20090619Ottens Direct.pdf

Brad M. Purdy
Attorney at Law
2019 N. 17th S1.
Boise, Idaho 83702
[phone]
Cell: [phone]
Fax: [phone]
RECE\VEtJ
2009 JUN '9 PM 2: 02
\ÐAHO
UTILITIES v
June 19,2009
Jean Jewell
Commission Secretar
Idaho Public Utilties Commission
472 W. Washingtn
Boise,ID 83702
Re: Case No. IPC-E-09-03
Dear Ms. Jewell:
Enclosed, please find an original and 13 copies of the direct testimony ofTeri Ottens on behalf
of the Communty Action Parership Association of Idaho in the above-referenced proceeding.
The testimony is also contaed in the enclosed CD.
Sincerely,
Brad M. Purdy
RECEI D
1
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UTILITIES COMf,1ICi;:,JNBrad M. Purdy
2 Attorney at Law
BarNo. 3472
3 2019 N. 17th S1.
4 Boise,ID. 83702
[phone] (Land)
5 [phone] (Fax)
bmpurdy(thotmail.com
6 Attorney for Petitioner
Communty Action Parnership
7 Association of Idaho
8 BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
9 IN THE MATTER OF IDAHO POWER
10 COMPANY'S APPLICATION FOR ACERTIFICATE OF PUBLIC
11 CONVENIENCE AND NECCESITY FOR
THE LANGLEY GULCH POWER PLANT
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CASE NO. ICP-E-09-03
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14 COMMUNITY ACTION PARTNERSmp ASSOCIATION OF IDAHO
DIRECT TESTIMONY OF
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DIRECT TESTIMONY OF TERI OTTENS 1
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I. INTRODUCTION
Please state your name and business address.
My name is Teri Ottens. I am the Policy Director of the Communty Action Parership
Association ofIdaho headquarered at 5400 W. Franin, Suite G, Boise, Idaho, 83705.
On whose behalf are you testifying in ths proceeding?
The Community Action Parership Association of Idaho ("CAP AI") Board of Directors
asked me to present the views of an expert on, and advocate for, low income customers 0
Idaho Power.
Please describe CAP AI's organzation and the fuctions it performs, relevant to its
involvement in this case.
CAP AI is an association of Idao's six Communty Action Parerships, the Communty
Council of Idaho and the Canyon County Organzation on Aging, Weatherization and
Human Services, all dedicated to promoting self-suffciency through removing the causes
and conditions of povert in Idao's communties.
What are the Communty Action Parerships?
Community Action Parerships ("CAPs") are private, nonprofit organzations that fight
povert. Each CAP has a designated service area. Combinng all CAPS, every county in
Idaho is served. CAPS design their varous programs to meet the unque needs of
communties located within their respective service areas. Not every CAP provides all 0
the following services, but all work with people to promote and support increased self-
suffciency. Programs provided by CAPS include: employment preparation and dispatch,
education assistace child care, emergency food, senior independence and support,
clothing, home weatherization, energy assistace, afordable housing, health care access,
and much more.
Have you testified before this Commission in other proceedings?
DIRECT TESTIMONY OF TERI OTTENS 2
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Yes, I have testified on behalf of CAP AI in numerous cases involving Idao Power
Company, PacifiCorp, AVISTA, Intermountan Gas, and United Water as well as in
multi-utilty proceedings.
II. SUMMAY
Would you please sumarze your testimony in this proceeding?
Yes. CAPAI is concerned about the Company's investment in, and its quest to seek, rate
base assurance for, a generation project that will be the largest acquied by Idaho Power
since the 1950s. CAP AI is concerned about the rate impact that such a large addition to
the Company's rate base will result in and its effect on Idao Power's low-income
customers. Specifically, CAP AI questions whether the Company and the Commssion
have sufcient information at this point in time to make a determnation whether the
proposed Langley Gulch plant is in the public convenience and necessity and whether the
relief sought by Idaho Power is fair, just and reasonable.
Do you have any exhbits to your testimony?
No, I do not.
III. THE APPLICATION
You seem to express doubt regarding whether the Langley Gulch project is in the public
convenience and necessity. Do you have specific, techncal rationale for ths?
First, I am not a lawyer, engineer, or economist, so I do not purrt to possess expertise
in any of those disciplines and nothng in my testimony should be constred to suggest
otherwse. My expertise lies within the area of the needs ofIdiio's poor and, in the
context of ths proceeding, how a large electrc rate increase will impact Idaho Power's
low-income customers. I honestly do not know if Langley Gulch is in the public
convenience and necessity and whether it would result in fair, just and reasonable rates. I
adamantly believe, nonetheless, that in order to make these decisions, the Commission
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must be equipped with as much relevant inormation as is reasonably possible to obta
within an acceptable timeframe. I submit that the Commission is faced with a balancing
act of comparg the risks associated with deferrg a ruing on the Company's
application until additional information is available, to the advantage of possessing such
additiona information.
Are you suggesting that the proposed Langley Gulch project would not help Idaho Power
to meet futue load growt?
No, it appears that no par disputes that Langley Gulch, as proposed, should be more
than adequate to meet futue load growt, for at least the nea to medium term futue.
The analysis, however, does not end there. One does not need to be an expert in these
matters to embrace the obvious proposition that a reguated public utilty should, among
other things, make every attempt to pursue least cost alternatives, best suited to meet the
needs in question, when it does acquire new resources, thereby minimizing increases to
rates. Indeed, this is one of the fudaenta puroses of the Integrated Resource
Planing process; to identify the relative costs of varous resource alternatives.
Is it your position that Langley Gulch does not constitute the least cost alternative to meet
the Company's perceived capacity deficit as it contends in its application and supporting
testimonies?
Again, I lack suffcient expertise and/or knowledge to testify with authority whether
Langley Gulch is the most suitable alternative, from a cost and other stadpoint, for
meeting Idaho Power's projected capacity deficit, or when tht date will occur.
Moreover, CAP AI believes that Idaho Power is genuinely concerned about, and taes
quite seriously, its legal obligation to serve its customers, and to make sensible decisions
in planing how to acquie suffcient resources to comply with that legal obligation now
and in the futue. CAP AI was graciously allowed to intervene late in ths proceeding
DIRCT TESTIMONY OF TERI OTTENS 4
and, therefore, did not sign on to the joint intervenors' motion to stay the application.
Nonetheless, as the Commssion noted durg a decision meeting conducted to address
the motion to stay, the points raised by the motion go to the merits of the application and
are now fully on the table. Based on the brief filed in support of the intervenors' motion,
and my review of the Company's application and supporting testimonies, it seems
apparent, from a layperson's point of view, that the other intervenors have ariculated
legitimate concerns regarding the overall merits of the Application and, without the
benefit of additional information, whether Langley Gulch is the best means, at this
junctue, to meet imment system load growth.
If you are not takng a specific position regarding whether Langley Gulch should be
constrcted at ths point in time, then what is the purose of your testimony in this case?
The best response I can provide to that question is to use Idaho Power's own words when
it characterized the joint intervenors' motion as a collection of "what ifs." Response to
Joint Motion at p. 2. The same characterization could be applied to the assumptions built
into Idaho Power's load forecasting, it's projected date of capacity deficit, whether there
are more suitable resources available to meet load growt, and so on. Again, I do not
possess the knowledge or expertse to argue with authority whether Idaho Power's load
forecasting methodology and the assumptions built into that methodology are
appropriate. It strkes me as inherently logical, however, that the more inormation that
the Company, the Commission, and all paries have, the better able the collective group is
to assess whether Langley Gulch is the generation resource of choice to meet the
Company's load growth.
There is obvious risk in not meeting the Company's futue capacity requiements to avoi
blackouts. Do you perceive other risks that the Commission faces in ruing on Idaho
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Yes. First, it canot be overstated that the Commission cares an awesome responsibil
to ensure that Idaho Power's customers are not, literally, left in the dark. The importce
of attempting to engage in the most accurate load forecasting possible, however, and to
fuly and faily analyze all alternatives to Langley Gulch, also canot be overstated.
Thus, the Company's application poses two risks. With an estimated cost of $247
millon, Langley Gulch will constitute approximately one-four of Idaho Power's entire
rate bae. Ths is the single largest investment that would be made by Idaho Power since
the Hell's Canyon complex some 50 years ago. Natually, the rate impact ofan
investment of ths magntude, which disproportionately afects the poor, is tremendous.
CAP AI is uncert as to the precise amount of increase to residential rates tht Langley
Gulch will result in, and concedes that any alternative resource, or collection of resources
to meet load growth, will also have an upward impact on rates. The sheer magntude of
Langley Gulch's estimated cost, however, warants a very carefu analysis of whether
there might be considerably cheaper, and equally viable, alternatives available. Thus, the
other side of the equation tht I speak of is that if Langley Gulch is not the least cost
alterntive for meeting future load growt, and given the imediate, irreversible
ratebasing assurance that Idaho Power seeks in ths case, then ratepayers could be saddle
with unecessarly excessive rates for many years to come. This too, constitutes a serio
risk.
So, what would you have the Commssion do in weighing the two priar risks
presented by Idaho Power's application?
Again, I propose that the arguents made in support of the joint intervenors' motion to
stay the application, at least for some reasonable time, be seriously considered and that
the assumptions built into the Company's assessment of the need for Langley Gulch, be
carefuly scrutinized. Specifically, the other intervenors have raised, among others, the
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following questions regarding the merits of Langley Gulch including, among others, the
following: Is Langley Gulch the least cost alternative for meeting futue load growt?
Has the Company engaged in a fair bid procurement process resulting in the least cost for
constructing Langley Gulch? Has Idaho Power pursued other alternatives such as
demand side management programs aggressively enough? Has Idao Power factored in
the reduction in load demand that existing and futue DSM programs will have? Has the
Company considered impending or existing state and federal legislation regarding
greenhouse gas emissions, and whatever action the Company will tae in response to a
recent shareholder resolution regarding gas emissions that might increase the relative
costs of a thermal plant such as Langley Gulch? Is Langley Gulch appropriate in light of
renewable portolio stadards that I am told might be legislated and enforced upon the
Company, and so on?
What are the ramifications of failing to aggressively pursue demand side maagement
progrs and the effect that ths has on the perceived viabilty of Langley Gulch?
Regarding demand-side alternatives, it is my understading that Idaho Power is a ''tn
peaking" utilty in terms of its load. Tht is, the utilty's highest demands come in the
sumer (due largely to irrgation and air conditioning) and in the witer (due largely to
electric space heating). One advantage that a revised IRP might provide is a revelation
whether increased investment in residential demand side mangement programs, such as
the Company's cost-effective, low-income weatherization program, are being fuly
exploited and, if not, might a more aggressive approach to such DSM programs shave the
peaks off the sumer and winter loads in a more cost-effective maner than Langley
Gulch?
Would you please provide an example of what you are referrng to?
DIRCT TESTIMONY OF TERI OTTENS 7
One example pertns to the Company's low-income weatherization program. Accordig
to CAP AI's records, all low-income weatherization programs fuded by Idaho's thee
largest public electric utilities (i.e., Idaho Power, Rocky Mountain Power and A VISTA)
served only 10% of all LIHEAP eligible residences in the most recent year for which
information is available. In recent cases, including the Commission-initiated energy
affordabilty case (Case No. GNR-U-08-1), Idaho Power has characterized its low-
income weatherization program as a very cost-effective DSM resource. Ths is merely
one example of what the Company itself deems to be a relatively cost-effective DSM
resoure that, arguably, is not being fuly taen advantage of. Whle an increased
investment in the Company's low-income weatherization program is hardly a surogate
for a large generation plant such as Langley Gulch, it is an example of just one of a
number of potentially low-cost, DSM alternatives that the Commission could analyze
though the IR process at the end of this year. Another example is the changes to the
Irrgator's Peak Rewards Programs. A thorough analysis of Langley Gulch that contains
the additional information mentioned above might demonstrate that a combination of
DSM measures, retooling of existing thermal generation plants (e.g., converting simple
cycle gas tubines to combined cycle), and other measures, will prove to be the least cost
means to meet load growth.
In their motion to stay, the other intervenors in this case urge the Commission to defer a
ruing on Langley Gulch in order to obtan additional information. What is CAP AI's
position in ths regard?
As stated, CAPAI did not join in the motion to stay. Just the same, CAPAI respectfuly
urges the Commission to scrutinize whether Idaho Power's assertion that there is
insuffcient time for the Commission to defer issuing a ruing on whether to ireversibly
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is suffcient time to obtan some or all of the additional information identified by the
intervenors, then deferrng a ruing on Langley Gulch would seem to be waranted. In
addition, the Company's Integrated Resource Planng process is curently on hold. It is
my understading that the process will resume in September with a final result estimated
close to the end of the year. The IRP process should shed light on some of the
assumptions that I understand are incorporated into the viability of Langley Gulch, the
possibilty of other, lesser cost alternatives, the accuracy of the estimated capacity deficit
date, and so on. Additional time might also provide information such as federa
legislation regarding carbon emissions, the effect of the recession on load growt, Idaho
Power's actions in response to its shareholders' greenhouse gas resolution and how tht
might affect Langley Gulch's place in the Company's IR and, fmally, the
implementation of renewable portolio stdards that might be required under state or
federal law. CAP AI urges the Commission to consider whether waiting until this
additional information is available would try create a risk of blackouts.
Are you tang a position as to whether this additional inormation will prove Langley
Gulch to not be the least cost alternative for meeting load growt?
No, I am not. I am simply expressing concern regarding the long-term rate implications
of such a large investment on the Company's low-income customers and concern
regarding whether the issues raised by the other intervenors ar being given their due
consideration. Again, there is much at stae for all concerned. CAP AI gratly
appreciates the careful and fai analysis that it knows the Commission will give ths most
importt matter.
Finally, does CAP AI have a position regarding Idaho Power's proposal to collect a retu
on its investment durng constrtion of Langley Gulch durng the plant's constrction
period though the use of Constrction Work In Progress (CWIP)?
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Though it is an issue unelated to the merits of Langley Gulch as an appropriate resource,
the Company's application itself seems to suggest that if the Commission believes that
Langley Gulch should be given rate base assurance for Langley Gulch, then use of the
recently enacted legislation granting such assurance is suffcient without the need for
imediate recovery through CWIP. CAP AI agrees with ths concession.
iv. CONCLUSION
Would you please sumarze your testimony?
The importce of this case is equaled by the magnitude of the proposed investment in
Langley Gulch. Due to budgeta constraints, CAP AI did not retain a techncal expert in
ths case and does not, itself, possess the techncal expertise to weigh in on numerous
issues raised by those intervenors who argue in favor of deferrng a ruing on Langley
Gulch until additional inormation is available. CAP AI does agree with the other
intervenors that it is imperative to carefuly examine whether such lesser cost alternatives
exist and whether they can be implemented in time to meet the estimated point of
capacity deficit, whatever that might be. Most of all, CAP AI respectfully asks ths
Commission to balance the temptation to avoid the distaefu prospect of a capacity
deficit against the need to determine whether the perceived point of load deficit is
accurate and whether there are more economical means of avoiding that deficit tha
Langley Gulch.
Does that conclude your testimony?
Yes, it does.
DIRCT TESTIMONY OF TERI OTTENS 10
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12 CERTIFICATE OF SERVICE
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i hereby represent that on the /1 day of June, 2009, I have served the foregoing
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15 docment on the following paries via U.S. Postage and by electronic mail (where available).
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17 Barton L. Kline
Lisa D. Nordstrom
Idaho Power Compay
POBox 70
Boise,ID 83707-0070
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20 Scott Woodbur
Deputy Attorney General
Idaho Public Utilties Commission
PO Box 83720-0074
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23 Peter J. Richardson
Richardson & O'Lear
515 N. 27th St.
Boise, ID 83702
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DIRCT TESTIMONY OF TERI OTTENS 11
Don Reading
1 6070 Hil Road
2 Boise,ID 83703
3 Eric L. Olsen
Racine, Olson, et al
4 201 E. Center
PO Box 1391
5 Pocatello,ID 83204-1391
6 Anthony Yanel
29814 Lake Road
7 Bay Vilage, OH 44140
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Ken Miler
9 Snake River Alliance
PO Box 1731
10 Boise,ID 83701
11 Betsy Bridge
Idaho Conservation League
12 710 N. Sixth St.
POBox 844
13 Boise,ID 83701
14 Susan K. Ackerman
15 9883 NW Nottge Dr.
Portland, OR 97229
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DIRECT TESTIMONY OF TERI OTTENS
!J=~
Brad M. Purdy //
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