20080729Tatum Direct.pdf

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1.15
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER i S
APPLICATION FOR APPROVAL OF AN
AMENDMENT TO AN AGREEMENT BETWEEN
AVIMOR i LLC i AND IDAHO POWER
COMPANY
CASE NO. IPC-E-08-1S
AN
FOR AUTHORITY TO IMPLEMENT A LINE
CAPACITY CHAGE
IDAHO POWER COMPANY
DIRECT TESTIMONY
OF
TIMOTHY E. TATUM
1 Q.Please state your name and business address.
2 A.My name is Timothy E. Tatum and my business
3 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
7 (UCompany") as a Senior Pricing Analyst in the Pricing and
8 Regulatory Services Department.
9 Q.Please describe your educational background.
10 A.I received a Bachelor of Business
11 Administration degree in Economics from Boise State
12 University in 2001. In 2005, I earned a Master of Business
13 Administration degree from Boise State University. I have
14 also attended electric utility ratemaking courses,
15 including UPractical Skills For The Changing Electrical
16 Industry," a course offered through New Mexico State
17 University's Center For Public Utilities ¡ UIntroduction to
18 Rate Design and Cost of Service Concepts and Techniques,"
19 presented by Electric Utilities Consultants, Inc. ¡and
20 Edison Electric Institute's UElectric Rates Advanced
21 Course."
22 Q.Please describe your work experience with
23 Idaho Power Company.
TATU, DI 1
Idaho Power Company
1 A.I became employed by Idaho Power Company in
2 1996 as a Customer Service Representative in the Company's
3 Customer Service Center. Over the first two years I
4 handled customer phone calls and other customer-related
5 transactions. In 1999, I began working in the Customer
6 Account Management Center where I was responsible for
7 customer account maintenance in the areas of billing and
8 metering.
9 In June of 2003, after seven years in customer
10 service, I began working as an Economic Analyst on the
11 Energy Efficiency Team. As an Economic Analyst, I
12 maintained proper accounting for Demand-Side Management
13 ( UDSM") expenditures, prepared and reported DSM program
14 accounting and acti vi ty to management and various external
15 stakeholders, conducted cost-benefit analyses of DSM
16 programs, and provided DSM analysis support for the
17 Company's 2004 Integrated Resource Plan (UIRP").
18 In August of 2004, I accepted a position as a
19 Pricing Analyst in Pricing and Regulatory Services. As a
20 Pricing Analyst, I provided support for the Company's
21 various regulatory activities, including tariff
22 administration, regulatory ratemaking and compliance
23 filings, and the development of various pricing strategies
24 and policies.
TATUM, DI 2
Idaho Power Company
1 In August of 2006, I was promoted to Senior Pricing
2 Analyst. As a Senior Pricing Analyst, my responsibilities
3 have expanded to include the development of complex
4 financial studies to determine revenue recovery and pricing
5 strategies. In 2007, I prepared the Company's cost-of-
6 service study submitted as part of Case No. IPC-E-07-08 and
7 served as the Company's cost-of-service witness in that
8 case.
9 Q.What is the scope of your testimony in this
10 proceeding?
11 A.My testimony will present Exhibit No.1,
12 uTransmission Lines and Distribution Substation, Rate Base
13 Per Residential Customer." Exhibit No. 1 details the
14 derivation of the refund amounts contained in Amendment No.
15 1 to the August 17, 2006, Agreement to Provide Electric
16 Transmission and Substation (UAmendment No.1"). Amendment
17 No. 1 is Attachment No. 1 to the Company's Application in
18 this case.
19 Q.In preparing your testimony, did you review
20 any prior Commission Orders?
21 A.Yes, I reviewed Commission Order Nos. 30322,
22 30396, and 3 0510. All of those Orders were issued in Case
23 No. IPC-E-06-23. I also reviewed the comments filed by the
24 parties in that case.
TATUM, DI 3
Idaho Power Company
1 Q.Based on your review of the above-referenced
2 Commission Orders, is it your opinion that the refund
3 amounts contained in Amendment No. 1 are computed in a
4 manner that is consistent with the Commission's direction
5 contained in those Orders?
6 A.Yes.
7 Q.Please explain why.
8 A.The refund amounts contained in Amendment
9 No. 1 were computed using the same methodology determined
10 to be acceptable by the Commission in Order No. 30322. The
11 analysis detailed on Exhibit No. 1 simply updates the
12 $1,000 refund amount computed by Staff and submitted in its
13 Comments in Case No. IPC-E-06-23 using the Company's most
14 current costs filed in its last general rate case
15 proceeding, Case No. IPC-E-07-08.
16 Q.Please explain your general understanding of
17 the methodology applied by the Staff to derive the $1,000
18 refund amount.
19 A.Based on my review of Attachment A to
20 Staff's Comments in Case No. IPC-E-06-23, it is my
21 understanding that the $1,000 refund amount was derived by
22 dividing the Company's incremental change in residential
23 transmission line-related and distribution substation-
24 related rate base between the 2003 test year and the 2005
TATUM, DI 4
Idaho Power Company
1 test year by the incremental growth in residential
2 customers during the same period. The resulting value is
3 intended to reflect the Company's average investment in
4 transmission lines and distribution substation plant that
5 is required to serve a new residential customer.
6 Q.Please describe the inputs and the
7 computational process used to derive the values presented
8 on Exhibit No.1.
9 A.The analysis detailed on Exhibit No. 1
10 applies the same methodology used by the Staff on
11 Attachment 1 to its Comments ¡ however, the test year values
12 have been updated to reflect the Company's most current
13 costs. As can be seen on Exhibit No.1, the 2005 test year
14 represents the base year which is then compared to the 2007
15 test year. For the 2005 base year values, I simply used
16 the same rate base values listed on Staff's Attachment A,
17 column heading uIPC-E-OS-28." The source of the 2007 test
18 year rate base values is Exhibit No. 52, page 1, column
19 (b), rows 18 and 23, Case No. IPC-E- 07 - 08. The
20 Transmission Substation Equipment deduction amount was
21 derived under the method used by the Staff in its analysis.
22 That is, the "Residential Transmission Rate Base" value was
23 multiplied by the ratio of Transmission Substation
24 Equipment (FERC Account 353) to Total Transmission Plant
TATUM, DI 5
Idaho Power Company
1 (FERC Accounts 350-359) as listed on Exhibit No. 49 of Case
2 No. IPC-E-07-08, line 40 and line 63 respectively. The
3 average number of customers listed on Exhibit No. 1 for
4 2005 and 2007 are identical to those filed in the
5 respective general rate case proceedings.
6 Q.Did the Commission, in Case No. IPC-E- 07 - 08,
7 approve the Company's cost-of-service study that served as
8 the basis for the updated refund amounts contained in
9 Amendment No.1?
10 A.No. The parties to Case No. IPC-E-07-08
11 agreed to settle the issues in the case prior to the
12 scheduled hearings. However, the study prepared in Case
13 No. IPC-E-07-08 applied a cost allocation methodology for
14 apportioning transmission~ and distribution-related rate
15 base to customer classes consistent with the methodology
16 that the Commission has accepted in prior rate case
1 7 proceedings.
18 Q.In your opinion, is the data you have
19 presented in Exhibit No. 1 a reasonable representation of
20 the Company's current average investment in transmission
21 lines and distribution substation plant that is required to
22 serve a new residential customer?
23 A.Based on the 2007 test year data, the answer
24 is yes.
TATUM, DI 6
Idaho Power Company
1 Q.
2 A.
Does this conclude your testimony?
Yes, it does.
TATUM, DI 7
Idaho Power Company
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-08-15
IDAHO POWER COMPANY
TATUM, 01
TESTIMONY
EXHIBIT NO.1
.
Transmission Lines and Distribution Substation
Rate Base Per Residential Customer
(Computed According to Staffs Method Used in Case No. IPG-E-06-23)
Transmission
Total Residential Transmission Rate Base
Remove Transmission Station Equipment
Transmission Lines
IPC-E-07-08 IPC-E-05-28 Difference
156,756,849 125,040,370
(59,990,846)(52,857,595)
96,766,003 72,182,775 24,583,228
386,277 (a)359,802 (b)26,475
251 201 929
Average No. of Customers
Transmission Rate Base Per Customer
Distribution
Distribution Substation Rate Base 53,142,090 48,708,348 4,433,742
Average No. of Customers 386,277 359,802 26,475
Distribution Rate Base Per Customer 138 135 167
Transmission and Distribution Per Customer 389 336 1,096
Notes:
(a) Customer count as detailed in Case No. I PC-E-07-08, Exhibit No. 58, Pg 1 of 4.
(b) Customer count as detailed in Case No. I PC-E-05-28, Exhibit No. 50, Pg 1 of 23.
Exhibit No. 1
Case No. IPC-E-08-15
T. Tatum, IPC
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