20071211Mickelsen direct.pdf

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BEFORE THE IDAHO PUBLIC UTILITIES coMM~~~g1fS\;'O~ilf\UŠSfOi)
IN THE MATTER OF THE APPLICATION )
OF IDAHO POWER CONW AN FOR )
AUTHORITY TO INCREASE ITS )
RATES AN CHARGES FOR ELECTRIC )
SERVICE TO ELECTRIC CUSTOMERS )
IN THE STATE OF IDAHO )
CASE NO. IPC-E-07-08
IDAHO IRGATION PUNERS
DIRCT TESTIMONY
OF
MAR MICKELSEN
DECEMBER 10, 2007
1 Q.PLEASE STATE YOUR NAM, ADDRESS, ENWLOYMNT, AN
2 AFFILIATION WITH THE IDAHO IRGATION PUNERS ASSOCIATION, INC.?
3
4 A.My name is Mark Mickelsen, and I am the president of the Idaho Irrgation
5 Pumpers Association, Inc. ("LIP A"). I principally farm in the Osgood area of Bonnevile
6 County, Idaho and also have some operations in Bingham County, Idaho. My address is
7 9088 N. River Road, Idaho Falls, Idaho 83402. I currently grow potatoes, wheat, and canola,
8 and my farming operations in Bingham County are served by Idaho Power Company
9 ("IPC").
10
11 Q.WHAT CRITICAL ISSUES FACE THE IRGATORS WHO RECEIVE
12 THEIR ELECTRICAL SERVICE FROM IPC?
13
14 A.One of the most critical issues that the irrigators face is getting stuck with
15 disproportionate rate increases. This result is suggested from IPC' s cost of service study and
16 is apparently the creature of the irrigators' summer use when IPC also has its system peak.
17 However, IPC admits that growth on its system is the principal driver of its increasing costs
18 and resulting need for rate increases. However, the irrigators have not been causing this
19 growth on the IPC system and it is unfair for the irrigators to get saddled with a
20 disproportionate amount of these non-causally connected system costs.
21 Another important issue to the irrigators is the loss of the BP A credit. The irrigators
22 effectively got a 4% to 6% rate increase in 2007 due to the loss of the BP A credit. Now, IPC
23 is seeking a 20% rate increase for the irrigators, which when coupled with the loss of the
1 Mickelsen, Dir
Irrigators
1 BP A credit, could result in a 24% to 26% rate increase for the ~008 irrigation season.
2 Although it is anticipated that the BP A credit may be restored at some point, it is the
3 prevailing view that IPC customers will receive little or no credit given IPC's average system
4 costs.
5 Finally, given all the rate pressures, the irrigators need IPC to make its Peak Rewards
6 Program ("Program") better. The lIP A believes that the Program provides a cost effective
7 way for IPC to reduce its system peak. Such a reduction in system peak unquestionably
8 benefits all IPC's customer classes by reducing the need to meet IPC's growing power needs
9 through more costly market power purchases and/or the building expensive new generation
10 capacity. However, only less than 10% of the irrigation class currently paricipates in the
11 Program as compared to an approximate 20% or more class participation rate in Rocky
12 Mountain Power's curtailment program. The IIPA believes that more participation under the
13 Program can be had by (1) increasing the credit amount, (2) relaxing participation
14 requirements such as minimum pump size, and (3) implementing a dispatchable curtailment
15 program similar to what has been successfully tested and implemented on Rocky Mountain
16 Power's Idaho. system.
17
18 Q.DO YOU PARTICIPATE IN IPC'S PEAK REWARS PROGRA?
19
20 A.No. My Bingham County operations are served by a 50hp irrigation pump.
21 This pump is below the 75hp threshold required for participation under the Program. If the
22 participation requirements were relaxed, I would participate in the Program.
23
2 Mickelsen, Dir
Irrigators
..
1 Q.DO YOU BELIEVE THAT THE CREDIT PAI TO THE
2 IRGATORS FOR P ARTICPATION IN THE PROGRA is SUFFICIENT?
3
4 A.No. IIPA's members are facing increasing prices for all of their
5 production inputs and must cut production costs in order to stay in business. This
6 necessitates that the irrigators must seriously look at paricipating in the Program as a
7 means of controllng production costs. However, the credit paid to the irrigators must
8 be drastically higher in order to offset the risks that the irrigators face in participating
9 in the program or in providing additional curtailment. Only then will participation
10 levels increase to a reasonable level that is already being found on Rocky Mountain
11 Power's system.
12 I have also reviewed Rocky Mountain Power's commissioned report entitled
13 "Assessment of Long-Term, System-Wide Potential for Demand-Side and Other
14 Supplemental Resources", dated July 11,2007 ("DSM Report"). The DSM Report
15 clearly shows that irrigation load control programs are cost effective and provide
16 Rocky Mountain Power and its customers with much more in benefits than the
17 associated costs. IPC operates in the same markets as Rocky Mountain Power and
18 face similar costs such that the conclusions in the DSM Report would also appear to
19 be relevant in this case. The lIP A's expert wil further address the pricing of the
20 Program's credit in his testimony.
21
22 Q. DOES THS CONCLUDE YOUR DIRCT TESTIMONY?
23
3 Mickelsen, Dir
Irrigators
~..
1 A. Yes.
4 Mickelsen, Dif
Irrgators