units
10 built by Idaho Power in 2001.
11 To avoid confusion between the "Evander
12 Andrews Power Plant" and the "Evander Andrews Power
13 Complex", the Company has adopted the naming convention of
14 this plant as the "Danskin Combustion Turbine No.1", or
15 "Danskin CT1", which is located at the Evander Andrews Power
16 Complex. The existing two gas-fired units built in 2001 at
17 the Evander Andrews Power Complex are referred to as
18 "Danskin CT Nos. 2 and 3".Throughout the rest of this
19 testimony, i will refer to the plant as the "Danskin CTl
20 Power Plant" and I will use the name "Danskin CTl Project"
21 to refer to the Danskin CTl Power Plant and all associated
22 transmission investment.
23 Q.Did the Commission issue an order in Case No.
24 IPC-E-06-09 approving the Company's application for a
25 Certificate of Public Convenience and Necessity for the
YOUNGBLOOD, DI 3
Idaho Power Company
1 Evander Andrews Plant, now being called the Danskin CTl
2 Power Plant?
3 A.Yes. The Commission, in Order No. 30201,
4 issued on December 15, 2006, approved the Company's
5 Application for a Certificate of Public Convenience and
6 Necessity. On December 15, 2006 the Commission issued
7 Certificate No. 465 for the Evander Andrews Power Plant. A
8 copy of Certificate No. 465 is attached as Exhibit 1.
9 Q.What is the Company requesting from the
10 Commission in this case?
11 A.The Company is asking the Commission to
12 review the investments the Company has made to develop and
13 integrate the Danskin CTl Project into the Company's
14 operating system and approve an adjustment to the Company's
15 rates to reflect those investments and certain related
16 expenses. This investment includes both generation and
17 transmission investment. The Company proposes that the rate
18 adjustment associated with the Danskin CTl Proj ect occur on
19 June 1, 2008 to coincide with other adjustments to rates
20 that will occur on that date.
21 Q.Will the Danskin CTl Power Plant be in
22 commercial operation on June 1, 2008?
23 A.Yes. In accordance with the agreement between
24 Idaho Power Company and Siemens Power Generation, Inc.,
25 care, custody and control of the Danskin CTl Power Plant
YOUNGBLOOD, DI 4
idaho Power Company
1 will be transferred to idaho Power on the Guaranteed
2 Provisional Acceptance Date, which is scheduled to occur
3 prior to April 1, 2008. Final acceptance and title transfer
4 will occur soon thereafter.
5 Q.Will testing of the power plant occur prior
6 to provisional acceptance of the proj ect?
7 A.Yes. Provisional acceptance of the power
8 plant is subject to performance tests to verify that plant
9 characteristics such as net capacity, net heat rate, and
10 emission levels are wi thin tolerances contained in the
11 purchase agreement.
12 Q.In your opinion, will the Danskin CTl Project
13 be used and useful on June 1, 2008?
14 A.Yes.
15 Q.Why has the Company filed this application
16 for inclusion of the Danskin CTl Proj ect prior to
17 Provisional Acceptance of the power plant?
18 A.The Company's plan has been to have the
19 Danskin CTl Project available to serve summer loads
20 beginning in June 2008, as identified in Case No. IPC-E-06-
21 09. The plant will be operational prior to June 1, 2008;
22 however, the Company is trying to time the change in rates
23 to coincide with the proj ect' s availability to serve the
24 summer peak loads in June. An additional benefit to a June 1
25 rate change is that other rate changes such as the PCA will
YOUNGBLOOD, DI 5
Idaho Power Company
1 also occur on June 1, 2008, thus minimizing customer
2 confusion associated with multiple rate changes within the
3 same year. Provisional Acceptance and Commercial Operation
4 will occur during the period when the Commission is
5 reviewing the Company's application and auditing costs. The
6 Danskin CTl Proj ect will be in commercial operation in time
7 to serve anticipated summer peak loads.
8 Q.Please discuss how the Federal Energy
9 Regulatory Commission's Standards of Conduct affect
10 testimony related to investments in the Danskin CTl Proj ect.
11 A.As I mentioned before, the Danskin CTl
12 Project includes both the Danskin CTl Power Plant and the
13 associated transmission investment. i will talk about the
14 capital investment in the power plant portion of the total
15 project separately from the investment in the transmission
16 and interconnection facilities needed to integrate the
17 Danskin CTl Power Plant.
18 POWER PLAT CONSTRUCTION EXPENDITURES
19 Q.What is the total investment specifically
20 related to the construction expenditures for the Danskin CTl
21 Power Plant that the Company anticipates will have been
22 booked by June 1, 2008 and that the Company is asking be
23 reflected in rates?
24 A.The Company anticipates $57,335,866 of
25 investment associated with the Danskin CTl Power Plant will
YOUNGBLOOD, DI 6
Idaho Power Company
1 be booked by June 1, 2008. An additional $314,995 will be
2 booked shortly after June 1, 2008. The total amount of
3 $57,650,861 ($57,335,866 + $314,995) is the basis for the
4 Danskin CTl Power Plant portion of the June 1 rate change
5 that the Company is requesting in this proceeding.
6 Q.What are some of the components that makeup
7 the above-referenced $57,650,861 investment in the Danskin
8 CTl Power Plant?
9 A.The largest portion of the $57,650,861
10 investment associated with the construction of the Danskin
11 CTl Power Plant is the contract with Siemens Power
12 Generation, Inc. for $49,999,000.
13 Q. What other components makeup the $57,650,861
14 investment in the Danskin CTl Power Plant?
15 A.As shown in Exhibit 2, as of January 31,
16 2008, Idaho Power had booked $50,545,080 as Construction
17 Work In Progress (CWIP). This amount includes $44,999,100
18 for the Siemens contract, $493,386 for change orders,
19 $1,312,256 for sales taxes, and $1,130,549 for engineering,
20 oversight and support. Also included in the amount of
21 dollars booked as of January 31, 2008 is $2,267,022 of
22 Allowance for Funds Used During Construction (AFUDC).
23 Q.What additional investment will the Company
24 make in the Danskin CTl Power Plant prior to June 1, 2008?
25 A.During the months of February, March, April
YOUNGBLOOD, DI 7
Idaho Power Company
1 and May, the Company anticipates booking an additional
2 $6,790,786 related to the Danskin CTl Power Plant. This will
3 bring the total investment in the Danskin CTl Power Plant on
4 June 1, 2008 to $57,335,866.
5 Q.What is the additional $314,995 the Company
6 is requesting as a part of $57,650,861 investment in the
7 Danskin CTl Power Plant?
8 A.The final payment of $249,995 is due on the
9 contract price to Siemens on June 1, 2008. The Company
10 anticipates making this payment on that date, or shortly
11 thereafter, once all final "punch list" items and possible
12 change orders have been completed and verified. The Company
13 has estimated an additional $65,000 for the month of June
14 associated with change orders, sales taxes, engineering,
15 oversight and support. This will bring the total investment
16 in the Danskin CTl Power Plant on or before June 30, 2008 to
17 $57,650,861.
18 Q.How does the $57,650,861 of investment in the
19 Danskin CTl Power Plant compare to the Company's Commitment
20 Estimate noted by the Commission in Order No. 3020l?
21 A.The $57,650,861 investment in the Danskin CTl
22 Power Plant is $2,349,139 less than the $60,000,000
23 Commitment Estimate provided by the Company. As noted by the
24 Commission in Order No. 30201, the Company had added
25 $10,001, 000 to the $49,999,000 contract price of the Danskin
YOUNGBLOOD, DI 8
idaho Power Company
1 CTl Power Plant to cover certain additional costs such as:
2 sales taxes, AFUDC, the cost of idaho Power engineering,
3 oversight and support on the proj ect, the cost of
4 capitalized start-up fuel, construction change orders and
5 other unforeseen events. As shown in Exhibit 2, sales taxes
6 amount to $1,492,256, AFUDC amounts to $2,902,022, the cost
7 of Idaho Power engineering, oversight and support on the
8 proj ect amounts to $1,455,549, and the estimated cost of
9 capitalized start-up fuel and construction change orders and
10 other unforeseen events amount to $400,000 and $685,316,
11 respectively.
12 Q.What is the total amount of investment the
13 Company is requesting to be added to rate base for the
14 Danskin CTl Power Plant?
15 A.The total amount of investment in the Danskin
16 CTl Power Plant which the Company is requesting to be added
17 to rate base is $57,650,861. This amount is $2,349,139 less
18 than the Company's Commitment Estimate of $60,000,000.
19 TRASMISSION AN INTERCONNCTION FACILITIES
20 Q.What is the total investment in transmission
21 and interconnection facilities required to integrate the
22 Danskin CTl Power Plant into the Company's system that the
23 Company anticipates will have been booked by June 1, 2008
24 and that the Company is asking be reflected in rates in this
25 proceeding?
YOUNGBLOOD, DI 9
Idaho Power Company
1 A.As shown in Exhibi t 3, as of January 31,
2 2008, the total investment in transmission and
3 interconnection facilities required to integrate the Danskin
4 CTl Power Plant into the Company's system is $6,694,129.
5 Included in this amount is $139,811 of AFUDC.
6 During the months of February, March, April and May,
7 the Company anticipates booking an additional $636,987
8 related to Danskin CTl transmission and interconnection
9 investment, including $15,134 of AFUDC. This will bring the
10 total investment in transmission and interconnection
11 facilities associated with the Danskin CTl Project which
12 will be placed in service by June 1, 2008 to $7,331,116.
13 Q.How does the $7,331,116 of investment in
14 transmission and interconnection investment for the Danskin
15 CTl Project compare to the Company's estimates noted by the
16 Commission in Order No. 3020l?
17 A.It is substantially less. However, as I will
18 discuss later in my testimony, this amount is only a portion
19 of the total cost of transmission and interconnection
20 investment that will eventually be needed to fully integrate
21 the Danskin CTl Power Plant.
22 Q.What was the cost estimate for transmission
23 and interconnection facilities noted by the Commission in
24 Order No. 3020l?
25 A.On November 20, 2006, at the time of the
YOUNGBLOOD, DI 10
Idaho Power Company
1 evidentiary hearing for Case No. IPC-E-06-09, the 90-Day
2 Transmission Interconnection Facility Study Report
3 ("Facility Study Report") had not been completed. As noted
4 in Order No. 30201, the Company's Power Delivery
5 (transmission) Business Unit had provided a "preliminary"
6 estimate of approximately $22.8 million to construct the
7 transmission and substation facilities required to upgrade
8 the Company's transmission system from Mountain Home to the
9 Treasure Valley load center.
10 Q.Has the Facility Study Report been completed
11 and filed with the Commission?
12 A.Yes. On February 20, 2007, the Company filed
13 with the Commission a copy of the Facility Study Report. The
14 Company's Power Supply Department, as the transmission
15 customer, was required to follow the same Large Generator
16 Interconnection Request process that any other independent
17 power producer would be required to flows. The Facility
18 Study Report filed with the Commission is a result of that
19 process. Included with the report was a list of facilities
20 needed to integrate the Danskin CTl Power Plant into the
21 Idaho Power system and the estimated cost of those
22 facilities.
23 Q.What were the estimated costs contained in
24 the report?
25 A.To perform the Interconnect Work, the total
YOUNGBLOOD, DIll
Idaho Power Company
1 cost estimate (+/- 20%) was $775,000. To perform the
2 Network Upgrades the total cost (+ / - 20%) was $22,392,415.
3 The grand total cost to perform the Interconnect and Network
4 Upgrades was (+/- 20%) $23,167,415, or within the range of
5 $18.5 million to $27.8 million.
6 Q.Is the Company requesting that the Commission
7 include more than $7,331,116 for transmission and
8 interconnection facilities in rate base in this proceeding?
9 A.No. Because of delays in construction, all
10 of the costs of the Danskin CTl transmission facilities have
11 not been incurred and the Company is not asking for their
12 inclusion in rate base at this time.
13 Q.How does the total investment in transmission
14 and interconnection facilities the Company anticipates will
15 have been booked by June 1, 2008 and that the Company is
16 asking be reflected in rates at this time, compare to the
17 estimate provided by the Facility Study Report?
18 A.The $7,331,116 investment in transmission and
19 interconnection facilities the Company expects to have been
20 booked in plant investment by June 1, 2008 is $15,836,299
21 less than the $23,167,415 estimate in the Facility Study
22 Report.
23 Q.Why is there such a large difference between
24 the Company's booked investment and the original estimate?
25 A.The primary reason for the large difference
YOUNGBLOOD, DI 12
Idaho Power Company
1 is because construction of a large portion of the
2 transmission proj ect has been delayed due to unanticipated
3 appeals of a required Conditional Use Permit and due to
4 delays in the Bureau of Land Management permi t ting process.
5 This portion of the project is now scheduled to be in
6 service in October 2008.
7 Q.Please describe the reasons for the delays to
8 the proj ect schedule.
9 A.The overall Danskin CTl Project involves
10 primarily six facets: 1) Danskin station, 2) Bennett
11 Mountain station, 3) Danskin-Bennett 230kV transmission, 4)
12 Hubbard Station, 5) Danskin-Hubbard 230kV transmission, and
13 6) the communications that tie all the pieces together.
14 Originally, the proj ect schedule called for Danskin
15 station, Bennett Mountain station, and the 230kV
16 transmission line between them to be completed by December
17 1, 2007. However, a delay in Danskin generator testing
18 delayed the requested in-service date to January 2008. The
19 Danskin-Hubbard 230kV transmission line and the Hubbard
20 station were scheduled for completion by June 1, 2008,
21 however this was later delayed for reasons I describe later
22 in my testimony.
23 Q.Which facets of the transmission proj ect
24 related to the Danskin CTl Power Plant will be in service on
25 June 1, 2008?
YOUNGBLOOD, DI 13
Idaho Power Company
1 A.The Danskin station, Bennett Mountain
2 station, Danskin-Bennett 230kV transmission line and the
3 portion of the communications that tie these pieces together
4 were placed in service in January 2008, meeting the
5 generator testing deadline. The Hubbard Station, the
6 Danskin-Hubbard 230kV transmission line and the portion of
7 the communications associated with those facets have been
8 delayed from June 1, 2008. They are scheduled to be placed
9 in service in October 2008.
10 Q.What was the reason for the delay for this
11 portion of the overall Danskin CTl Project?
12 A.As I stated before, the delay on this portion
13 of the project was due to unanticipated appeals of the
14 required Conditional Use Permit in Ada County for the
15 230kV transmission line segment between Danskin and Hubbard
16 stations. The Hubbard station was delayed due to BLM
17 permitting issues. In order to comply with all county
18 conditional use requirements, several additional public
19 open-houses were held, part of the line route was re-
20 negotiated, and several hearings were held. These issues
21 resulted in the forecasted delay to October 2008.
22 Q.What is the expected remaining investment the
23 Company anticipates will be booked after June 1, 2008?
24 A.It is expected that the portion of the
25 Danskin CTl Project which is associated with transmission
YOUNGBLOOD, DI 14
Idaho Power Company
1 and interconnection facilities that will be booked after
2 June 1, 2008 is approximately $19.5 million.
3 Q.What then is the total estimated cost for the
4 transmission and interconnection facilities for the Danskin
5 CTl Proj ect?
6 A.The total estimated transmission related
7 costs expected to be booked by June 1,2008 is $7,331,116.
8 The amount of dollars expected to complete the proj ect by
9 October 2008 is $19.5 million. The Company will seek
10 inclusion of this amount in rate base at a later date. The
11 grand total of the transmission and interconnection
12 facilities for the Danskin CTl project by year-end 2008 is
13 anticipated to be $26.8 million ($7.3 million + $19.5
14 million).
15 Q.How does this amount compare to the estimated
16 total amount provided in the Facility Study Report provided
17 to the Commission?
18 A.The anticipated cost of $26.8 million is
19 within the range of that originally stated in the Facility
20 Study Report. It is $1 million less than the $27.8 million
21 upper bound of that range.
22 Q.Will the Company be able to fully utilize the
23 entire output of the Danskin CTl Power Plant in order to
24 meet peak demand this summer prior to completion of all
25 transmission and interconnection facilities scheduled to be
YOUNGBLOOD, DI 15
Idaho Power Company
Ion-line in October 2008?
2 A.Yes. As I mentioned before, the Danskin
3 station, Bennett Mountain station, Danskin-Bennett
4 230kV transmission line and the portion of the
5 communications that tie these pieces together were placed in
6 service in January of 2008, meeting the generator testing
7 deadline. The Danskin-Bennett 230kV transmission line
8 provides a radial connection to the transmission network
9 through the Bennett Mountain Power Plant. With this segment
10 in place, the Company will be able to fully utilize the
11 entire output of the Danskin CTl Power Plant in order to
12 meet peak demand this summer.
13 Q.if the Company can utilize the full output of
14 the Danskin CTl Power Plant for peak loads this sumer with
15 the transmission upgrades already completed, why is the
16 additional network upgrade a necessary part of integrating
17 this plant?
18 A.The design for the integration of the Danskin
19 CTl Power Project included two 230kV transmission lines to
20 connect the generator to the existing transmission network.
21 The Danskin-Bennett 230kV transmission that is in place
22 today provides a radial connection to the transmission
23 network through the Bennett Mountain Power Plant. The
24 second line, which was delayed and will be completed by
25 October 2008 (the Danskin-Hubbard 230kV line), will provide
YOUNGBLOOD, DI 16
Idaho Power Company
1 reliable service if there are line outages.It also
2 provides the ability to transfer the local generation to the
3 west during conditions of heavy east-to-west transmission
4 system flows.
5 idaho Power considers the risk for line
6 outages during the 2008 summer operating season to be
7 minimal. Additionally, the Company does not expect this
8 summer's operating conditions to result in heavy east-to-
9 west transmission flows that would cause curtailment of the
10 Danskin CTl Power Plant generation. However, if some
11 unforeseen event were to occur, for example a wildfire,
12 which would take out the Danskin-Bennett radial connection
13 or worse yet, the connection between the Bennett Mountain
14 Power Plant and the Company's transmission network, then the
15 output from one or both of the generating plants may be
16 lost. So while the Company will be able to fully utilize
17 the output of the Danskin CTl Power Plant this summer,
18 barring any unforeseen events, it is prudent for system
19 reliability to complete two 230kV transmission lines as were
20 originally designed to connect the generator to the existing
21 transmission network.
22 REVENUE REQUIRENT
23 Q.What is the sum of the Danskin CTl Power
24 Plant and the related transmission and interconnection
25 investment that the Company is requesting to be reflected in
YOUNGBLOOD, DI 17
idaho Power Company
1 its revenue requirement?
2 A.The total investment the Company will make by
3 June 2008 is $64,981,977. This amount is the summation of
4 $57,650,861 for the investment in the Danskin CTl Power
5 Plant plus $7,331,116 for the investment in transmission and
6 interconnection facilities related to the power plant.
7 Q.Have you quantified the change in the
8 Company's revenue requirement as a result of the addition of
9 the Company's investment in the Danskin CTl Project?
10 A.Yes. I requested the preparation of Exhibit 4
11 that demonstrates the change in the Company's revenue
12 requirement from the level determined in Order No. 30508
13 issued in Case No. IPC-E-07 -08. The change in revenue
14 requirement is due solely to the addition of the Danskin CTl
15 Power Plant and the transmission and interconnection
16 facilities booked as of June 2008, necessary to integrate
17 the power plant to the Company's system.
18 Q.Please describe Exhibi t No.4.
19 A.Exhibi t No. 4 is a two-page exhibi t. Page 1
20 of Exhibit No. 4 summarizes the system and idaho
21 jurisdictional rate base and net income components and
22 quantifies the revenue deficiency associated with the
23 addition of the Danskin CTl Proj ect. Page 2 of Exhibit No.
24 4 shows the major category detail of changes in the rate
25 base components and net income components associated with
YOUNGBLOOD, DI 18
Idaho Power Company
1 the Danskin CTl Proj ect from levels approved by the
2 Commission in Order No. 30508. These changes are shown on a
3 system and Idaho jurisdictional basis. All jurisdictional
4 allocations of FERC accounts were fixed such that the
5 addition of the Danskin CTl Proj ect did not result in a re-
6 allocation of non-Danskin CTl Project expenses.
7 Q.What is the increase in total combined rate
8 base which results from including the Company's investment
9 in the Danskin CTl Proj ect?
10 A.As shown at line 3 on page 1 of Exhibit 4,
11 the total combined rate base is increased by $64,163,203.
12 The detail for this number is found on page 2 of Exhibit 4,
13 lines 38 through 43. The plant investment in the Danskin
14 CTl Power Plant of $57,650,861 can be seen at line number 38
15 on page 2 of Exhibit 4. Interconnection investment
16 associated with the Danskin CTl Power Plant (transmission
17 plant and distribution plant) can be found at lines 39
18 through 40 on page 2 of Exhibit 4. The total of these 3
19 lines, $64,981,977, less $818,774 on line 42 for accumulated
20 deferred income taxes, results in the $64,163,203 increase
21 in total combined rate base.
22 Q.What are the changes in operating income as a
23 result of adding the Danskin CTl Proj ect?
24 A.As shown at line 59 on page 1 of Exhibit 4,
25 operating income decreases by $620,790 with the addition of
YOUNGBLOOD, DI 19
Idaho Power Company
1 the Danskin CTl Project. This is the result of total
2 operating revenues increasing by $4,156,333, due to
3 increased surplus sales, and total operating expenses
4 increasing by $4,777,123 ($4,156,333 - $4,777,123).
5 Q.What are the major changes affecting the
6 increase in total operating expenses?
7 A.The maj or changes in operating expenses
8 include operation and maintenance expenses, depreciation
9 expenses, taxes, and investment tax credits. Changes in
10 these expenses have been included because these items are a
11 direct cost of the new plant and can be quantified at this
12 time. Total system operation and maintenance expenses,
13 which are driven mainly by increases in fuel expense and
14 decreases in purchased power costs, increase by $1,672,756
15 (Exhibit 4, page 1, line 9). The total system depreciation
16 expense increases by $1,813,550 (line 10). Together with
17 the expenses for all taxes and investment tax credits, total
18 operating expenses increase by$4, 777,123 (Exhibit 4, page 1,
19 line 16) .
20 Q.Has an adjustment for reduced power supply
21 expenses resulting from the addition of the Danskin CTl
22 Project been made in the Company's incremental revenue
23 requirement computations?
24 A.Yes. In the Commission order following the
25 Company's previous application to add the Bennett Mountain
YOUNGBLOOD, DI 20
Idaho Power Company
1 power plant to rate base, Order No. 29790, Case No. IPC-E-
2 05-10, the Commission ordered that "future filings by the
3 Company reflect the associated reduction in power supply
4 costs in base rates." On page 2 of Exhibit 4, line 66 shows
5 the total power supply costs are reduced by $2,613,807 on a
6 system basis, or $2,475,227 for the idaho jurisdiction. As
7 shown on lines 62 through 65, on a normalized system basis,
8 the addition of the Danskin CTl Power Proj ect increases
9 surplus sales by $4,156,333, increases fuel expenses by
10 $7,914,159 ($7,916,038 - $1,879) and decreases firm
11 purchases by $6,371,633.
12 Q.Will the Company use this adjusted base for
13 future Power Cost Adjustment (PCA) filings following the
14 approval of this Application?
15 A.Yes. In accordance with Order No. 29790, the
16 Company's future PCA filings will incorporate the
17 adjustments approved in this case. (Order No. 29790, p. 10)
18 Q.What is the revenue deficiency impact to the
19 Company with the addi tion of the Danskin CTl Proj ect?
20 A. The total system revenue deficiency is
21 $9,553,172. The revenue deficiency for the Idaho
22 jurisdiction is $9,010,952, which can be seen at line 29 on
23 page 1 of Exhibi t No.4.
24 Q.What percentage increase is required in rates
25 in order to recover the $9,010,952 revenue deficiency for
YOUNGBLOOD, DI 21
idaho Power Company
1 the Idaho jurisdiction?
2 A.An increase in Idaho jurisdictional revenue
3 of 1.39% is needed in order to recover the $9,010,952
4 revenue deficiency for the idaho jurisdiction.
5 TARIFF RATES
6 Q.Has the Company prepared tariff sheets to
7 reflect the incremental increase in the Company's revenue
8 requirement?
9 A.Yes. Attachments 1 through 4 to the
10 Company's Application in this proceeding contain tariff
11 related information. Attachment 2 contains the tariff
12 sheets specifying the proposed rates which reflect the
13 revenue requirement for providing retail electric service to
14 the Company's customers in the State of Idaho. Attachment 4
15 to the Application shows a comparison of the revenues from
16 the various tariff customers and special contract customers
17 under the Company's existing rates and charges with the
18 corresponding proposed new revenue levels resul ting from the
19 proposed rates based upon normalized energy sales reflected
20 in Commission Order No. 30508 issued in Case No. IPC-E-07-
21 08.
22 Q.Does this complete your testimony?
23 A.Yes.
YOUNGBLOOD, DI 22
Idaho Power Company
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-08-01
IDAHO POWER COMPANY
EXHIBIT NO.1
MIKE YOUNGBLOOD
BEFORE TH IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER )
COMPANY'S APPLICATION FOR A ) CASE NO. IPC-E-06-9
CERTICATE OF PUBLIC CONVENIENCE )
AND NECESSITY FOR THE EVANDER ) CERTIFICATE NO. 465ANDRES POWE PLANT )
On April 14.2006. Idaho Power Company fied an Application for a Certficate of
Public Convenience and Necessity to constrct a new natu gas-fired genertig plant at th
Evader Andrews Complex near Mountain Home, Idaho pursuat to Idaho Code § 61-526.
IT IS HEREBY CERTIFIED that the futu public convenience and necessity
requires and wil requie Idaho Power Compay authorization to constct and subsequently
operate a 170 MW natual gas-fied power plant and related interconnection facities at the
Evander Andrws Complex. The Evander Andrews generting plant will be located in the
Evander Andrws Complex (formerly "Dankin") in Mounta Home and wil be inteonnecte
to the natual gas transmission system. Idaho Power shall operate and maintain the Evander
Andrews power plant to fush electrc energy to its customers.
TIS CERTIFICATE is predicated upon and issued puruant to the findins of fact
and conclusions of law contained in Order No. 30201 service dated Decmber 15, 2006. in the
above-referenced case.
DATED at Boise, Idaho ths /f)rA day of December 2006.
PA~~~'-
~¡j~Yl
MARSHA H. SMITH. COMMSSIONER
D~~~
ATTEST:
bls/O:IPC-E-06-09 _ Cert 465
Exhibit NO.1
Case No. IPC-E-08-01
M. Youngblood, IPC
Page 1 of 1
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-08-01
IDAHO POWER COMPANY
EXHIBIT NO.2
MIKE YOUNGBLOOD
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BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-08-01
IDAHO POWER COMPANY
EXHIBIT NO.3
MIKE YOUNGBLOOD
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BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-08-01
IDAHO POWER COMPANY
EXHIBIT NO.4
MIKE YOUNGBLOOD
IDAHO POWER COMPANY
JURISDICTIONAL REVENUE REQUIREMENT
FOR THE DANSKIN CT1 GENERATION UNIT AT THE EVANDER ANDREWS COMPLEX
FOR THE 12-MONTHS ENDING DECEMBER 31, 2008
TOTAL AllOC IDAHO
DESCRIPTION SYSTEM ~IPUC
1 SUMMARY OF RESULTS
2 RATE OF RETURN UNDER PRESENT RATES
3 TOTAL COMBINED RATE BASE 64,163,203 60.329,238
4
s OPERATING REVENUES
6 SYSTEM OPPORTUNITY SALES 4,156.333 3,935,9707TOTAL OPERATING REVENUES 4,156.333 3,935,970
8 OPERATING EXPENSES
9 OPERATION & MAINTENANCE EXPENSES 1.672.756 1,584,398
10 DEPRECIATION EXPENSE 1.813,550 1,708,260
11 TAXS OTHER THAN INCOME 192,017 180,445
12 PROVISION FOR DEFERRED INCOME TAXES 818,774 792,834
13 INVESTMENTTAX CREDIT ADJUSTMENT 1.913,140 1,852,528
14 FEDERAL INCOME TAXES 366,753 355,133
15 STATE INCOME TAXES /1,999,866)(1,936,507)
16 TOTAL OPERATING EXPENSES 4,m.123 4,537,092
17 OPERATING INCOME /620,790)(601,122)
18 ADD: IERCO OPERATING INCOME
19 CONSOLIDATED OPERATING INCOME /620,790)(601,122)20 RATE OF RETURN UNDER PRESENT RATES -0.97%.1.00%
21
22 DEVELOPMENT OF REVENUE REQUIREMENTS
23 RATE OF RETURN 8.10%8.10%
24
25 RETURN 5,197,219 4,886,668
26 EARNINGS DEFICIENCY 5.818.010 5,487.79127
28 NET.TO-ROSS TAX MULTIPLIER 1.642 1.64229REVENUE DEFICIENCY 9.553,172 9,010,952
30
31 FIRM JURISDICTIONAL REVENUES (IPC.E.Ol.OS Slp.'649,946,926
32 PERCENT INCREASE REQUIRED 1.39%
33
34 SALES AND WHEELING REVENUES REQUIRED 658.957,878
Exhibit NO.4
Case No. IPC-E-08-01
M. Youngblood, IPC
Page 1 of2
IDAHO POWER COMPANY
JURISDICTIONAL REVENUE REQUIREMENT
FOR THE DANSKIN cn GENERATION UNIT AT THE EVANDER ANDREWS COMPLEX
FOR THE 12.MONTHS ENDING DECEMBER 31, 2008
TOTAL ALLOC IDAHO
DESCRIPTION SYSTEM SOURCE IPUC
35 SUMMARY OF RESULTS
36 DEVELOPMENT OF RATE BASE COMPONENTS
'I ELECTRIC PLANT IN SERVICE
38 PRODUCTION PLANT 57.650.861 54,751,730
39 TRANSMISSION PLAT 7.120.387 6,142.058
4Q DISTIBUTION PLANT 210.729 194,037
41 TOTAL ELECTRIC PLANT IN SERVICE 64,981,9n 61,087,825
42 LESS: ACCUM DEFERRED INCOME TAXES 818.n4 758.588
43 TOTAL COMBINED RATE BASE 64,163,203 60.329.23844
45 DEVELOPMENT OF NET INCOME COMPONENTS
46 OPERATING REVENUES
47 SALES REVENUES 4.156,333 3,935,970
48 OPERATING EXPENSES
49 OPERATION & MAINTENANCE EXPENSES 1,672,756 1,584,398
50 DEPRECIATION EXPENSE 1.813,550 1,708.260
51 TAXS OTHER THAN INCOME 192.017 180,44
52 PROVISION FOR DEFERRED INCOME TAXES 818,774 792.834
53 INVESTMENT TAX CREDIT ADJUSTMENT 1,913,140 1,852,528
54 FEDERAL INCOME TAXES 366,753 355.133
55 STATE INCOME TAXES (1,999,866)(1,936.507)
56 TOTAL OPERATING EXPENSES 4,7n.123 4.537,092fjOPERATING INCOME (620.790)(601,122)
58 ADD: IERCO OPERATING INCOME E10
59 CONSOLIDATED OPERATING INCOME (620,790)(601,122)60
61 POWER SUPPLY COSTS:
62 ACCT. 447/SURPLUS SALES 4,156.333 3.935,970
63 ACCT. 501/FUEL-THERMAL PLATS (1,879)(1.779)
64 ACCT. 547/FUEL-CTHER 7,916.038 7.496.341
65 ACCT. 5551NON-FIRM PURCHASES (6,371.633)(6,033.818)
66 TOTAL POWER SUPPLY COSTS (2.613,807)(2.475,227)
Exhibit NO.4
Case No. IPC-E-08-01
M. Youngblood, IPC
Page 20f2