20080805Application.pdf

eslDA~POR~
An IDACORP Company
DONOVAN E. WALKER
Attorney II
August 4,2008
VIA HAND DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
P.O. Box 83720
Boise, Idaho 83720-0074
Re: Case No. IPC-E-08-16
Advanced Metering Infrastructure (''AMI' Technology
Dear Ms. Jewell:
Enclosed please find for filing an original and seven (7) copies of Idaho Power's
Application in the above matter.
In addition, enclosed are an original and eight (8) copies each of the testimonies of
John R. Gale, Courtney Waites, and Mark Heintzelman that are being submitted in support
of Idaho Power's enclosed filing. One copy of each of the testimonies has been
designated as the "Reporter's Copy." In addition, a disk containing Word versions of each
of the above testimonies has been provided for the Reporter and has been marked
accordingly.
Also, delivered with this filing for the Commission's Review and records is a full-
sized map showing Idaho Power's proposed deployment of AMI. Please note that only one
full-sized map is being provided to the Commission.
Also enclosed are two (2) copies of a Protective Agreement, which I have executed.
Please have one of the Staff attorneys execute both copies of the Protective Agreement.
Please return one of the fully executed copies of the Protective Agreementto me at Idaho
Power and retain the other original for the Commission's files.
Finally, I would appreciate it if you would return a stamped copy of this letter for
Idaho Power's file in the enclosed stamped, self-addressed envelope.
P.O. Box 70 (83707)
1221 W. Idaho St.
Boise, ID 83702
Jean D. Jewell, Secretary
August 4, 2008
Page 2
If you have any questions about the enclosed documents, please do not hesitate to
contact me.
Very truly yours,bLffÛ~
Donovan E. Walker
Attorney II for Idaho Power Company
DEW:csb
Enclosures
DONOVAN E. WALKER, ISB No. 5921
BARTON L. KLINE, ISB No. 1526
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: 208-338-6936
dwalker(âidahopower.com
bkline(Çidahopower.com
Attorneys for Idaho Power Company
Street Address for Express Mail:
1221 West Idaho Street
Boise, Idaho 83702
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION OF
IDAHO POWER COMPANY FOR A
CERTIFICATE OF PUBLIC CONVENIENCE
AND NECESSITY TO INSTALL ADVANCED
METERING INFRASTRUCTURE ("AMI")
TECHNOLOGY THROUGHOUT ITS
SERVICE TERRITORY
)
) CASE NO. IPC-E-08-16
)
) APPLICATION
)
)
)
Idaho Power Company ("Idaho Power" or "Company"), in accordance with Idaho
Code §§ 61-526, 61-502A, 61-525, 61-503, RP 052, and RP 112, hereby respectfully
makes Application to the Idaho Public Utilities Commission ("IPUC" or "Commission")
for an Order granting the Company a Certificate of Public Convenience and Necessity
("CPCN") to install Advanced Metering Infrastructure ("AMI" technology throughout its
service territory, granting authorization to accelerate the depreciation of the existing
metering infrastructure, and including the corresponding operation and maintenance
benefits as they occur.
APPLICATION - 1
Idaho Power seeks approval of its three-year deployment of AMI technology to
replace all meters in its service territory (99 percent of its customers) 1, along with the
associated softare, substation, and communications equipment.Idaho Power
requests in this proceeding that the Commission issue its Order stating that, in the
ordinary course of events, Idaho Power can (1) expect to ratebase the prudent capital
costs of deploying AMI as it is placed in service, (2) accelerate the depreciation of the
existing metering infrastructure replaced by AMI over the three-year deployment, and
(3) include the operation and maintenance benefits in the accounting methodology.
In support of this Application, Idaho Power has filed the testimony and exhibits of
John R. Gale, Courtney Waites, and Mark Heintzelman concurrently herewith and
hereby represents as follows:
BACKGROUND
1. As a result of the very large purchased power costs and accompanying
Power Cost Adjustment rate increases stemming from the 2000-2001 energy crisis, the
Commission ordered Idaho Power and the Energy Effcíency Advisory Group2 to
evaluate and report upon the viability of Time-of-Use ("TOU") metering programs and
the deployment of AMR3 technology. Order No. 28894 at 7, Order No. 29026 at 22.
i There are approximately 4,000 customers, who make up approximately 1 percent of total customers, whose
electrical service comes from Idaho Power's 53 smallest distribution substations. The technology wil work in these
locations but the station infrastrctue cost per customer is very high and is not offset by the benefits that would be
achieved though AMI at this time. These customers are not curently included in the proposed deployment plan.
2 The Energy Effciency Advisory Group is made up of customers, Commission Staff, Company employees and
technology specialists who advise and make recommendations regarding the evaluation, revision, and
implementation of demand-side management ("DSM") programs to the Company. The Group is charged with
recommending new DSM measures, enhancing existing DSM programs, prioritizing implementation of appropriate
programs, and evaluating each program's effectiveness. Order No. 28894 at 2,7.
3 "AMR" refers to "Advanced Meter Reading" or "Automated Meter Reading." "AMI" refers to "Advanced
Metering Infrastrctue." AMI is a more inclusive term than AMR, and refers to systems that measure, collect, and
analyze energy usage information from advanced metering devices through various communication media on
APPLICATION - 2
Case No. IPC-E-02-12 was opened to investigate TOU pricing for Idaho Power's
residential customers and, after review of the Company's initial report, the Commission
directed Idaho Power to implement AMI "as soon as possible, with installation
commencing this year (2003) and completed in 2004." Order No. 29196 at 10. The
Commission ordered Idaho Power to submit a plan no later the March 20, 2003, to
replace the current meters of Idaho Power customers with advanced meters. Id. at 11.
The 2004 implementation was subsequently delayed because of the financial, technical,
and implementation problems encountered with meeting that time frame. Order No.
29226 at 2-3. The Commission then adopted a phased:.in implementation along with a
collaborative evaluation approach, while directing the Company to continue to work
towards implementation of AMI technology "as soon as possible." Order No. 29362 at
12, Order No. 30102 at 5-6. The Commission has continually stated that Idaho Power
should be working toward the implementation of AMI technology as soon as possible,
and has reiterated its finding that "the potential benefits of advanced metering to
ratepayers and the Company are too great to delay AMR implementation indefinitely."
Id.
2. The Commission ordered that Idaho Power collaboratively develop and
submit a Phase One AMR Implementation Plan to replace current residential meters in
selected service areas by December 2003, complete Phase One installation by
December 31, 2004, and file a Phase One implementation Status Report by the end of
2005. Order No. 29362. In December 2003, after a collaborative workshop amongst
the Company, Commission Staff, vendors and interested individuals, the Company filed
request or on a pre-defined schedule. This infrastrctue includes hardware, softare, communications equipment,
customer associated systems, and data management softare. The term "AMR" was upgraded to "AMI" as the
technology and terminology developed. "AMI" better reflects the capabilties of the technology discussed herein.
APPLICATION - 3
its Phase One Implementation Plan to install AMI technology in the Emmett and McCall
operating Areas. Case No. IPC-E-02-12. Phase One implementation was completed
on October 26, 2004, and consisted of approximately 23,500 meters along with other
associated infrastructure.
3. Subsequent to Phase One implementation, the Company instituted two
time-variant pricing pilot programs in the Emmett operating area that utilized the hourly
consumption data made possible by the AMI technology. Order No. 29737, Case No.
IPC-E-05-02. The programs were (1) the Energy Watch Pilot Program, Schedule 4, and
(2) the Time-of-Day Pilot Program, Schedule 5. Id. These pilots were subsequently
authorized to continue indefinitely, as tariff Schedules 4 and 5, for continued
development and further evaluation in anticipation of an eventual system-wide
implementation of time-variant pricing and AMI technology. Order No. 30292, Case No.
IPC-E-07-05. The Company is required to file annual reports detailing the previous
year's progress for both programs. Id.
4. On December 30, 2005, the Phase One AMR Implementation Status
Report was fied with the Commission and Noticed for Comments pursuant to Modified
Procedure. Order No. 29959, Case No. IPC-E-06-01. The report detailed the
implementation as well as the time-variant pricing pilots and load control AC cycling
programs conducted with the AMI technology, and made recommendations for future
evaluation and deployment. In this docket, the Commission granted the Company an
additional one-year period in which to work to resolve technical issues encountered in
the pilot programs, allow for the technology to mature, and to assess further AMI
deployment while ordering an updated status report to be filed by May 1, 2007.
APPLICATION - 4
5. On May 1, 2007, the Company filed a detailed AMI Status Report,
followed by an August 31,2007, Implementation Plan describi,ng and proposing a three-
year deployment of an AMI system covering roughly 99 percent of the customers in its
service territory from January 2009 through the end of 2011. Case No. IPC-E-06-01.
This proceeding seeks approval of that plan.
CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY
6. Idaho Power proposes to install AMI throughout its service territory in a
systematic, three-year deployment schedule starting in January 2009, and continuing
through the end of 2011. The schedule would start with the Company's Capital Region
(Boise, Meridian, Eagle, Kuna, etc.) in 2009, move to the Canyon and Payette Regions
(Nampa, Caldwell, Payette, Ontario, etc.) in 2010, and finish with the Southern and
Eastern Regions (Twin Falls, Hailey, Jerome, Pocatello, Salmon, etc.). A map showing
the proposed deployment is included as Attachment NO.1 to this Application. The
actual meter exchanges wil take place on a carefully planned schedule that would
generally follow meter reading routes, and progress route by route and substation by
substation to install the required hardware throughout the system.
7. The system-wide implementation of AMI technology is cost effective at this
time. The August 31, 2007, AMI Implementation Plan filed with the Commission in
Case No. IPC-E-06-01 includes a summary of the Company's updated cost-benefi
analysis, as directed by Order No. 30102, concluding that the long-term benefits derived
from reduced operating expenses' are themselves sufficient to support a system-wide
implementation. This has not always been the case. See, Order No. 29362 at 11.
Additionally, as recognized by the Commission in several Orders, the deployment of
APPLICATION - 5
AMI technology has numerous other benefits for the both the Company and its
customers that cannot necessarily be quantified at this time, but never-the-Iess exist.
See, Order No. 29196 at 10; Order No. 30102 at 5-6; Order No. 29362 at 12-14. The
direct benefits that will increasingly be recognized following the start of the
implementation are the operational savings associated with remote meter readings.
Beyond the savings in meter reading costs and the benefits associated with time-of-use
pricing, additional benefits as stated in the findings of this Commission are:
AMR would improve meter reading accuracy, eliminate the
need for Idaho Power to gain access to customer property
for monthly meter reads, and allow Idaho Power to develop
new services in the future. An AMR system would improve
outage monitoring, theft detection, and employee safety.
AMR's capacity for remote connects and disconnects would
also save customer time and employee labor. From a billng
perspective, AMR would result in fewer estimated bils, less
rebilling, flexible billng schedules, account aggregating, and
flexible rate designs.
Order No. 29196 at 10. The AMI technology selected for installation by the Company is
a true two-way communications system that is fully capable of enabling the various
other functionalities anticipated by the Commission, and mentioned above, as well as
other "smart-grid" operations into the future. Outage management functionality and
hourly data collection wil be implemented for each area in the succeeding year
following deployment. The benefits of outage management integration wil begin to be
realized almost immediately, although achieving the full benefit from hourly data
collection wil likely require more time as additional back offce systems and rate
structures wil need to be in place before significant benefits could be realized through
TOU pricing and rates.
APPLICATION - 6
8. The Company has selected vendors and executed contracts to secure the
required hardware, softare, and labor for this deployment through its Strategic
Sourcing Process that involves both a Request for Information ("RFI") and a Request for
Proposals ("RFP") process. The Strategic Sourcing Process utilizes a cross-functional
team made up of Idaho Power employees with the assistance of a strategic sourcing
consultant and is led by the Company's Procurement Department professionals. The
team conducted the RFI and RFP process to evaluate and assess the possible AMI
solutions and ultimately to select vendors and successfully negotiate contracts for the
deployment of the AMI technology. The team is made up of employees with expertise in
procurement/purchasing, pricinglregulatory, meter support, finance, and other subject
matter experts.
9. Because of the evolving and developing nature of the AMI technology
there is not a single-source vendor that can provide all of the necessary components
required for an AMI deployment. Idaho Power has executed four contracts
("Agreements") with separate vendor companies that each provide a distinct product
and/or service that is required to complete the supply chain necessary to install AMI.
The contracted vendors (collectively, "AMI vendors") are: (1) Aclara Power-Line
Systems Inc. ("Aclara"), formerly known as Distribution Control Systems Inc. ("DSCI" ,
to provide the Two-Way Automated Communication System ("TWACSCI") which uses
power line carrier communication technology, and primarily includes the AMI modules
that are installed in the meters, softare, substation control equipment, as well as
support service, project management, and training; (2) Landis+Gyr Inc. ("Landis+Gyr"),
to provide the residential meters including the integration of TWACSCI modules from
APPLICATION - 7
Aclara into Landis+Gyr meters, providing electronic certified meter test results with each
shipment, support services to manage the meter module integration and delivery, and
meter/module failure analysis and resolution; (3) General Electric Company ("GE"), to
provide the commercial meters including integration of TWACSCI modules into GE
meters, providing electronic certified meter test results with each shipment, support
services to manage the meter module integration and delivery, and meter/module failure
analysis and resolution; and (4) Tru-Check, Inc. ("Tru-Check"), to provide meter
exchange services (remove and replace) and plan the logistics to provide: material
management, project management, exchange order management, meter exchange
resource management, and other services necessary to exchange meters on schedule
in years 2008 - 2011.
1 O. Idaho Power is not requesting a rate increase with this filing. The
Company requests in this proceeding that the Commission find the deployment of AMI
technology to be in the public interest and grant the Company a Certificate of Public
Convenience and Necessity to install AMI technology throughout its service territory. In
granting the Company a CPCN, Idaho Power asks the Commission to state in its Order
that, in the ordinary course of events, Idaho Power can expect to rate base the prudent
capital costs of deploying AMI as it is placed in service, accelerate the deprecíation of
the existing metering infrastructure replaced by AMI over the three-year deployment,
and include the operation and maintenance benefits in the accounting methodology.
CAPITAL COST COMMITMENT ESTIMATE
11. Idaho Power has negotiated firm unit pricing in its contracts to acquire and
deploy AMI technology over the three-year plan. Based upon these Agreements, Idaho
APPLICATION - 8
Power is able to make a reliable estimate of the total capital cost of the Project. This
"Commitment Estimate" is a good faith estimate of the project's total capital cost based
upon the contract pricing plus certain additional costs the Company knows it wil incur
but cannot quantify with precision at this time.
12. These additional costs include, but are not limited to, sales taxes,
customer growth, fuel charges, additional Information Technology ("IT") hardware,
softare, and personnel time, and the cost of Idaho Power oversight of the Project. The
Commitment Estimate also covers contingencies such as change orders and customer
growth. Idaho Power's Commitment Estimate for the Project is $70.9 millon.
13. The Commitment Estimate does not include the accelerated depreciation
of the existing metering infrastructure or the operation and maintenance benefits
associated with the installation of the AMI technology.
14. Idaho Power wil commit to the initial acquisition and installation of AMI
technology throughout its entire service territory as described in this proceeding for the
Commitment Estimate. The Commitment Estimate would be subject to adjustment to
account for documented, legally-required equipment changes and material changes in
assumed escalation or growth rates not foreseen at the time of this Application. If the
capital cost of the project exceeds the adjusted Commitment Estimate, Idaho Power wil
absorb the extra cost. The Company will include in its Idaho rate base only the amount
actually incurred up to the adjusted Commitment Estimate.
MODIFIED PROCEDURE
15. In order to purchase certain equipment at competitive prices, to acquire
long lead time equipment, and to get materials into the rather complex supply chain in
APPLICATION - 9
time for installation to begin in January 2009, Idaho Power has already ordered and
purchased certain items, and must place additional orders in September and October of
2008. The cost of the equipment that has been ordered and purchased thus far is
approximately $1.2 millon. With the additional orders that must be placed in
September/October 2008, the Company wil be committing to an additional cost of
approximately $5 millon. Consequently the Company is requesting that this Application
be processed expeditiously.
16. In order to streamline the process and expedite the Commission's review
of the Application, the direct testimony of John R. Gale, Courtney Waites, and Mark
Heintzelman in support of this Application is filed concurrently herewith. In addition,
Idaho Power has assembled documents that it anticipates, based on prior CPCN cases,
that Staff and any potential intervenors wil likely desire to examine as part of their
analysis of this Application. Additionally, the Company can make personnel available to
meet with Staff and intervenors at Idaho Power to walk through, describe, and
demonstrate the Strategic Sourcing Process. The Company wil work with Staff and any
intervenors to expedite the discoverylreview process.
17. Some of the documents the Company intends to provide for review
contain information that the bidders and selected AMI vendors deem to be confidential,
commercially sensitive, and trade secrets. To assure full bidder participation in future
Idaho Power RFPs, as well as to protect critical, confidential commercial information of
the AMI vendors, the Company requests that Staff and any intervenors sign an
appropriate confidentiality agreement prior to reviewing these materials, as has been
APPLICATION - 10
done in past cases. Hopefully, making these documents immediately available for
review wil help expedite the processing of this Application.
18. Idaho Power believes that a hearing is not necessary to consider the
issues presented herein, and respectfully requests that this Application be processed
under Modified Procedure, Le., by written submissions rather than by hearing. RP 201
et seq. If, however, the Commission determines that a technical hearing is required, the
Company stands ready to present its testimony and support the Application in such
hearing.
COMMUNCIATIONS AND SERVICE OF PLEADINGS
19. Communications and Service of Pleadings with reference to this
Application should be sent to the following:
Donovan E. Walker
Barton L. Kline
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
dwalker(Çidahopower.com
bkline(Çidahopower.com
Courtney Waites
John R. Gale
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
cwaites(Çidahopower.com
rgale(Çidahopower .com
REQUEST FOR RELIEF
20. Idaho Power respectfully requests that the Commission issue an Order
(1) authorizing that this matter may be processed by Modified Procedure, (2) granting
the Company a Certificate of Public Convenience and Necessity to install Advanced
Metering Infrastructure ("AMI") technology throughout its service territory, (3) authorizing
that, in the ordinary course of events, Idaho Power can expect to ratebase the prudent
capital costs of deploying AMI as it is placed in service, (4) authorizing the accelerated
depreciation of the existing metering infrastructure replaced by AMI over the three-year
APPLICATION - 11
deployment, and (5) including the operation and maintenance benefits in the accounting
methodology.
DATED at Boise, Idaho this 11 day of August 2008.
Mt:ØtZ__
Donovan E. Walker
Attorney for Idaho Power Company
APPLICATION -12
BEFORE THE
IDAHO PUBLIC UTiliTIES COMMISSION
CASE NO. IPC-E-08-16
IDAHO POWER COMPANY
ATTACHMENT NO.1
ATTACHMENT NO.1
MAP NOT SCANABLE
(PLEASE SEE PAPER FILE)