20081030Said Direct.pdf

RECEIVED
zoua OCT 30 PH i.: 32
IDAHO PLJr311C
UTILITIES COMMISSION
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF IDAHO POWER COMPANY FOR
AUTHORITY TO MODIFY ITS RULE H
TARIFF RELATED TO NEW SERVICE
ATTACHMENTS AND DISTRIBUTION LINE
INSTALLATIONS OR ALTERATIONS
CASE NO. IPC-E-08-22
IDAHO POWER COMPANY
DIRECT TESTIMONY
OF
GREGORY W. SAID
1 Q.Please state your name and business address.
2 A.My name is Gregory W. Said 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 as the
7 Director of State Regulation in the Pricing and Regulatory
8 Services Department.
9 Q.Please describe your educational background.
10 A.In May of 1975, I received a Bachelor of
11 Science Degree in Mathematics with honors from Boise State
12 University. In 1999, I attended the Public Utility
13 Executives Course at the University of Idaho.
14 Q.Please describe your work experience wi th
15 Idaho Power Company.
16 A.I became employed by Idaho Powe~ Company in
17 1980 as an analyst in the Resource Planning Department. In
18 1985, the Company applied for a general revenue requirement
19 increase. I was the Company witness addressing power
20 supply expenses.
21 In August of 1989, after nine years in the Resource
22 Planning Department, I was offered and I accepted a
23 position in the Company's Rate Department. With the
24 Company's application for a temporary rate increase in
SAID, DI 1
Idaho Power Company
1 1992, my responsibilities as a witness were expanded.
2 While I continued to be the Company witness concerning
3 power supply expenses, I also sponsored the Company's rate
4 computations and proposed tariff schedules in that case.
5 Because of my combined Resource Planning and Rate
6 Department experience, I was asked to design a Power Cost
7 Adjustment ("PCA") which would impact customers' rates
8 based upon changes in the Company's net power supply
9 expenses. I presented my recommendations to the Idaho
10 Public Utilities Commission in 1992, at which time the
11 Commission established the PCA as an annual adjustment to
12 the Company's rates.
13 In 1994, I was selected to a cross-training position
14 as Manager of the Meridian District. In that role, I
15 oversaw line installation work in the Meridian District.
16 Following my return to the Rate Department in 1995,
17 I was promoted to Director of Revenue Requirement in 1996.
18 I have managed the preparation of revenue requirement
19 information for regulatory proceedings since that time. I
20 have also been responsible for overseeing the tariff
21 changes related to Rule H, the Company's line installation
22 rule, and was a witness in Case No. IPC-E-95-18 to update
23 Rule H charges and allowances. The IPC-E-95-18 case was
24 the last case where the Company made substantial changes to
SAID, DI 2
Idaho Power Company
1 Rule H.
2 In August 200S, I was promoted to Director of State
3 Regulation, adding the area of Rate Design to my
4 responsibilities.
5 Q.What is the purpose of your testimony in
6 this proceeding?
7 A.My testimony in this proceeding is intended
S to describe the instructions that I gave to Mr. Scott
9 Sparks regarding the modifications to Rule H that the
10 Company is requesting. Mr. Sparks will testify to the
11 specifics of those modifications. I will describe the
12 Company's rationale for requesting reduced allowances and
13 refunds. Finally, i will address the Company's proposal to
14 clarify the rules governing the allocation of costs between
15 developers and the Company's customers when real estate
16 development requires relocation of Company facilities
17 located on public rights-of-way. The Company believes that
1S these clarifications will alleviate apparent
19 misunderstandings where certain governmental entities have
20 forced responsibility for funding of line relocation
21 expenses onto Idaho Power customers that should have more
22 appropriately be borne by developers. Mr. David Lowry will
23 testify as to the specifics of some of those instances
24 where governmental entities have incorrectly applied their
SAID, DI 3
Idaho Power Company
1 authority to shift relocation costs from developers to
2 Idaho Power customers.
3 Q.Please describe the instructions you gave to
4 Mr. Sparks regarding the improvements that the Company
5 desired be made to Rule H.
6 A.I instructed Mr. Sparks to make a thorough
7 review of the provisions contained in Rule H. I asked him
8 to work closely with the Methods and Materials Department
9 to identify areas of Rule H that could be improved. I
10 identified three primary goals for Mr. Sparks to achieve.
11 First, I wanted Mr. Sparks to improve the readability of
12 Rule H. Mr. Sparks will describe the Company's
13 recommendations to add definitions, add sections, and
14 generally reformat Rule H in order to accomplish this goal
15 of better readability with understandable flow. Second, I
16 wanted Mr. Sparks to update all of the costs contained in
17 the rule. Most of the rates and charges contained in Rule
18 H are a number of years old and, as a result, are not
19 reflective of the costs actually incurred by the Company.
20 Third, I asked Mr. Sparks to take a close look at line
21 installation allowances and refunds with an eye toward
22 reducing both allowances and refunds.
23 Q.Why is the Company desirous of reducing line
24 installation allowances and refunds?
SAID, DI 4
Idaho Power Company
1 A.As the Commission is well aware, the Company
2 has filed general rate case proceedings in 2003, 2005,
3 2007, and 200S. In addition, the Company has also filed
4 cases for the inclusion into rate base of the Bennett
5 Mountain gas-fired plant in 2005 and the inclusion of the
6 Danskin gas-fired plant in 200S. With the recent frequency
7 of rate proceedings, a persistent question arises: Is
S growth paying for itself?
9 The clear answer is no. Additional revenues
10 generated from the addition of new customers and load
11 growth in general is not keeping pace with the additional
12 expenses created and required to provide ongoing safe and
13 reliable service to new and existing customers. While the
14 provisions of Rule H have required some contributions in
15 aid of construction for new distribution facilities, there
16 are no requirements for contributions in aid of
17 construction for new transmission or generation facilities
1S which are also typically required to serve customer growth.
19 Reducing the Company's new customer-related distribution
20 rate base by reducing allowances and refunds will relieve
21 one area of upward pressure on rates and will take a step
22 toward growth paying for itself. Mr. Sparks details the
23 Company's recommendations to reduce line installation
24 allowances and refunds to achieve the Company's goal of
SAID, DI 5
Idaho Power Company
1 reducing one aspect of upward pressure on rates.
2 Q.Please describe how certain governmental
3 entities are able to force paYment of line installation
4 expenses onto Idaho Power customers that should more
5 appropriately be borne by developers.
6 A.Under Idaho law, governmental agencies
7 charged with constructing, operating, and maintaining
8 roads, such as the Idaho Transportation Department and the
9 Ada County Highway District have the authority to require
10 the relocation of Company-owned transmission and
11 distribution facilities that are sited in road rights-of-
12 way at Company expense. Typically, such relocation is
13 required to accommodate transportation planning for general
14 area growth. Population growth causing the need to add
15 traffic lanes is an example of general area growth.
16 In some instances, relocations have been requested
17 to facilitate specific development by third parties such as
18 residential or commercial subdivisions. In those
19 instances, highway agencies have required developers to pay
20 the costs of related highway improvements. Idaho Power has
21 required the third-party developers to pay for transmission
22 and distribution facility relocation caused by their
23 development. Third parties are also responsible for other
24 developmental costs such as curbs, gutters, and landscape.
SAID, DI 6
Idaho Power Company
1 Developers have the ability to form local improvement
2 districts ("LIDs") as a means to pay for such costs,
3 including utility costs.
4 Mr. Lowry has informed me of a number of examples
5 where I believe governmental entities have required the
6 relocation of Company-owned transmission and distribution
7 facilities at Company cost instead of seeking paYment from
8 third-party developers. Mr. Lowry's testimony in this
9 proceeding provides examples of instances where third-party
10 developers have attempted to avoid Idaho Power's
11 requirement that they make contributions in aid of
12 relocating transmission and distribution facilities for
13 their developments. When governmental entities require
14 Idaho Power to relocate facilities and incur costs that
15 should be properly paid for by local developers, it results
16 in the inappropriate shifting of costs from local
17 developers to the general rate paying customers of Idaho
18 Power. Mr. Sparks describes in his testimony a newly
19 drafted Rule H provision clarifying the rules governing
20 cost responsibility for relocations. Hopefully these
21 clarifications will assist the highway agencies in
22 determining when relocation costs should be borne by
23 developers and avoid further inappropriate cost shifting
24 from local developers to Idaho Power customers.
SAID, DI 7
Idaho Power Company
1 Q.Ultimately, what is the Company requesting
2 in this proceeding?
3 A.The Company believes that as a result of Mr.
4 Sparks' review and evaluation of the provisions of Rule Hi
5 the revisions to Rule H as proposed in this filing are in
6 the best interest of Idaho Power customers. The proposed
7 Rule H language provides a more logical and readable flow,
8 updates costs to current levels, and reduces one aspect of
9 upward pressure on rates. In addition, the new Rule H
10 section addressing relocation of distribution facilities
11 for third-party development will also assist in making sure
12 that growth pays for itself rather than transferring
13 additional costs to Idaho Power's rate paying customers.
14 The Company therefore requests that the Commission approve
15 the proposed Rule H language as filed by the Company.
16 Q.Does that conclude your testimony?
17 A.Yes, it does.
SAID, DI 8
Idaho Power Company