20100514Reply Comments.pdf

DONOVAN E. WALKER
Senior Counsel
dwalkert&idahopower.com
eslDA~POR~
An IDACORP Company
May 13, 2010
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-10-06
ADVANCED METERING INFRASTRUCTURE ("AMI'INVESTMENT IN
RATE BASE
Dear Ms. Jewell:
Enclosed for filing please find an original and seven (7) copies of Idaho Power
Company's Reply Comments in the above matter.
DEW:csb
Enclosures
P.O. Box 70 (83707)
1221 W. Idaho St.
Boise, ID 83702
DONOVAN E. WALKER (ISB No. 5921)
LISA D. NORDSTROM (ISB No. 5733)
Idaho Power Company
1221 West Idaho Street
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: [phone]
dwalkercæidahopower.com
InordstromcæidahoDOwer.com
RECE.\V
10\0 "AY ,:; Pt\~: 51
"". '-'~l trj,~ ir':
IDAHU \"ui."¡~~c.\ON
u\\L\T\E.S COf,'\M\vv
Attorney 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
AUTHORITY TO INCREASE ITS RATES
DUE TO THE INCLUSION OF ADVANCED
METERING INFRASTRUCTURE ("AMI")
INVESTMENT IN RATE BASE.
)
) CASE NO. IPC-E-10-06
)
) IDAHO POWER COMPANY'S
) REPLY COMMENTS
)
)
Idaho Power Company ("Idaho Powet' or "Company") submits the following
Comments in response to the Comments filed by the Commission Staff on May 6, 2010.
I. INTRODUCTION
Commission Staff and the Commission have long been supportive of the
Company's efforts to deploy Advanced Metering Infrastructure ("AMI") throughout its
service territory, recognizing the benefis of reduced meter reading expenses and
providing a solid platform for other energy effciency pncing structures. Likewise, Staff,
in its Comments, supports the Company's request to increase its rates effective June 1,
IDAHO POWER COMPANY'S REPLY COMMENTS - 1
2010, due to the inclusion of AMI investment in rate base. The Company is appreciative
of Staffs recommendation.
However, Staff has recommended a proposed increase of $1,926,523, which is
$431,562 less than that requested by the Company. Staffs recommendation is the
result of its belief that the Company's calculation of the revenue deficiency understates
the Operation and Maintenance ("O&M") benefits and effciencies attnbutable to the AMI
investment. The difference between the Company's quantification of the O&M benefits
used in the revenue deficiency calculation for the 2010 test year and Staff's
quantification of the O&M benefits appears to be due to an initial mischaracterization on
the Company's part of incremental savings and cumulative savings which led to a
misunderstanding on the part of the Staff of what is being represented in the O&M
benefits amounts. The Commission authonzed the Company to recover the costs of
installng AMI throughout its service territory, specifically including the "corresponding
operation and maintenance benefits as they occur." Order No. 30726, p. 10, Case No.
IPC-E-08-16. Staffs recommendation in this case denies the Company the abilty to do
so by mischaractenzing these benefits as being stated as incremental when they are in
fact stated as cumulative.
II. OPERATION AND MAINTENANCE BENEFITS
In the Company's Application for a Certificate of Public Convenience and
Necessity to install AMI technology throughout its service terntory (Case No. IPC-E-08-
16), Idaho Power identified quantifiable O&M benefis associated with the AMI
installation in the following areas: reduction in labor and transportation costs related to
meter reading, regional operations benefits in confirming equipment outage to prevent
IDAHO POWER COMPANY'S REPLY COMMENTS - 2
crew dispatch, regional operations benefits in confirming service restored to prevent
prolonged crew time in area, regional operations benefits on detecting overloaded
distribution transformers, benefits with regard to the operations of the irngation peak
rewards program, and outage management operation benefits. To calculate the
expected O&M benefits, the Company compared O&M costs assuming business as
usual" (no AMI installation) to expected O&M costs with AMI in place for each of the
three years of the deployment penod. This resulted in an expected O&M savings per
year. The O&M benefits identified for the three-year deployment period, shown in
Company witness Courtney Waites' Exhibit No.4 to the certificate case (Case No. IPC-
E-08-16), identified savings of $262,828 in 2009, savings of $3,150,708 in 2010, and
savings of $5,570,400 in 2011.
In the Company's initial Application for authority to increase rates due to the
inclusion of AMI investment in rate base for the first year of deployment (Case No. IPC-
E-09-07), the Commission authorized the Company to recover its investment in AMI
based on a 2009 test year, the first year of the three-year deployment period, which
included the 2009 expected O&M benefits of $262,828. It was not until the preparation
of the Company's current Application for authority to increase rates due to the inclusion
of AMI investment in rate base based on a 2010 test year (Case No. IPC-E-10-07), the
second year of the three-year deployment penod, that the Company discovered that the
O&M benefits in the initial certificate case, Case No. IPC-E-08-16 had been incorrectly
characterized as incremental savings rather than correctly characterized cumulative
savings. The numbers and the calculations are correct and do not change, even
between Staffs recommendation and the Company's request. The only difference is
IDAHO POWER COMPANY'S REPLY COMMENTS - 3
the mischaracterization of those numbers as incremental numbers rather than
cumulative. When companng expected O&M costs assuming business as usual (no
AMI installation) to expected O&M costs with AMI in place as of December 31, 2010,
AMI savings are $3,150,708, resulting in incremental savings of $2,887,880 ($3,150,708
less O&M benefits of $262,828 as of December 31,2009).
Staff incorrectly states that the amounts listed on Company Exhibit No. 2 for
benefits to be received in 2010 do not include any benefits already received in 2009.
This would be correct if the amount was actually an incremental amount. However, the
amounts listed on Company Exhibit No. 2 are simply the monthly quantification of the
difference between O&M costs assuming business as usual (no AMI installation) and
O&M costs with AMI in place as of a specifc penod in time.
Staff further expresses concerns with the Company's O&M benefits quantification
stating that "Staff is not confident that these benefits can be adequately reflected in the/
revenue requirement change until a general rate case when all expenses categories are
reflected" and that "the Company has not updated the benefits of AMI since deployment
began and relies on the projections created pnor to the installation of a single AMI
meter." However, just as the Company tracks its expenses in new AMI investment and
has provided Staff in production request responses, the Company tracked its actual
O&M savings expenenced in 2009. The Company realized savings of $273,146 in 2009
'C'.
- very close to the projected savings quantified prior to the installation of a single AMI
meter.
IDAHO POWER COMPANY'S REPLY COMMENTS - 4
II. CONCLUSION
The difference between the Company's quantification of the O&M benefits used
in the revenue deficiency calculation for the 2010 test year and Staffs quantification of
the O&M benefits appears to be due to an initial mischaracterization on the Company's
part of incremental savings and cumulative savings which led to a misunderstanding on
the part of the Staff of what is being represented in the O&M benefits amounts. The
Company has, however, tried to clear up this misunderstanding with this filing. The
Company respectfully requests that the Commission issue an Order: (1) approving the
new electnc rate schedules set out in Attachment Nos. 1, 2, and 3 in the Company's
Application for Authonty to Increase Its Rates Due to the Inclusion of Advanced
Metering Infrastructure ("AMI") Investment in Rate . Base authorizing a uniform
percentage increase of 0.41 percent to Schedules 1, 3, 4, 5, 7, 9 secondary, 24
secondary, 41 metered, and 42 customers, and (2) approving an effective date of June
1, 2010, for the new rates.
Respectfully submitted this 13th day of May 2010.
~
DONOVAN E. WALKER
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S REPLY COMMENTS - 5
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 13th day of May 2010 I served a true and
correct copy of IDAHO POWER COMPANY'S REPLY COMMENTS upon the following
named parties by the method indicated below, and addressed to the following:
Commission Staff
Scott Woodbury
Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington
P.O. Box 83720
Boise, Idaho 83720-0074
-- I:and Delivered
U.S. Mail
_ Overnight Mail
FAX
-- Email scott.woodburycæpuc.idaho.gov
Donovan E. Walker
IDAHO POWER COMPANY'S REPLY COMMENTS - 6