20080627Bowman direct.pdf

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.
CASE NO. IPC-O8-
IDAHO POWER COMPANY
DIRECT TESTIMONY
JEANNETTE BOWMAN
Please state your name and business address.
My name is Jeannette Bowman.My business
address is 1221 West Idaho Street , Boise, Idaho.
capacity?
By whom are you employed and in what
I am employed by Idaho Power Company as a
Senior Pricing Analyst.
Please describe your educational background
and work experience.
In 1973, I graduated from the College of
Idaho earning a Bachelor of Arts degree in Social Studies
and Mathematics.I have also done graduate work at Boise
State Uni versi ty .In addition, I have attended electric
utility ratemaking courses offered through New Mexico State
University's Center for Public Utilities as well as various
advanced rate courses presented by the Edison Electric
Institute.From 1973 to 1981 , I taught secondary school
mathematics and social studies courses.In 1981 , I joined
Accounting Systems in Boise where my duties primarily
involved implementing accounting software systems.
August 1982, I accepted a position at Idaho Power as a Rate
Analyst.In July 1986 , I was promoted to Senior Rate
Analyst, now designated as Senior Pricing Analyst.
duties as a Senior pricing Analyst include gathering,
BOWMAN, Dr
Idaho Power Company
analyzing, and coordinating data from various departments
throughout the Company required for development of
jurisdictional separation studies, class cost-of-service
studies and rate design as well as other analyses as may
be required.In addition , I assist in the development of
the Company s tariffs.
What is the scope of your testimony in this
proceeding?
Under the direction of Mr. Gale, Vice
President of Regulatory Affairs , my testimony addresses
proposed changes to the Company s Idaho Schedule 24 -
Agricul tural Irrigation Service, as well as all Idaho
lighting and non-metered retail tariff schedules.I will
also address the proposed changes to Schedule 89 - Unit
Avoided Energy Cost for Cogeneration and Small Power
Production.
Have you prepared or supervised the
preparation of certain exhibits relating to your rate
design testimony?
Yes , I have prepared or supervised the
preparation of the following exhibits relating to rate
design:
, BOWMAN , DI
Idaho Power Company
Exhibit Description
Exhibit No. 76 Calculation of Proposed Rates for
Schedules 15, 24 , 39, 40 , 41, and 42.
Exhibit No. 77 Billing Comparisons of Proposed Rates for
Schedule 24 Agricultural Irrigation
Service -
Exhibi t No.7 8 Summary of Revenue Impact
Exhibit No. 79 Proposed Revised Tariff Sheets in
Legislative Format
Exhibit No. 80 Proposed Revised Tariff Sheets
RATE DESIGN
What are your overall obj ecti ves in arriving
at the proposed rate designs for the various serVlce
schedules identified in your testimony?
As discussed in Mr. Gale's testimony, the
first objective is to establish prices which primarily
reflect the costs of the services provided.As part of the
Company s last several general rate cases, this objective
has been met in demand-metered schedules by emphasizing
increases in the demand and customer components and the
inclusion of fewer non-energy-related costs in the energy
charges.Mr. Gale s testimony also discusses a second
objective of having the cost-based rate proposals be
designed to also encourage increased energy efficiency.
Addi tionally, as noted by Mr. Gale , as well as Ms.
Waites and Ms. Nemnich , the rates I will describe as the
BOWMAN, DI
Idaho Power Company
present rate structure are the rates filed in Case No. IPC-
08-0l related to the Danskin Combustion Turbine.
actual rates approved by the Commission in Case No. IPC-
08-01 (Order No. 30559) vary slightly from those originally
filed.In Order No. 30559, the Commission excluded a
relatively small part of the investment from inclusion in
rates ($422 000).The Company has not included this small
impact in the General Rate Case filing because of the time
impact associated with reprocessing all the analyses and
studies.Since the impact of not making the change is to
slightly overstate revenues, any disadvantage accrues to
the Company's case.
SCHEDULE 24 - AGRICULTURAL IRRIGATION SERVICE
What is the current rate structure for
Schedule 24?
Service under Schedule 24 is classified as
being either "in-season" or "out-of-season.The in- season
for each customer begins with the customer s meter reading
for the May billing period and ends with the customer
meter reading for the September billing period.The out-
of - season encompasses all other billing periods.
Within the in-season, customers pay both an Energy
Charge and a Demand Charge for the metered usage.During
the out-of-season, customers pay an Energy Charge only.
BowMAN , DI
Idaho Power Company
For the in-season, customers pay a monthly Service Charge
of $15.00.The monthly Service Charge during the out-of-
season is only $3.00 to encourage customers to continue
service throughout the out-of-season period.
Both Secondary Service and Transmission Service
levels are available under Schedule 24, although no
customers are currently taking Transmission Service.
Schedule 24.
Please describe the rate design proposal for
Consistent with my overall objectives, I
propose to move the individual rate components closer to
the costs indicated by Mr. Tatum's 3CP/12CP Class Cost-of-
Service study as shown on page six of Exhibit No. 67.
rate design proposal on page two of Exhibit No. 76 also
targets the capped 15 percent average revenue increase
indicated on page four of Mr. Tatum s Exhibit No. 70.
In addition, I am proposing a load- factor pricing
mechanism for in-season energy sales to irrigation
Out-of-season energy sales will not be impactedcustomers.
by the proposed load-factor energy rate design.
factor.
Please explain what is meant by U load
A load factor is the ratio of the kilowatt-
hours supplied during a designated period to the peak or
BOWMAN, DI
Idaho Power Company
maximum load in kilowatts (~kW") occurring in that same
period.It is computed by dividing the number of the
monthly billed kilowatt-hours by the product of the billed
kW and the number of hours in the billing month.TO attain
efficiency goals , it is beneficial to maximize the
kilowatt-hour usage for each kW of billed demand.The
higher the load factor , the higher the energy efficiency.
Can you provide various examples of how load
factors are established?
Yes.If a customer has 1 kW of billed
demand and utilizes 720 kilowatt-hours of energy in a
typical 30-day month, the resulting load factor is 100
percent: 720 kilowatt-hours / 720 (1 kW x 24 hours x 30
days) .If another customer has the same 1 kW billed demand
but only uses 360 kilowatt-hours during the 30-day month,
the customer would have a 50 percent (360/720) load factor.
Why is a customer's load factor meaningful
or important?
A customer s load factor is a measure of how
fully electric facilities are being utilized.For example,
assume one customer has the infrastructure required to
provide service to a 100 -horsepower pump that is utilized
only 30 percent of the time.A second customer has a 50-
horsepower pump that is utilized 60 percent of the time.
BOWMAN, DI
Idaho Power Company
Even though each customer may have the same kilowatt-hours
energy charges over a month's time, the demand charges for
the smaller pump will be proportionally less.In addition,
the smaller pump will have a load factor sufficient to
benefit from reduced energy rates.
Furthermore, right-sized equipment also assists in
minimizing the Company's peak demand if the device is being
utilized during the Company s highest demand periods.
Why would an energy rate design which is
conditional on a customer s load factor be preferable to a
uniform energy rate?
Currently a uniform energy rate is applied
to all in-season energy sales.Efficiency is neither
rewarded nor discouraged by such an energy pricing
mechanism.unrecognized efficiencies of the higher load-
factor customers result in the subsidization of the lesser
efficient lower load-factor customers.Implementation of
the proposed load-factor pricing mechanism will ameliorate
the cross-subsidization between these two types of
customers.
How is the load-factor pricing rate
mechanism structured?
Instead of applying a single uniform energy
rate to all in-season energy sales, the load-factor pricing
BOWMAN DI
Idaho Power Company
mechanism divides the energy sales into two groups: one
energy rate for all kilowatt-hours up to a certain load-
factor threshold and a second energy rate for all kilowatt-
hours above that level.
What is the typical load factor of the
Company s Idaho irrigation customers?
Using 2007 data for Idaho irrigation
customers taking service during the in-season months (June
- September), the "average " and "median" in-season load
factors were 45.4 percent and 45.6 percent, respectively.
The "average" and "median" out-of-season load factors were
19.3 percent and 18.6 percent, respectively.
For the proposed load-factor pricing rate
structure, what load factor served as your benchmark for
determ1ning the kilowatt-hour tiers your rate design?
My proposed rate design targets bill
neutrali ty for customers at tainlng the median"load factor
of 45.6 percent (328 kilowatt-hours per kW) in an in-season
month.Those with a monthly load factor greater than that
level will benefit from lower bill charges than if all
kilowatt-hours are charged a single, uniform energy rate.
Conversely, customers with a load factor below 45.6 percent
in an in-season month will experience increased bill
charges compared to a single uniform energy rate.Again,
BOWMAN, DI
Idaho Power Company
load-factor pricing is not being recommended for out-of-
season kilowatt-hour usage.
In order to accomplish your expressed goal
of revenue neutrality at 328 kilowatt-hours, how large is
the first tier of your proposed energy rate design?
The first energy tier in the energy rate
design will be for the first 164 kilowatt-hours per kW.
The second tier will be for all additional kilowatt-hours
per kW.My workpapers include a sheet illustrating the
billing comparisons between single-rate energy pricing and
a load factor pricing rate design for customers with
monthly load factors between 0-100 percent.
How large is the proposed price differential
between the first energy rate tier (first 164 kilowatt-
hours per kW) and the second tier (all other kilowatt-hours
per kW)?
I am proposing to make only a three percent
price differential between the two energy tiers.This
small differential will minimize any sizable economic
impacts of the proposed rate design while customers are
becoming more knowledgeable about the pricing structure.
Does a load-factor energy pricing rate
design interfere with, or become counter-productive to, the
goals of either the Company s Irrigation Efficiency Rewards
BOWMAN , DI
Idaho Power Company
Program or the Irrigation Peak Rewards Program?
Participants in the IrrigationNO.
Efficiency Rewards Program receive rewards to improve the
energy efficiency of their existing irrigation systems or
their installation choices for new systems.The right-
sizing of equipment encouraged by this Program should
enhance the customer s load factor.Therefore, load-factor
energy pricing has the potential to provide a second set of
benefits to the participants in the Irrigation Efficiency
Rewards Program.
The Irrigation Peak Rewards program provides
economic credits to customers who allow the Company to turn
off specific irrigation equipment on a regular pre-
scheduled basis.Compared to the Irrigation Efficiency
Rewards Program, energy efficiency goals are not as
directly related to this Company Program.However,
whenever participating customers maintain a monthly in-
season load factor above the 45.6 percent threshold, they
will also receive a second additional benefit of lower
energy billings resulting from load-factor energy pricing.
Participants in the Program generally shift their usage to
another time period.Therefore load-factor energy pricing
should not make any significant changes to their monthly
load factor.As a result, participation levels in the
BOWMAN , DI
Idaho Power Company
Program should not be negatively affected by the proposed
load-factor pricing rate design.
introduction of
usage?
What goals are addressed with the
load-factor energy pricing for in-season
As mentioned, the Company has the goals of
establishing prices which reflect the costs of the services
provided and establishing rate designs which encourage the
wise and efficient use of energy.Load-factor energy
pricing supports both of these goals because it incents
customers to right-size their equipment and utilize service
in an efficient manner.
will all irrigation customers be able to
immediately make adjustments that will allow them to
benefit from load-factor energy pricing?
Perhaps not.The right-sizing of irrigation
equipment and/or changes in operations would probably occur
gradually over time.However, load- factor energy pricing
will encourage eff icient choices when equipment and
operational decisions are being made.
Have you had an opportunity to discuss your
proposed load-factor energy rate design with any irrigation
customers or their representatives?
BOWMAN, DI
Idaho Power Company
Yes.Idaho Power has discussed the load-
factor energy pricing mechanism with representatives of the
Idaho Irrigation Pumpers Association and sought their
inpu t .In addition, at an irrigation forum on June 11
2008 , the load-factor energy pricing proposal was presented
to various irrigation customers an Idaho Commission Staff
member , and, once again , representatives of the Idaho
Irrigation Pumpers Association.
Schedule 24.
Please describe the rate design proposal for
The Unit Cost results detailed on page six
of Mr. Tatum's Exhibit No. 67 indicate the current Service
Charge, Demand Charge , and Energy Charge rate components
are not in alignment with costs.I propose to move the
indi vidual rate components closer to the costs indicated by
the cost-of-service study.
What approach did you take in determining
the amount of increase for each rate component?
I first considered the percentage of overall
revenue requirement identified by demand, energy, and
customer component for irrigation service resulting from
the 3CP/12CP Class Cost-of-Service study discussed in Mr.
Tatum s testimony.These percentages established the
target for each component.Second, I determined the
BOWMAN , DI
Idaho Power Company
percentage of overall revenue by component currently
provided by the existing base rates.The difference, or
gap, between the target and the actual percentage was then
determined for each component.I then adjusted the current
percentage of overall revenue by component by approximately
seven percent of the gap to establish my targets for this
proceeding.Customer-, demand-, and energy-related charges
were then established to achieve these new targets.I have
included details of these calculations in my workpapers.
How were the rates for Transmission Service
determined?
Once the component rates for Secondary
Service were determined, the charges for Transmission
Service were established to maintain the same relationship
between service levels as currently exists.
What is the revenue requirement to be
recovered from Schedule 24?
The total annual revenue to be recovered
from customers taking service under Schedule 24, as shown
on page four of Mr. Tatum s Exhibit No. 70 , is $88,602,410.
Schedule 24?
What is the proposed Service Charge for
The proposed Service Charge for Secondary
Service during the in-season increases from $15.00 to
BOWMAN , DI
Idaho Power Company
$20.00 per month.The proposed Service Charge for
Transmission Service during the in-season is $250 per
mon th .This amount is the same charge proposed for
Schedule 9 and Schedule 19 Transmission Service.For both
Secondary and Transmission Service, the Service Charge
during the out-of-season remains at $3.00 per month.
What is the proposed Demand Charge for
Schedule 24?
The proposed Demand Charge for Secondary
Service increases from $4.67 to $5.67 per kW per month.
The proposed Demand Charge for Transmission Service
increases from $4.39 to $5.33 per kW per month.The Demand
Charge is billed to Schedule 24 customers during the in-
season only.
What are the proposed Energy Charges for
Schedule 24?
The proposed in-season Energy Charges for
Secondary Service increase from 3. 6409~ per kilowatt-hour
to 4 .1430~ per kilowatt-hour for the first 164 kilowatt-
hours per kilowatt , and to 4. 0206~ per kilowatt-hour for
all other energy usage.The proposed out-of-season Energy
Charges increase from 4. 6347~ per kilowatt-hour to 5. 4654~
per kilowatt-hour.
BOWMAN DI
Idaho Power Company
The proposed in-season Energy Charges for
Transmission Service increase from 3. 4635~ per kilowatt-
hour to 3. 9411~ per kilowatt-hour for the first 164
kilowatt-hours per kilowatt, and to 3.82479 per kilowatt-
hour for all other energy usage.The proposed out-of-
season Energy Charges increase from 4. 4088~ per kilowatt-
hour to 5.19909 per kilowatt-hour.
What is the impact of the rate design on
Schedule 24 irrigation service customers?
Exhibi t No.7 7 shows the impact on
customers' bills of the proposed rate designs for Schedule
24.Approximately 33 percent of the customers taking
service under Schedule 24 receive an increase in their
annual bills of less than 15 percent , the total overall
capped percentage increase proposed for the class as a
whole.Another 44 percent of the customers receive an
increase of just 2 percent above the overall class proposed
increase of 15 percent.
What are the usage characteristics of the
Schedule 24 customers receiving increases less than and
greater than 15 percent?
Because the rate design increases the Demand
Charge by a greater percentage than it increases the Energy
Charges, the higher a customer I s load factor, the more
BOWMAN , DI
Idaho Power Company
beneficial the rate structure tends to be in terms of the
overall impact to the annual billing.The proposed load-
factor energy pricing mechanism has a similar affect.
can be seen from Exhibit No. 77, customers with the highest
percentage increase in annual bills have the lowest average
load factors.
LIGHTING & NON-METERED SCHEDULES
What are the Company's lighting and non-
metered service schedules?
The Company's lighting and non-metered
schedules are Dusk-to-Dawn Customer Lighting, Street
Lighting Service Supplemental Seasonal or Variable Energy,
Unmetered General Service, Street Lighting Service, and
Traffic Control Signal Lighting Service, Schedules 15, 39,
40, 41, and 42, respectively.
What is the present rate structure for Dusk-
to-Dawn Customer Lighting on Schedule 15?
Customers taking service under Schedule 15
are charged on a per lamp basis.Lamps currently served
under Schedule 15 include 100-, 200-, and 400-watt high
pressure sodium vapor area lighting, 200- and 400-watt high
pressure sodium vapor flood lighting, and 400- and 1,000-
watt metal halide flood lighting.
BOWMAN, DI
Idaho Power Company
What is the revenue requirement to be
recovered from customers taking service under Schedule 15?
The annual revenue requirement for Schedule
15 customers as shown on page four of Mr. Tatum s Exhibit
No. 70 is $1,029,764.
Please describe the rate design proposal for
Schedule 15.
The rate design proposal for Schedule 15 is
included on page one of Exhibit No. 76.It includes the
total energy usage and proposed effective rate for each
lamp size option.The proposed class revenue increase of
51 percent shown on page four of Mr. Tatum's Exhibit No.
70 is applied uniformly.
Are you proposing any other changes to
Schedule 15?
No rate design changes are being proposed.
However, the Company is seeking to properly track energy
usage by correcting the designated energy usage per
lighting unit.Currently, the energy portion of service
under Schedule 15 is being tracked solely on the lamp
To properly determine energy usage, it requiresusage.
basing it on the combined usage of both the lamp and its
ballast since both are integral to the lighting servi~e.
One of my workpapers illustrates the combined energy usages
BOWMAN, DI
Idaho Power Company
of each lamp and ballast option.
Will the requested monthly base rate charges
per lighting unit be impacted in this filing if both the
lamp and ballast energy usages are combined?
The monthly per unit base rate lampNo.
charges proposed in this filing are being computed solely
on a uniform increase of 2.51 percent.Requested
recognition of combined lamp/ballast monthly energy usage
per lighting unit will have no impact to the proposed base
However, if adopted , any other charge based onrates.
kilowatt-hour usage (e. g. the Power Cost Adjustment) will
resul t in minor billing changes.
Does the Company currently have any lighting
services where the energy charges are based on both the
lamp and ballast usages?
Yes.The energy portion of all the
Company's Schedule 41 , Street Lighting options currently
includes charges for the combined energy usage of both the
lamp and ballast.
Are you proposing any other changes to
Schedule 15?
, I am not.
What is the present rate structure for
Unmetered General Service under Schedule 40?
BOWMAN , DI
Idaho Power Company
Customers taking service under Schedule 40
are unmetered but have energy loads and periods of
operation which are fixed.The customer s computed usage
is charged a flat Energy Charge.Demand- and customer-
related costs are also recovered through the Energy Charge.
The minimum bill for service under Schedule 40 is $1.50 per
month.
What is the revenue requirement to be
recovered from customers taking service under Schedule 40?
The annual revenue requirement for Schedule
40 customers as shown on page four of Mr. Tatum s Exhibit
No. 70 is $990,791.
Please describe the rate design proposal for
Schedule 40.
The rate design proposal for Schedule 40 is
included on page five of Exhibit No. 76.It targets the
proposed class revenue increase of 2.51 percent as shown on
page four of Mr. Tatum's Exhibit No. 70.The Energy Charge
remains flat and increases from 5.7649 per kilowatt-hour to
9099 per kilowatt-hour.
Are any other changes being proposed to
Schedule 40?
No.
BOWMAN, DI
Idaho Power Company
What is the present rate structure for
Street Lighting Service, Schedule 41?
Charges for Street Lighting Service are
based on a per-lamp (including ballast) or per-pole basis.
Street Lighting is divided into two types:( 1) Company-
Owned and (2) Customer-Owned.Both metered and non~metered
service is provided for Customer-Owned lighting; only non-
metered service is provided for Company-Owned lighting.
Schedule 41 does not allow new service for incandescent,
mercury vapor , or fluorescent fixtures.
Are you proposing any changes to the rate
structure for Schedule 41?
However, I am proposing clarificationNo.
of the ~Accelerated Replacement of Existing Services H text
for Company-Owned systems.In order to exercise the
accelerated replacement option , the Customer must make
payments prior to the work being performed.Because
prepayment is required, it is inconsistent to base the
charges on ~actual labor, time , and mileage costs.
Therefore the proposed tariff text has been modified to
state the charges will be based on the Company ' s ~designed
cost estimateH which includes labor , time, and mileage.
What is the revenue requirement to be
recovered from customers taking service under Schedule 41?
BOWMAN , DI
Idaho Power Company
The annual revenue requirement for Schedule
41 customers as shown on page four of Mr. Tatum's Exhibit
No. 70 is $2,372 448.
Schedule 41.
Please describe the rate design proposal for
The rate design proposal for Schedule 41 is
included on pages six through nine of Exhibit No. 76.Each
per-lamp charge for both non-metered and metered service
increases by the overall 2.51 percent increment proposed on
page four of Mr. Tatum s Exhibit No. 70 for Schedule 41.
In addition, the per-kilowatt-hour charge for metered
service also increases by 2.51 percent.The monthly meter
charge of $8.45 remains unchanged.To encourage the
retention of metered lighting systems, I propose to keep
this charge at its current level.
What is the present rate structure for
Schedule 39, Street Lighting Service Supplemental Seasonal
or Variable Energy?
Customers taking service under Schedule 39
pay a flat Energy Charge based on estimated variable or
seasonal usage until the street lighting service is
converted to a metered service or the potential for
variable usage has been removed.The current Energy Charge
is the same as the current Energy Charge for Schedule 40,
BOWMAN , DI
Idaho Power company
Unmetered General Service.
Please describe the rate design proposal for
Schedule 39.
The rate design proposal for Schedule 39 is
included on page four of Exhibit No. 76.The Energy Charge
increases from 5. 764~ to 5. 909~ per kilowatt-hour in order
to match the Energy Charge proposed for Schedule 40
Unmetered General Service.
What is the present rate structure for
Traffic Control Signal Lighting Service, Schedule 42?
Customers taking service under Schedule 42
pay a flat Energy Charge for each kilowatt-hour of
estimated energy use for non-metered systems and for each
kilowatt-hour of actual usage for metered systems.For
non-metered systems, usage is estimated based on the number
and size of lamps burning simultaneously in each signal and
the average number of hours per day the signal is operated.
There is no minimum charge under Schedule 42.
What is the revenue requirement to be
recovered from customers taking service under Schedule 42?
The annual revenue requirement for Schedule
42 customers as shown on page four of Mr. Tatum s Exhibit
No. 70 is $178,483.
BOWMAN , DI
Idaho Power Company
Please describe the rate design proposal for
Schedule 42.
The rate design proposal for Schedule 42 is
included on page ten of Exhibit No. 76.It targe t s the
proposed capped class revenue increase of 15 percent shown
on page four of Mr. Tatum s Exhibit .No. 70.The Energy
Charge increases from 3.68899 per kilowatt-hour to 4.24229
per kilowatt-hour.
Is the Company proposing any other changes
to Schedule 42?
No.
MISCELLANEOUS
Are you proposing any changes not directly
related to the Company s retail rate design?
Yes.I am proposing a change to Schedule
89, Unit Avoided Cost for cogeneration and Small Power
Production , to comply with previous Commission Orders.
Please describe the proposed change to
Schedule 89.
Based on previous Commission Orders, the
pricing under Schedule 89 is to be adjusted during the
course of every Idaho Power general rate proceeding.using
the methodology previously ordered by the Commission, I
have adjusted the unit-avoided energy cost utilizing
BOWMAN, DI
Idaho Power Company
updated variable operation and maintenance costs and
variable fuel costs for the Valmy plant.The proposed
monthly rate payments increase from 2. 7279 ~o 2.9769 per
kWh for all kWh.I have included details of this
adjustment in my workpapers.
Are you sponsoring any other Exhibits not
already mentioned in your testimony?
Exhibi t No.7 8 is a summary of theYes.
revenue impacts of this filing on all the Company's retail
rate classes.It illustrates the current and proposed
effective revenues of each customer class as well as the
requested percentage revenue increases.This Exhibit is a
summary of the information provided by Mr. Tatum , Ms.
Waites, Ms. Nemnich, and myself.
Exhibit No. 79 contains all the proposed
additions/deletions/modifications to the Company's current
tariff sheets illustrated in legislative format.
Exhibit No. 80 contains the Company's proposed
revised tariff sheets in final form.
Does this conclude your testimony?
Yes, it does.
BOWMAN , DI
Idaho Power Company