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Home My WebLink About20090622Mitchell Direct.pdf- . Xpc-E-09 -03 1 2 3 4 RECEIVED 2689 JUH 19 PH.. ~:.52 Q. Please state your name and address and summarize your qutJlflf. . ... .lQ PUBUl'mE'S COMMf.~~HpN A. My name is Cynthia Mitchell. My address is 530 Colegate Cour, Reno Nevada 895(J3". am the founder of Energy Economics, Inc., a consulting firm located in Reno Nevada. A copy of my resume is attached as Exhibit 206. I am testifying on behalf of the Industrial Customers of Idaho Power. I. Introduction and Overview 5 6 7 8 9 10 11 12 13 14 Q. What is the purpose of your testimony? A. I provide technical support to Dr. Reading's testimony relative to the stale nature of the load and load growth forecasts relied upon by Idaho Power in support of its request for a CPCN to build the Langley Gulch Power Plant. The purpose of my testimony is to provide a review and analysis of Idaho Power Company's (IPC) proposed 330 MW CCCT Langley Gulch generation facility with a proposed in service date of Januar (?) 2012 from an Integrated Resource Planing (IRP) perspective. Q. Can you speak generally regarding the proper role of IRP in the ratemaking context? A. IRP requires supplementing traditional utility regulation with a comprehensive regulatory framework that sets new checkpoints for the utility resource planing and procurement process. The principal consumer benefit of IRP when viewed as a regulatory construct lies in changing the roles that regulator and also consumers play in utility planing and procurement from those of "Monday morning quarerbacks" to active players. As a utility planing and procurement process, the utility must consider the feasibility and economics of non-utility generation including small power production and co-generation projects. While IRP stil involves analysis of the existing and possible futue demand for energy on an utility system-wide basis, its cornerstone is a more fine-grained consideration of existing and future energy needs on a: . Discrete spatial or location- specific basis within the utility service territory, and . "End Use" basis that considers the required useful energy service output such as light, space heating and cooling, water heating, refrigeration, motor drive, etc. Through the IRP construct, existing and possible future energy demand is not a "given", but something that can be modified and or reduced through any number of "demand sideMitchell, Di 1 IPC- E-09-03 ICIP 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 1 management" (DSM) tools or techniques including but not limited to energy efficiency (EE), conservation, load management (LM) and demand response (DR). IRP as a utility planing and regulatory construct pre-dates this country's late-1990's deregulation / "competition" movement. This time around ("IRP Round 2"), the energy policy and utility regulatory issues have expanded beyond ratepayer economic and utility financial investigations within relatively robust economic conditions and limited environmental "externality" considerations. Now states and regions, our country and world, face the sobering prospect of possible ongoing relatively stagnant economic growth given constraints on available and affordable investment capital, resource inputs (oil, gas, metals, aggregate materials, etc.), and innovative production capabilities. This, coupled with the very real potential negative environmental consequences of global warming via the rising levels of C02 or "greenhouse gas" (GHG) emissions, is very sobering indeed. Interestingly, the recession with its downward pressure on electricity demand, affords the Commission to tur IPC's otherwise Langley Gulch "Sow's Ear" into a "Silk Purse". Rather than commit IPC and ratepayers to the very capital intensive long-lead time Langley Gulch during a recession with its resultant downward pressure on electricity demand, the Commission has time to more fully consider the timing, type, and location of possible future generation resources in par through an independently ru competitive solicitation process. Also the Commission in collaboration with IPC, state and local governents, and businesses and industries has the opportunty to more fully manage electricity demand through a varety expanded and new energy efficiency, load management, and demand response technques. 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 II. Summary of Findings and Recommendations Q. Please summarize your recommendations and findings. Finding 1: IPC has provided no compellng reason for the Commission to expedite its review of IPC's Langley Gulch Application in order to meet futue loads in the 2012 timeframe. The Company's March 2, 2009 Langley Gulch Application requests expedited review outside of the Commission's IRP process in order to meet a purorted peak load deficit in June 2012. By first receiving permission to fie its June 2009 IRP in December 2009, IPC set the stage to try and rush Langley Gulch through without the benefit of (1) an updated load forecast Mitchell, Di IPC-E-09-03 ICIP 2 1 that reflects the effects of the recession on near- and possible longer-term electricity 2 requirements and (2) integration of forecasted load and existing supply-side resources with 3 additional non-utility supply side resources such as the recently-let wind generation RFP and 4 additional DSM energy effciency and demand response resources. 5 Interestingly, per IPC's response to Staffs Production Request #84, which provides what 6 the Company labels "2009 IRP" Peak-Hour Load and Average Energy Load and Resources 7 Balance 2009 through 2028, (see Exhibit 207) the Langley-Gulch in-service date has been 8 slipped from June 2012 to December 2013. Thus, IPC has handed the Commission an additional 9 six months to review its Application. 10 Also, the Company's 2009 IRP Peak-Hour Loads and Resources Balance table for winter 11 2012, shows for the row entry "Network Set-Aside for Firm Purchases": 12 . November 2012 at 734 MW 13 . December 2012 at 673 MW 14 . Januar 2013 at 441 MW 15 . February 2013 at 536 MW 16 . March 2013 at 504 MW 17 . April 2013 at 402 MW 18 19 If IPC can purchase 734 MW of firm purchases in November 2012, it can in all likelihood 20 purchase at least the equivalent amount of734 MW in December 2012 through March or April 21 2013. Per the Company's own analysis, this shifts out the in-service date of Langley-Gulch an 22 additional 3 to 4 months. 23 Further, the Company's 2009 IPR Average Energy Loads and Resources Balance table for 24 2013 shows for the row entr "Network Set-Aside for Firm Purchases" all months at 115 aMW. 25 IfIPC can purchase upwards of734 MW of firm purchases in November 2012 ON PEAK, it can 26 also in all likelihood purchase more than 115 aMW during non-peak periods in sufficient 27 amounts to cover the July and August 2013 monthly deficits of369 and 276 aMW shown 28 respectively per Exhibit 207. 29 F or these reasons alone when working with IPC' s own data and assumptions, the Company 30 has provided no compelling reason for the Commission to expedite its review ofIPC's Langley 3 1 Gulch Application outside of the 2009 IRP process. Mitchell, Di IPC-E-09-03 ICIP 3 1 2 Finding 3: On a load forecasting and demand side management (DSM) basis, IPC has not 3 reasonably demonstrated the need for the Langley Gulch Project in June 2012 (June 2008 IPR 4 Update) or December 2013 (Staff Production Request #84). 5 The Company's Application states that relies on its June 2008 IPR Update to justify the 6 proposed Langley Gulch 330 MW CCCT. The 2008 IRP Update utilizes an August 2007 load 7 forecast that is based on pre-recession demographic and economic indicators in Idaho that do not 8 take into account more current and likely future conditions for the state. The recession is 9 resulting in significant downward pressure on personal income, employment, and economic 10 activity. These factors strongly affect electricity usage per customer, which in tu drves the 11 demand for electricity within IPC's service terrtory. 12 IPC response to Staff Production Request #84 2009 IRP Loads and Resources Balance 13 2009 - 2028 represents to use a May 2009 load forecast. Exhibit 208 provides a comparison of 14 four IPC load forecasts in 2010 and 2013 at 95% MW Peak and 70% aMW Energy: 15 . Production Request (PR) 84 2009 IPR 16 . August 2008 Load Forecast per IPC's February 2009 IRP Addendum Boardman- 1 7 Hemingway Transmission Project 18 . August 2007 Load Forecast per IPC's 2008 IRP 19 . August 2005 Load Forecast per IPC's 2006 IRP 20 Because the load forecast per PR 84 2009 IRP is apparently the most curent, the peak 21 demand MW or average energy aMW difference or change from the most curent to the previous 22 forecasts are shown in the rows labeled "Change + / - MW" and "Change + / - aMW" of 23 Exhibit 208. The data reflect that the following for both 2010 and 2013 Loads and Resources 24 Balance: 25 . On both a 95% MW peak and 70% aMW energy basis, IPC's most curent load 26 forecast per PR 84 2009 IPR is essentially the same as its August 2008 load forecast 27 per February 2009 Addendum B-H Transmission Project. 28 . Interestingly, again on both a 95% MW peak and a 70% aMW energy basis, IPC's 2 9 most curent load forecast per PR 84 2009 IRP is in all months either higher or the 30 same as its August 2007 load forecast per its 2008 IRP Update. Mitchell, Di IPC-E-09-03 ICIP 4 1 . And, somewhat surrisingly, the same pattern holds for a comparison to IPC's 2 August 2005 load forecast per its 2006 IRP. That is, the more curent 2009 IRP load 3 forecast is in many months either higher. 4 Without reviewing the underlying key demographic and economic indicators that drve 5 IPCs' PR 84 2009 IRP, it is not possible to determine the extent to which the more curent load 6 forecast reasonably reflects the near- and possibly longer-term effects of the curent recession. 7 However, on the face of it certainly does not appear that the Company has not adjusted its 2009 8 IRP load forecast per Staff Production Request #84 or any other previous load forecasts to reflect 9 the curent recession. 10 My analysis indicates that even once the economic recovery is underway, it wil take 11 some years for personal income and employment to retur to 2006-2007 levels. These levels will 12 not be reached by the end of2011 and, at the rates of increase forecast for that period (Q3 to Q4 13 of2011) are unlikely. Early indications are that IPC's 2009 energy usage is off by about 5% 14 from early 2008 levels. 15 There are other indications that components ofIPC's projected loads will be delayed or 16 may fail to materialize. For instace, the "Special Contract" load Hoku Scientific Inc. (forecasted 17 at 38 aMW / 43 MW peak in the June 2008 IRP Update), recently announced that may have not 18 have enough money to complete its polysilicon plant in Idaho. 19 Also, there are recent additional DSM resources not reflected in IPC's 2008 IRP Update 20 that fuher reduce the need to the Langley Gulch Project in June 2012 timeframe. For example, 21 IPC is curently expanding its very successful Irrigation Peak Rewards Program. For this 22 summer, it has added the option of a dispatchable demand response program which will increase 23 the demand reductions derived from the program. IPC is also proposing a commercial demand 24 response program not reflected in the June 2008 IRP Update. 25 There are also non-utilty energy effciency and demand response activities and programs 26 not reflected in the 2008 IRP Update. For example, the Boise City Council's recent meeting to 27 discuss 10 potential energy projects that could reduce demand through energy efficiency. These Mitchell, Di IPC-E-09-03 ICIP 5 1 projects include LEDs and energy efficient lighting and a cogeneration plant at the West Boise 2 waste water treatment facility.1 3 Furher, as wil be discussed in Section v: DSM, it appears that IPC has been shrinking 4 rather than growing its forecasts of additional or new energy efficiency savings from its 2006 5 IRP, 2008 IRP Update, and 2009 IRP Addendum. Not only is this ilogical, but all other factors 6 being equal, works to favor new generation resources. 7 8 Finding 4: Winter peak demand is also importnt issue in the IPC service territory. 9 As par of its curent energy efficiency programs, IPC's rebates or cash incentives often 10 favor electric space heating over natural gas or propane heating. Winter peak demand is an 11 increasingly important issue in the IPC service terrtory. While there is a clear historical trend 12 toward higher use in general and particularly in summer, a distinct secondar winter peak is 13 emerging. 14 15 Recommendation 1: The Commission should consider Langley Gulch based on IPC's 16 forthcoming August 2009 load forecast as part of an integrated loads and resources analysis via 17 IPC's 2009 IRP. 18 Because IPC has provided no compelling reason for the Commission to expedite its 19 review of IPC' s Langley Gulch Application in order to meet future loads in the 2012 timeframe, 2 0 the Commission should consider Langley Gulch based on its forthcoming August 2009 load 21 forecast as par ofan integrated loads and resources analysis via IPC's 2009 IRP. The August 22 2009 load forecast should more reasonably reflect curent, near, and possibly longer term 23 economic conditions and resultant impacts of electricity demand. 24 Also, the near-term energy conservation, energy effciency, load cycling and demand 25 response utility and non-utility activities underway and emerging should be reflected in the 2009 26 IRP. And, IPC should reverse its recent pattern of shrinking projected new DSM savings. 27 Furher, the Commission should require a detailed analysis of IPC's secondary winter 28 peak and possible DSM activities and programs to curtail its growth. This could include a review 1 How wil Boise spend its energy stimulus grants? IdahoStateman.com, June 9, 2009. http://ww.idahostatesman.com/localnews/v-print/story796461.htm i Mitchell, Di IPC-E-09-03 ICIP 6 1 IPC's current retail tariffs to ensure that utility rate design is not at cross puroses with energy 2 efficiency activities and programs. For instance, it makes no sense to send price signals that 3 promote increased consumption via declining block rates and high fixed customer charges while 4 developing and implementing energy effciency programs. The secondary winter peak appears 5 to feed into the Company's justification for new baseload generation. 6 7 Finding 4: ICP is not facing the sort of financial difficulty that would suggest that curent 8 recovery of CWIP is appropriate. 9 IPC's stock has been sellng well above book value over most of the last decade and was 10 sellng above book as late as the end of the fourh quarer of 2008. The curent stock market 11 meltdown and credit cruch (plus a sale of over 1 milion shares of stock in the fourh quarer of 12 2008) took them below book value at the end of the fourh quarer, although the stock price has 13 increased somewhat in recent months. The relationship ofthe stock price to book value is of key 14 importce because issuing new stock below book value will dilute the holdings of existing 15 shareholders. 16 Furher, CWIP is inappropriate for several reasons. It is both inconsistent with 1 7 competitive market processes and essentially blunts incentives associated with integrated 18 Resource Planing, has adverse intergenerational impacts. If adopted, it reduces the utilty's 19 business risk, though we have not seen IPC volunteer for a lower return on equity or less equity 2 0 in its capital structue. 21 22 23 III. Organization of Testimony 24 25 Section iv: Load Forecasting 26 27 Section V: DSM and Rate Design 28 29 Section Vi: Integration of Loads and Resources 30 31 Section VII: Construction Work in Progress (CWIP) 32 33 IV. IPC Load Forecast: The Recession and Demand for Electricity 34 Mitchell, Di IPC-E-09-03 ICIP 7 1 Q. Please explain your findings relative to the recession and demand for electricity. 2 A. IPC's Langley Gulch Application states that "having this Project available to meet 3 future loads is extremely importt. Therefore, to the extent the Commission can expedite its 4 review of this Application, it wil redound to the benefit of customers and system reliability." 2 5 Also, IPC Witness Mr. Bokenkamp represents that "Load growth within Idaho Power's service 6 territory is primarily what drives the need for new generating resources." 3 IPC works with 7 number of households and employment projections, along with customer consumption patterns, 8 to develop customer forecasts and load projections. These projections were updated in IPC's 9 August 2007 anual load forecast which is then in tu is used as the sales and load forecast for 10 the 2008 IRP Update. (p. 92008 IRP).4 11 Several factors related to load growth are cited as supporting the need and timing of Langley 12 Gulch: 13 . Large historical load growth (from 1990 to 2008) 14 . 2004 & 2006 Integrated Resource Plans called for a new baseload resource 15 . Possible new large loads in IPCo service territory 16 . Shift in timing of federal water releases 1 7 All but the change in federal water releases are based on the pre-recession situation in 18 Idaho and do not take into account more curent, and likely futue, economic indicators for the 19 state. 20 The recession has caused load growth to level off or decline throughout the U.S. and 21 worldwide.s Figure 1: "U.S. Electricity Consumption and Anual Growth in Consumption 2 Application item 26. 3 Testimony page 3, lines 9-10. 4 In the 2008 IPR Update, both the average energy and peak-hour load forecasts declined relative to the 2006 IRP. S For example, the EIA's May 12,2009 Short Term Energy Outlook reports that the recession has led to reduced demand from the industrial sector. The EIA expects total electricity use to decline 0.8% this year (http://ww .eia.doe. gov / emeu/ steo/pub/ contents.html ?featureclicked= 1 & ). The International Energy Agency recently forecast its first electricity use decline since 1945.Mitchell, Di 8 IPC- E-09-03 ICIP 1 1998-2008 with Forecast to 2010" shows thatfrom 1998 through 2007, the anual electricity 2 growth rate was positive in every year but for a slight negative growth rate of -0.7% in 2001, 3 while approaching a zero growth rate (0.2%) in 2006.2008 shows a marked decrease of -1.6% in 4 anual growth in electricity consumption. The 2009 forecast continues with a decline of -0.8%, 5 with a slight rebound forecast in 2010 of 1.5%. 6 7 Figure 1: U.S. Electricity Consumption and Anual Growth in 8 Consumption 1998-2008 with Forecast to 2010 U.S. Total Electricity Consumption 13 Bilion 12 kilowatt 11 hours 10 per day 9 8 : Forecast . .... Consumption. . . ..... ... 3.7%Annual Growth"- 2.8%3% 20k 1% Changefrom0% Prior .1% Year .20/ó -3% 1998 1999 20 201 202 203 2004 2005 20 201 208 2009 2010 9 10 11 Short-Term Energy Outlook, May 2009 e.... Source: Energy Information Administration, Short-Term Energy Outlook, May 12 2009: http://ww.eia.doe.gov/emeu/steo/pub/gifs/Fig20.gif It has attributed this decline to the seriousness of the curent economic recession (http://ww.ibtimes.com/articles/20090522/iea- forecasts- first -electricity-use-decline-since- 1945.htm). The North American Electric Reliability Corp forecasts a decline in electric consumption to 2006 levels this summer due to the effect of the recession on industral power use (http://news.yahoo.com/s/nm20090519/us nmus utilities nerc summer/print). Similarly, the ISO-NE Regional System Plan 2008 "reports that peak demand for electricity in New England is projected to be somewhat lower than the previous 10-year demand forecast, largely due to lower growth in the long-run forecast of personal income (http://tdworld.com/usiness/iso-new-england-plan-1 0080. iso NE' s 2009 forecast shows that demand for electricity in New England declined in 2008 and that growth in future demand is likely to slow because of economic conditions (http://isonewengland.net/nwsiss/grid mkts/key facts/ct profile.pdf).Mitchell, Di '9 IPC-E-09-03 ICIP 1 Table 1 "Idaho Power Company Form 1O-K Reported Energy Usage First Quarer 2008 2 and First Quarer 2009" shows that from 2008 to 2009, Residential and Commercial energy 3 (MWh) usage was down -3.5% and -4.2% respectively, with a larger decline of -8.2% in 4 industrial energy (MWh) usage. The average decline for these three customer categories totals 5 nearly -5%. 6 7 8 9 The demand for electricity while influenced by a number of factors, is largely correlated 10 to changes in population, personal income, and the levels of economic activity. Idaho Division 11 of Financial Management's (DFM) April 2009 Idaho Economic Forecast6 provides the following 12 information and data for the State ofIdaho concerning changes in these key indicators. 13 14 A. Population Table 1: Idaho Power COl IItJali y Form 10-K Reported Energy Usage First Quarter 2008 & First Quarter 2009 ''',1st 008 1st 009 % Change~, " Energy Use (MWh)Energy Use (MWh)1Q08to 1Q09 ßesidential " " l,5S8,912 1,533,8?9 -3.5%, Commercial 998,994 956,875 -4.2% Industrial 850,838 780,973 -8.2% SUB-TOTAL 3,438,744 3,271,707 -4.9% lrri~atil:11 ,ll,061 7,257 -34.4%,~. ",.i Off-system sales 517,944 576,673 11.3% 15 State population growth has been substantially curtiled in recent months. In the last 16 quarter of2008 Idaho's population increase was just 0.14%. Forecasts to 2011 show that while 1 7 the rate of increase in the population is likely to rise from late 2008 levels, it is not expected to 18 reach the levels recorded in 2006 and 2007.7 19 1. Migration 6 April 2009 most recent available at time of testimony filing. 7 Idaho Economic Forecast Quarterly Detail, April 2009, http:// dfm. idaho. gOY /Pu b lications/EAB/F orecast/2009 / Apri 11 q uarterlydetailtab Ie. pdf Mitchell, Di IPC-E-09-03 ICIP 10 1 A similar pattern is evident regarding migration. Net migration slowed between 2006 2 and 2008 (in the last quarer of 2006 net migration was 20,600 whereas by 2008 this figure had 3 fallen to 3,500), and is forecast to be negative in late 2009 and early 2010 (Figure 2). By the end 4 of 20 11, net migration is stil expected to be substantially lower than in 2006 (nearly 30,000 15t 5 quarter 2006 and forecast at13,900 in the 4th quarer of2011). 6 Figure 2: Net Migration to Idaho 2006-2008 with Forecast to 2011 30 5 25 20 15 l 10 o -5 m mæ ~m m æ~m m æ~m mæ~m m æ ~m mæ~ 2006 2007 2008 2009 2010 20117 8 Source: Idaho Economic Forecast Quarerly Detail, April 2009 9 http://dfm.idaho. gov/Publications/EAB/F orecast/2009/ April! quarterlydetailtable. pdf 10 11 1. Housing Starts 12 Lower levels of population increase means fewer housing stars. Idaho housing stars fell 13 from over 23,000 at the beginning of2006 to just 5,183 in the first quaer of2009 (Figue 3). Mitchell, Di IPC-E-09-03 ICIP 11 1 While the number of new stars is forecast to increase beginning in the 2nd quarer of 2009, the 2 levels recorded in 2006 are not expected to retu by the end of 20 11.8. 3 4 Figure 3: Idaho Housing Starts 2006-2008 with Forecast to 2011 25,000 ~ 15,000 t! .r"oJ: .."" E"z 10,000 20,000 5,000 o mææ ~mæ æ~m ææ~mææ~mææ~mææ~ 2006 2007 2008 2009 2010 20115 6 Source: Idaho Economic Forecast Quarterly Detail, April 2009 7 http://dfm.idaho . gov /Publications/EAB/F orecast/2009/ April! quarerl ydetailtable. pdf 8 9 Given that changes in average load are overwhelmingly correlated with changes in the 10 number of customers served, the recent and forecast lower population growth and housing starts 11 will reduce the near-term need for new generation. 12 13 B. Personal Income 8 Idaho Economic Forecast Quarterly Detail, April 2009, http:// dfm. idaho. gOY lPu b lications/EAB/F orecast/2009/ April quarterlydetailtab Ie. pdf Mitchell, Di IPC-E-09-03 ICIP 12 1 The depth of the recession is such that available forecasts indicate that personal income is 2 likely to remain well below 2006/ early 2007 levels beyond 2011 (Figure 4). In the 1st quaer 3 of2007 per capita personal income in Idaho reached $27,159 in 2000 $. By the fourh quarer of 4 2008 it had declined to $26,387 (a drop of2.8%). Personal income is forecast to decline to 5 $26,025 in the 2nd quarer of 20109 and then increase to $26,415 by the 4th quarer of2011.10 6 That is, by the end of 20 11 per capita personal income (in real 2000 $) is forecast to be only a 7 little higher than at the end of2008 and stil almost 3% lower than its peak in the first quarer of 8 2007. Beyond 2011, even if personal income continued to recover at the rate forecast for the end 9 of 20 1111, it would not reach 2007 levels until 2013. 10 Figure 4: Idaho Per Capita Personal Income 2006-2008 with Forecast to 2011 27,400 27,200 27,000 26,800 26,600 '"002 26,400.5"E ~26,200 26,000 25,800 25,600 25,400 À ! ..\ I A ~ I y .. / ~,~/4 .~ Q1 Q2 Q31 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q41 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2006 007 ~008 2009 2010 2011!I 11 12 Source: Idaho Economic Forecast Quarterly Detail, April 2009 13 http://dfm.idaho . gov /PublicationsÆAB/F orecast/2009 / April! quarterlydetailtable. pdf 9 These trends have led to a decline in personal income, for the first time since 1986 10 Idaho Economic Forecast Quarerly Detail, April 2009, http:// dfm. idaho. gov /PublicationsÆABIF orecast/2009/ April! quarterlydetailtable. pdf 11 Between Q3 and Q4 of2011 per capita personal income is forecast to rise 0.422% MitcheH, Di IPC-E-09-03 ICIP 13 1 2 c.Economic Activity 3 The Idaho Division of Financial Management summarzed the economic situation in 4 2008 as follows: 5 "After several years of strong growth, Idaho's economy shran last year, and it is 6 expected to tur in disappointing performances in both this year and next. The extent of last 7 year's decline can be seen in several indicators. Idaho nonfarm employment shran 1 % in 8 2008, which is its weakest performance since 1987. The state's goods-producing sector was 9 disproportionately hard hit in 2008. Weighed down by double-digit declines in its construction, 10 lumber and wood products, and computer and electronics sectors, the goods-producing sector 11 fell over 8% last year. The nongoods-producing sector's employment did not decline, but 12 advanced by a meager 0.6o/o-its weakest showing according to records that go back through 13 1991." 12 14 They are also reflected in the Gross State Product. As shown in Figure 5, Idaho's real 15 GSP increased each year between 2005 and 2007. In 2008, however, it remained almost level 16 with the 2007 figure, recording a 0% change for that year. In the U.S. as a whole real GDP 17 increased 0.7% between 2007-2008, so the recession has hit Idaho's economy even harder than is 18 the case for the nation as a whole.13 In terms of industr sectors, the greatest contributor to 19 Idaho's stagnant GSP was the construction sector (-1.58 percentage points).14 Since housing 2 0 starts contribute to load growth, this downtur in construction is likely to reduce demand for 2 1 electricity in the near term. 22 12 State ofIdaho, Division of Financial Management, Idaho Economic Forecast, April 2009: http://dfm.idaho.gov/PublicationsÆAB/F orecast/2009/ April/Idaho 0409 .pdf page 15 13 Economic Slowdown Widespread Among States in 2008, Bureau of Economic Analysis, June 2,2009: http://ww.bea.gov/newsreleases/regional/gdpstate/gspnewsrelease.htm 14 Regional Accounts Tables, Bureau of Economic Analysis, ww.bea.gov Mitchell, Di IPC-E-09-03 ICIP 14 1 Figure 5: Idaho Gross State Product (GSP) and Percent Change in GSP: 2005-2008 2 3 4 Source: Bureau of Economic Analysis, Regional Accounts 5 6 The forecast for 2009 is even worse than the situation in 2008: 7 8 "Idaho nonfarm employment is forecast to decline almost 5% in 2009. This decline 9 reflects continued weakesses in several sectors being joined by employment drops in other 10 sectors that were spared last year. As was the case in 2008, goods-producing employment is 11 especially hard hit. It is forecast to decline over 14%, as several of its components continue to 12 face difficulties. Construction employment is forecast to decline another 17%. Lumber and wood 13 production is projected to fall 23%. Computer and electronics manufacturing, which is weighed 14 down by layoffs, declines 20%. Mining employment, which grew last year, decreases 30%. Job 15 losses are also expected to be widely distrbuted among the categories of the heretofore immune 16 nongoods producing sector. In fact, of all its categories, only information and state and local 1 7 governents post job gains. But these increases do not offset the expected decreases. As a result, 18 services employment is forecast to be down 3.7% and trade employment is down 4.4%. _ Percent change GSP ~ReaIGSP 46,000 9.0 45,500 8.0 45,000 7.0 44,500 6.0 Mi:..~'" E 44,000 5.0 I."..~i:....'"tI.1:'i 43,500 4.0 ""~0:".. 43,000 3.0 42,500 2.0 42,000 1.0 41,500 0.0 2005 2006 2007 2008* Mitchell, Di IPC-E-09-03 ICIP 15 1 Governent employment is up slightly. Overall, nongoods-employment should fall 3% in 2 2009. Idaho nominal personal income falls 0.2%, but grows 0.1 % after adjusting for deflation. 3 Housing stars are expected to fall to about 5,700 units. In 2009, in-migration is forecasted to 4 slow significantly, causing Idaho population to expand just 1 % that year." 15 5 Figure 6 reflects how nonfar employment in Idaho peaked in the 4th quarer of2007 and 6 then declined throughout 2008. It is forecast to continue to fall until the 4th quarer of2009. 7 Even by the end of2011, nonfar employment is expected to be 3.6% lower than at the end of 8 2007 (see Figure 4). As with personal income, beyond 2011, even if employment levels 9 recovered at the rate forecast for the end of 20 1116, they would not reach 2007 levels until the 10 final quarter of2012 and the beginning of2013. 11 12 Figure 6: Idaho Non-Farm Employment 2006-2008 with Forecast to 2011 670,000 660,000 650,000 640,000 630,000 1:"E ~620,000 Ew 610,000 600,000 590,000 580,000 ~,/\/\/\/"~ Q1 Q2 Q3 Q4 Ql Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Ql Q2 Q3 Q4 Q1 Q2 Q3 Q4 006 007 008 009 010 011 13 14 Source: Idaho Economic Forecast Quarerly Detail, April 2009 15 http://dfm.idaho. gov /PublicatIons/EAB/F orecast/2009/ April! quarerlydetailtable.pdf is State ofIdaho, Division of Financial Management, Idaho Economic Forecast, April 2009: http:// dfm.idaho.gov /Publications/EAB/F orecast/2009/April/ldaho 0409.pdf ,page 15 16 Between Q3 and Q4 of2011 total nonfar employment is forecast to rise 0.91 %. Mitchell, Di IPC- E-09-03 ICIP 16 1 Figue 7 shows that for employment in the goods producing sector, the forecast is for an 2 even greater proportionate decline. By the end of2011, employment in this sector is forecast to 3 be 22% less than at its peak in the 1 st quarter of 2007. Beyond 2011, even if the rate of increase 4 forecast for the end of201117 doubled in subsequent years, it would not be until 2014 that 5 employment in the goods producing sector would reach the levels recorded in 2007. 6 Figure 7: Idaho Goods Producing Employment 2006-2008 with Forecast to 2011 130,000 120,000 110,000 100,000 1:.. l ,!90,000 80,000 70,000 60,000 7 8 -- ~~~" "\"--- Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 !Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 006 007 008 009 I 2010 ~011 9 Source: Idaho Economic Forecast Quarerly Detail, April 2009 10 http://dfm.idaho .gov /PublicationsÆAB/F orecastl2009/ April! quarterlydetailtable.pdf 11 12 13 Construction employment registered a particularly marked drop in the 4th quarer of 14 2008 (-5% compared to the 3rd quarer). Employment in this sector is expected to continue to fall 17 Between Q3 and Q4 of2011 employment in the goods producing sector is forecast to rise almost 1.3%. Doubling this rate leads to a quarterly increase of almost 2.6%. Mitchell, Di IPC-E-09-03 ICIP 17 1 until the second quarer of 20 1 0, after which small increases (around 1 %) are forecast.18 By the 2 end of2011, the number of people employed in construction, one ofIdaho's hardest hit 3 industries, is forecast to be only two-thirds of the number employed in the industry at the end of 4 2006. That is, employment in this sector would have to increase by more than one third in 2012 5 to regain its 2006 levels. 6 This analysis indicates that even once the economic recovery is underway, it will tae 7 some years for personal income and employment to reach 2006-2007 levels. These levels wil 8 not be reached by the end of2011 and, at the rates of increase forecast for that period (Q3 to Q4 9 of2011) are unlikely to be reached until 2013 or beyond. 10 11 D. Comparison of Key Factors Influencing Electricity Demand: IPC 12 August 2007 Load Forecast and Idaho Division of Financial 13 Management April 2009 14 15 Q. Please explain your comparison of the most recently released IPC data on per capita 16 personal income and non-farm employment. 17 18 A. The following is a comparison ofIPC's August 2007 load forecast as presented in its 19 June 2008 IRP Update to the most recent April 2009 forecasts produced by Idaho's Division of 20 Financial Management 21 1. Per Capita Personal Income 22 Figure 8 compares the IPC August 2007 load forecast of per capita personal income with 23 the April 2009 forecast from the Division of Financial Management (DFM). The IPC forecast 24 shows a steady upward climb in personal income to 2011. This contrasts with the more recent 25 DFM forecast which shows per capita personal income declining from 2007 to 2010, before 26 beginning to increase again in 2011. Even with the increase in 2011, however, per capita 2 7 personal income is forecast to remain below 2006 levels between 2008 and 2011. The difference 28 between the two forecasts increases from 2008 on. By 2011, the difference is over six per cent 29 (see Figure 9), with the DFM forecasting substatially lower per capita personal income than 30 those in IPC'S August 2007 load forecast. 18 Idaho Economic Forecast Quarterly Detail, April 2009, http:// dfm. idaho. goy/Pub lications/EAB/F orecast/2 009/ April/ quarterlydetailtab Ie .pdf Mitchell, Di IPC-E-09-03 ICIP 18 1 2 Figure 8: Idaho Per Capita Personal Income IPC August 2007 and DFM April 2009 Forecasts 3 4 Source: IPC IRP 2008 Update and Idaho Economic Forecast Quarerly Detail, April 2009 5 http://dfm.idaho . gov /PublicationsIEAB/F orecast/2009/ April! quarerlydetailtable.pdf 28,500 28,000 27,500 27,000 o ~¿, 26,500o ! 26,000 25,500 25,000 24,500 ..IPC (adjusted to 2000 $) ..OFM 2009 (2000 $) 2006 2007 2008 2009 2010 2011 6 Figure 9: Percent Difference IPC August 2007 and DFM April 2009 Forecasts of 7 Per Capita Personal Income 3.00% 2.00% 1.00% 0.00% "1.00% "-2.00% -3.00% -4.00% -5.00% -6.00% -7.00 2006 8 . % difference 2.11% Mitchell, Di IPC-E-09-03 ICIP 20 1 Source: IPC IRP 2008 Update and Idaho Economic Forecast Quarerly Detail, April 2009 2 http://dfm.idaho.gov /Publications/EAB/F orecast/2009/ April/quarter! ydetailtable. pdf 3 2. Non-Farm Employment 4 5 A similar situation is evident in the two forecasts for non-far employment (see Figues 6 10 and 11). Figure 10 compares the two forecasts of total nonfar employment. It shows that 7 the August 2007 load forecast a steady increase in total employment to 2011. The more recent 8 DFM forecast shows a decline in employment beginning in 2008 and continuing to 2010. 9 Employment is forecast to increase in 2011, but again it is not expected to reach 2006 levels in 10 the forecast period. The difference between the two forecasts is even more marked for 11 employment than for personal income. Figure 11 shows that the DFM forecast for total nonfar 12 employment is 8.5% below that ofthe IPC August 2007 load forecast. In the manufacturng 13 sector the difference rises to over 25% in 2010. 14 Figure 10: Idaho Total Employment: IPC August 2007 and DFM April 200915 Forecasts 700,000 680,000 660,000 ~ 640,000c:"E ~e. Ew 620,000 600,000 580,000 560,000 2006 2007 2008 2009 ~IPC ..DFM2009 2010 2011 16 Mitchell, Di IPC-E-09-03 ICIP 21 1 Figure 11: Percent difference Between ¡PC August 2007 and DFM April 2009 2 Forecasts of Total Nonfarm and Manufacturing Employment: 2006-2011 - Total nonfarm employment _ Manufacturingemployment 3 10% 5% 0% ~5% 'i -10".- -15% -20% -25% -30% 2006 2007 2008 2009 2010 2011 4 5 Source: IPC IRP 2008 Update and Idaho Economic Forecast Quarerly Detail, April 2009 http://dfm.idaho . gov/Publications/EAB/F orecast/2009/ April/ quarterl ydetailtable.pdf 6 7 8 9 Section V: DSM and Rate Design A. Current DSM Programs 10 Q.Please provide your general understanding of IPC's current DSM programs. 11 A. Per its 2008 DSM Anual Report, IPC reports energy efficiency and demand response 12 program savings of 140,156 MWh of energy and 72 MW of peak load reduction in 2008. The 13 bulk of energy (MWh) savings came from the industrial sector ((29%), whereas irrgation 14 provided over half of peak load reduction. Market Transformation and Commercial programs 15 both accounted for 23% ofMWh savings, with the residential sector and other programs (16%) Mitchell, Di IPC- E-09-03 ICIP 23 1 and irrigation (8%) accounting for the remaining savings DSM programs have expanded rapidly 2 since 2002, when only 17,117 MWh of savings were realized. 19 3 IPC's DSM program categories are as follows: 4 . Energy Efficiency Programs that focus on reducing energy usage, usually throughout 5 the year. 6 . Demand Response Programs that are designed to reduce customers' electricity loads.at 7 8 9 10 11 12 13 specific times of the day and year when demands on the electricity supply system are highest. IPCo offered two demand response programs in 2008 (for residential customers and irrigation customers) and expects to expand its DR offerings to the commercial and industrial sectors in 2009. IPCo is also planing to extend its irrigation DR program to include a dispatchable option. One of IPCo's planed C/I programs is a pilot project to determine the extent to which load could be reduced through cycling air conditioning in the small commercial sector. A broader C/I demand response program, the FlexPeak Management Program, is also being introduced. 2014 15 . Market Transformation Activities: Idaho Power paricipates in the Northwest Energy 16 17 Efficiency Alliance (NEEA), which aims to introduce energy efficiency products into the marketplace and create a viable market for them through market transformation activities. 19 Idaho Power, Demand Side Management Anual Report 2008, Appendix 4, page 95. These figues include the Oregon portion ofIPCs' service territory. 20 This program is being administered by a third-part contractor. The contractor, EnerNOC, signed a five-year contract with IP in February 2009 to run a demand response program active in June, July and August for large CII customers (::200 kW average biling demand. Customers wil contract directly with EnerNOC and receive capacity and energy payments in return for reducing their load during peak demand periods. The program's target demand reduction goals are 2 MW in the summer of 2009, rising to 30 MW in the summer of 2010, with an additional 10 MW each year thereafter to 2013. Bilie Jo Me Winn, Commercial Demand Response, Idaho Power, 2009 Integrated Resource Plan Advisory Council Meeting, March 19,2009, Slides 41-51. Mitchell, Di IPC-E-09-03 ICIP 24 1 IP also helps to foster market transformation through appliance or building code modifications or enforcement. 212 3 B.Secondary Winter Peak 4 As par of its DSM initiative, Idaho Power offers a range of rebates or cash incentives on a 5 space heating equipment, new homes including manufactured homes, and weatherization 6 services, that appear to favor electric heat. Winter peak demand is an increasingly important 7 issue in the IPC service territory. The figures below show historical monthly electricity demand 8 for 1984 and 2007 (MWh OOO's). There is a clear historical trend toward higher use in general 9 but paricularly in the summer and winter months. This is reflected in the forecasts for winter 10 and sumer peak demand (Figures 2-3). 11 As par ofIPC's 2009 IRP, the Commission should require a detailed analysis of IPC's 12 secondary winter peak and possible DSM activities and programs to curtail its growth. This 13 could include a review IPC's current retail tariffs to ensure that utilty rate design is not at cross 14 puroses with energy efficiency activities and programs. For instance, it makes no sense to send 15 price signals that promote increased consumption via declining block rates and high fixed 16 customer charges while developing and implementing energy effciency programs. 17 18 19 20 21 22 23 24 25 26 27 28 21 Idaho Power, Demand Side Management 2008 Annual Report, March 13, 2009, page 5-9; Jude Noland, IPC Files Commercial AC Pilot; Demand Response Program OK'd, Clearing Up, May 25, 2009, No. 1391, p.l0 Mitchell, Di IPC- E-09-03 ICIP 25 1 2 Figure X: Peak Forecast: Historical Monthly Seasonality 1984 vs 2007 (MWh OOO's) 1984 2007 IIR1del'aI lI.AditicmaI Prrm &Ie~II Imsiial .. COWiai BIiigatcm 3 4 Source: Brad Snow, Sales and Load Forecast, Slide 64, 2009 Integrated Resource Plan Advisory 5 Council Meeting, October 14, 2008 6 7 Figure X: Peak Forecast - Winter Foreaste4 Firm Winter Peak -I in IOprobabilty (lIt1awøtb) 8 9 10 Mitchell, Di IPC- E-09-03 ICIP 26 1 C. Shrinking Forecasts of New DSM 2 Q. Please explain how IPC's forecasts of new DSM are shrinking. 3 A. IPC's DSM programs have expanded in recent years and are forecast to continue to grow 4 to 2029. Figue 12 shows the monthly average load for 2009 to 2029 (in red) and the 5 forecast DSM from Energy Efficiency (green). A notable featue of this char is that, "New 6 DSM Energy Efficiency" (the pale green part of the DSM data) is a very small proportion of 7 overall DSM and average monthly load. 8 9 Figure 12: DSM Energy Efficiency UM ,.- tUM l l~ l.e - . 10 11 12 13 14 15 16 """"""" """ Source: Phil DeVol, Average Energy and Peak-Hour Deficits, Idaho Power Presentation to 2009 Integrated Resource Plan Advisory Council Meeting, December 17, 2008, Slide 31 In its December 17, 2008 presentation to the 2009 Integrated Resource Plan Advisory Council Meeting, IPCo showed that it planed to increase savings from new Energy Efficiency Programs from the current level of about 3 aMW to about 28 aMW in 20 years time. As reflected Mitchell, Di IPC-E-09-03 ICIP 27 1 in Figure 13, its new plan, however, shows substantially reduced goals relative to the 2006 IRP 2 (the latter plan aimed for 90 aMW after 20 years).22 3 4 Figure 13: New DSM - Energy Efficiency (aMW) 2009 VS. 2006 150 60 120 3= :EII 90 30 o 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 IRP PlannIng Period (2009/2006=1) 5 6 7 8 9 10 .2009 IRP .2006 IRP Source: Cory Read, New 2009 IRP DSM Avoided Costs, 2009 Integrated Resource Plan Advisory Council Meeting, December 17,2008, Slide 12 IPC's plan regarding savings from new Demand Response programs is also interesting. A similarly limited role for DSM is evident in the forecast ofDSM's peak reduction (Figure 14). 22 Cory Read, New 2009 IR DSM Avoided Costs, 2009 Integrated Resource Plan Advisory Council Meeting, December 17,2008, Slides 11-12. Mitchell, Di IPC-E-09-03 ICIP 28 1 .. .. .. ~ I a. l~ f lM 1, ". !l . Figure 14: DSM - Peak Reduction """""""""" Source: Phil DeVol, Average Energy and Peak-Hour Deficits, Idaho Power Presentation to 2009 Integrated Resource Plan Advisory Council Meeting, December 17, 2008, Slide 41 2 3 4 5 6 7 8 9 10 11 12 In 2009, the company is planing for about 100 MW in new DSM savings from these programs (Figure 15). This figue is expected to rise to just under 240 MW afer five years. At that point, however, the planned savings level off and no new incremental savings are included in the plan forecast for the next 15 years. 23 23 Cory Read, New 2009 IR DSM Avoided Costs, 2009 Integrated Resource Plan Advisory Council Meeting, December 17,2008, Slides 13-12. Mitchell, Di iPC- E-09-03 ICIP 29 1 240 3::Il\ Figure 15: New DSM - Demand Response (MW) 400 320 160 80 o 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 IRP Planning Period (2009=1) . 2009 IRP Source: Cory Read, New 2009 IRP DSM Avoided Costs, 2009 Integrated Resource Plan Advisory Council Meeting, December 17, 2008, Slide 13 2 3 4 5 6 7 8 1. Comparison of the Peak Demand Reductions in the 2006 IRP, 2008 IRP Update, and 2009 IRP Addendum Figure 16 shows the expected case peak savings from energy efficiency programs in the 2006 IPR and the 2008 and 2009 updates. The 2008 IRP Update showed an increase over the 2006 IRP savings levels. This increase was reduced in the 2009 Addendum. This is somewhat surprising given the curent national focus on energy effciency - the reasons for the reduction are not explained in the 2009 Addendum text. 9 10 11 12 13 14 Mitchell, Di IPC-E-09-03 ICIP 30 1 Figure 16: Expected Case Peak Savings from Energy Efficiency: 2006 IRP and 2 2008 and 2009 IRP Updates 300 250 50 200 ~ 150 100 o I 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 3 4 -.2006 -+2008 ..2009 5 Source: 2008 Integrated Resource Plan Update, Table 8, page 21; 2008 Integrated Resource Plan 6 Update, Appendix A, page 60; Integrated Resource Plan Addendum - February 2009, Page A-24 7 8 Figure 17 shows the forecast peak savings from demand response programs in the 2006 9 IRP and the 2008 and 2009 updates. A similar reduction between the 2008 and 2009 updates is 10 evident here, although again the reasons for the anticipated reduction are not clear. 11 Mitchell, Di IPC-E-09-03 ICIP 31 1 Figure 17: Expected Case Peak Savings from Demand Response: 2006 IRP, and 2 2008 and 2009 IRP Updates 84 / r - II --".. -- - II j 82 80 78 ~ 76 74 72 70 68 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 3 -.2006 ..2008 ..2009 4 Source: 2008 Integrated Resource Plan Update, Table 8, page 21; 2008 Integrated Resource Plan 5 Update, Appendix A, page 60; Integrated Resource Plan Addendum - February 2009, Page A-24 6 7 D. Greenhouse Gas Emissions 8 9 10 11 12 Q. How could possible GHG emission reduction goals increase IPC's future DSM savings? 13 14 A. The Company has yet to develop quantitative goals for reducing greenhouse gas emissions. This issue came to the fore in a recent shareholders meeting, when a resolution asking IPC to adopt specific goals for reducing GHGs passed with 52% of the vote. The resolution requests that IPC adopt such goals by September 30,2009.24 24 Rocky Barker, Historic green victory at Idaho Power annual meeting could mean higher electrc bil, IdahoStatesman.com, May 21, 2009: htt://ww.idahostatesman.com/localnews/story/777839.html Mitchell, Di IPC- E-09-03 ICIP 32 1 A GHG goal could encourage the Company to expand its DSM program because meeting 2 demand, including peak demand, via the constrction of additional conventional generation 3 would increase emissions. IPC's curent plans envision a relatively limited role for DSM. 4 5 Section VI: Loads and Resources Integration 6 Finding 3: From an integrated loads and resources basis, IPC has not reasonably demonstrated 7 that a baseload generation such as Langley Gulch as "least cost -best fit" . 8 9 As discussed earlier in my testimony in regard to Exhibit 207, even under IPC's stale 10 load forecast, the Company could most likely meet average aMW energy requirements during 11 the 2013 timeframe with network firm purchases. Thus, any possible futue resource constraints 12 appear to be more of a peaking nature than year-round requiring baseload generation. 13 Regardless, the duration and location of possible constraints need to be more fully analyzed. For 14 instance, curent and forecasted monthly load duration cures showing the time duration of 15 resource deficits by percentile ranges (100 - 90%; 89 -75%; etc.) should be provided, with the 16 geographic location within IPC service terrtory of the resource deficits identified. In addition to 1 7 the seasonal occurence of a deficit, resource shortages that only occur for say 20% of the time in 18 a given month versus say 50-60% and 80%+, warant different supply-side strategies. 19 As discussed in Section II. of my testimony, with no compelling reason to expedite the 20 Application, the Commission has the abilty to more carefully consider a variety of additional 21 supply- and DSM-resource options. As discussed by Dr. Reading, the Commission should 22 require an independent competitive bidding process. Also, any number of DSM options should 23 be considered. It may be that IPC's new DSM Commercial Demand Response program shown 24 on Exhbit 207 as only providing peak reductions in June, July and August, could be utilized in 25 other months as welL. Also, not only might there be more than the 9 or 10 MW of new DSM 26 energy efficiency shown per Exhbit 207, whatever the amount, it should also be shown as 27 reducing not only average energy aMW requirements but also peak MW requirements as well. 28 Further, as discussed by Dr. Yanel, there are additional peaking offsets to be had via IPC's very 29 successful Irrgation Peak Rewards Program. Lastly, it appears that the Company has failed to 30 include its residential air conditioning load management program in its 2009 new DSM 3 1 resources. Mitchell, Di IPC-E-09-03 ICIP 33 1 Recommendation 3: As par of IPCs; 2009 IRP, the Commission should require IPC to present 2 more detailed information as to the location and duration of possible projected future resource 3 constraints. 4 5 This should include a more complete consideration of additional available resources 6 through an independently administered competitive solicitation process and an expanded analysis 7 of increased utilization of existing DSM energy efficiency and demand response programs as 8 well as additional new DSM resources. 9 10 11 Section VII: Construction Work in Progress (CWIP) 12 13 14 Q.Is Construction Work in Progress (CWIP) in rate base appropriate for investments in new generation? 15 A. No. CWIP is inappropriate for several reasons. It is both inconsistent with competitive 16 market processes and essentially blunts incentives associated with integrated Resource Planing, 17 has adverse intergenerational impacts. If adopted, it reduces the utility's business risk, though we 18 have not seen Idaho Power volunteer for a lower retur on equity or less equity in its capital 19 structure. 20 Q.Wil you discuss how CWIP is inconsistent with competitive market principles? 21 A. First, it is an arifact of monopoly regulation that is unavailable in the competitive 22 business world. Consider the case of, for example, a new mine. The mine's customers typically 23 do not pay for a mining company to build a mine before it comes into service. The mining 24 company's investors advance the fuds to build the mine and the mine gets paid for the metal 25 that the mine produces once it is operating, thereby generating a retu for the investors. The 26 construction workers get paid, but they're paid by the mining company's shareholders in advance. 27 Utilities are similar - except that under rate regulation, they have an explicit method of 28 recovering pre-constrction costs over the life of the plant. Standard utility ratemaking gives an 29 allowance for fuds used durng construction (AFUDC) which provides for interest and an 3 0 equity retu on money tied up during construction. This AFUDC is added to the direct capital Mitchell, Di IPC-E-09-03 ICIP 34 1 cost of the plant. Once the plant comes into service and is used and useful and providing (or 2 delivering) electricity, all of this money (direct costs and AFUDC) is recovered over the life of a 3 plant (through depreciation and a rate of retu on equity and debt on the undepreciated balance). 4 IPC's request for cash payment for both interest and their retur on equity capital tied up 5 in CWIP before the plant is operational thus provides cost recovery that virtually no other 6 business can achieve and that would be almost impossible in an unegulated setting. 7 Second, there are intergenerational issues. For example, an 85-year-old customer of the 8 Company will pay proportionately far more of the cost of the new powerplant with CWIP than 9 without CWIP. 10 Q. 11 Wil you explain how including CWIP in rate base essentially can distort the type of choices that are typically made in an IRP process. 12 A. There are three ways in which such distortions can occur. CWIP in rate base encourages 13 utilities to build power plants rather than purchasing power (by removing one of the 14 disincentives to ownership - the cash flow consequences of financing a plant in-house). We are 15 concerned that when utilities determine their resource plans, they may choose ownership over 16 PPA options based on relatively flmsy grounds. Assurancethat the utility would receive rate 1 7 base treatment of CWIP before the plant comes into service would make ownership even more 18 compelling to the utility. 19 The inclusion of CWIP in rate base also creates a financial disincentive to energy 20 efficiency. Again, if efficiency can avoid or defer a power plant, it can avoid or defer the cash 21 flow consequences of financing the plant. But if those cash flow consequences are automatically 22 covered by ratepayers with CWIP, there will be even less incentive for utilities to promote 23 efficiency and we may see even greater demands for shareholder incentives. 24 CWIP in rate base also provides the greatest benefits to investments in long-lead-time 25 power generation technologies (large utility central station plants instead of more modular 26 renewable and combined heat and power plants with shorter lead times). 27 Q.Can you give an example of the intergenerational impacts of CWIP in rate base? Mitchell, Di IPC- E-09-03 ICIP 35 1 A. Consider, for example, an 85-year-old customer ofIdaho Power. Even if she survives for 2 10 years, she will pay for about 7 years of the cost of a new powerplant under normal 3 accounting, but wil pay for the plant for almost ten years will pay with CWIP in rate base. 4 Q.Wil you discuss business risk? 5 A. One key business risk facing an electric utilty is the construction risk - both the risk that 6 construction projects wil be on time and on budget and that they can be financed over the 7 construction period. CWIP in rate base signficantly reduces Idaho Power's business risk 8 associated with construction. First, it removes the finance risk. Second, it reduces the 9 consequences to the utilty of being late or over budget because (depending on the specifics of 10 the mechanism) it may cover cost overrs and schedule slippages. Therefore, while we oppose 11 CWIP in rate base, if the Commission adopts it, it should recognize this risk reduction by 12 reducing Idaho Power's retur on equity or the equity in its capital structure at the same time to 13 reflect the lower risk. 14 Q.What arguments are made in favor of CWIP in rate base? 15 A. The general argument is that including CWIP in rate base wil improve the utility's 16 financial condition. 17 18 Q Is Idaho Power facing any sort of financial difficulty that would suggest that current recovery of CWIP is appropriate? 19 A No, not of a permanent nature. Idaho Power's stock has been sellng well above book 20 value over most of the last decade and was selling above book as late as the end of the fourh 21 quarter of 2008. The curent stock market meltdown and credit cruch (plus a sale of over 1 22 milion shares of stock in the fourh quarter of 2008) took them below book value at the end of 23 the fourh quarer, although the stock price has increased somewhat in recent months. 24 The relationship of the stock price to book value is of key importance because issuing new stock 25 below book value will dilute the holdings of existing shareholders. 26 Moreover, we can measure the stress due to construction programs on the utility by examining a 27 utility's ratio of CWIP to Capitalization (or rate base that ears a retur). Thisratio has been in Mitchell, Di IPC-E-09-03 ICIP 36 1 the 8-10% range over the last several years. A new large generation project could tae it as high 2 as 20%, but only for a brief period of time. 3 Q.Wil you generally describe Idaho Power's credit rating? 4 A. Idaho Power's bond rating is a split rating. Senior secured debt is rated A- by all three 5 agencies. Unsecured debt is one notch lower at BBB+ for Moody's and Fitch and two notches 6 down at BBB for Standard and Poors. The Rating outlook is stable at S&P and negative for the 7 other two agencies.25 The outlook downgrades in March, 2008 from Fitch and June 2008 from 8 Moodys was related to issues in Power Cost Recovery ratemaking coupled with below-average 9 water conditions in the Pacific Northwest and a large future capital construction program.26 10 Q. 11 Is there any other information in the rationale for the changes in outlook by the two credit rating agencies that gives you concern? 12 A. Yes. There are two concerns. First, the two rating agencies considering downgrades 13 both pointed to a large future capital constrction program before Idaho Power allegedly made 14 the decision to go with its own "build" program instead of buying new generation. The 15 Commission should determine whether the information given to the rating agencies had 16 demonstrated that Idaho Power had prejudged its decision regarding new generation before it 1 7 was anounced. 18 Second, the Commission needs to determine whether Idaho Power's decision to build new 19 generation factored in the financial and credit agency metrics that could lead to a downgrade and 20 also factored in its request for CWIP that would require ratepayers to pay up front to finance its 21 generation, while purchased power options would not require payments before generation is 22 available. 23 Q What do these financial metrics tell you in broad terms? 2S Idacorp 1O-Q for first Quarer 2009, p. 49. 26Idacorp 1O-Q for second Quarer 2008, pp. 46-47. Mitchell, Di IPC- E-09-03 ICIP 37 1 A Idaho Power's long-term financial condition would be improved if it could postpone its 2 large construction program in new generation. It is currently selling below book value (though 3 that condition is likely to be temporar given its long history of sellng above book value) and 4 the rating agencies are concerned about capital spending. While market conditions have eased in 5 the last few months, the cost of investment grade debt financing has stil risen relative to both 6 past levels and rates on governent bonds. (WE HAVE A CHART WE MAYBE ABLE TO 7 GIVE YOU THAT GARRCK NEEDS TO UPDATE FOR SOME ARKANSAS TESTIOMNY 8 I AM WRITING.) If construction can be postponed due to lower demand, it would be beneficial 9 not only to ratepayers but to the company and its shareholders, because high interest rate debt to 10 finance a large powerplant would not be locked in for years to come, creating an unwanted 11 legacy of the curent crisis. 12 Q 13 Have any financial analysts agreed that postponing construction projects during the current credit crunch would have value to utilties and their regulators? 14 A Yes. In a presentation to the NARUC Winter Committee Meetings,27 Ban of America 15 and Merril Lynch of course made the usual recommendations to raise rates of retu due to the 16 crisis, but also pointed out that utilities need to adjust their "internal hurdle rates" when deciding 1 7 whether to make capital investments and deciding which capital investments to make. More 18 energy efficiency (which does not require capital because it is expensed in Idaho) CYNTHIA 19 CHECK and less powerplant constrction would be a corollary of such a strategy. At least, 20 deferring generation that is not immediately required because of reduced demand would be a 2 1 rational response to curent conditions. 22 Q.Does this conclude your prepared testimony? 23 A.Yes it does. 24 27 Ban of America and Merril Lynch, "Wall Street Turoil: Outlook for 2009 and Implications for Utilities and Regulators," Presentation to NARUC Winter Committee Meetings, February 17,2009. Mitchell, Di IPC- E-09-03 ICIP 38 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on the 19th day of June, 2009, a true and correct copy of the within and foregoing TESTIMONY OF CYNTHIA MITCHELL ON BEHALF OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER was served in the maner shown to: Ms. Jean Jewell (C) Commission Secretar Idaho Public Utilities Commission 472 W. Washington (83702) PO Box 83720 Boise, ID 83720-0074 2L Hand Delivery _U.S. Mail, postage pre-paid Facsimile Electronic Mail Lisa Nordstrom (C) Barton L. Kline Idaho Power Company PO Box 70 Boise, Idaho 83707-0070 lnordstromcmidahopower.com bklinecmidahopower.com ~ Hand Delivery -LU.S. Mail, postage pre-paid Facsimile -- Electronic Mail Scott Woodbur (C) Deputy Attorney General Idaho Public Utilities Commission 472 W. Washington Boise ID 83702 Scott. woodburycmpuc.idaho. gov L Hand Delivery _U.S. Mail, postage pre-paid Facsimile Electronic Mail Eric L. Olsen (C) Racine, Olson, Nye, Budge & Bailey, Chtd. 201 E. Center PO Box 1391 Pocatello, ID 83204-1391 elocmracinelaw.net _ Hand Delivery iU.S. Mail, postage pre-paid Facsimile Electronic Mail Anthony Yanel 29814 Lake Road Bay Vilage, OH 44140 tonycmyankel.net _ Hand Delivery iU.S. Mail, postage pre-paid Facsimile Electronic Mail Ken Miler Clean Energy Program Director Snake River Allance PO Box 1731 Boise, ID 83701 kmilercmsnakeriverallance.org _ Hand Delivery iU.S. Mail, postage pre-paid Facsimile Electronic Mail Betsy Bridge Idaho Conservation League 710 North Sixth Street (83702) POBox 844 Boise, ID 83701 bbridge(iwildidaho .org _ Hand Delivery iU.S. Mail, postage pre-paid Facsimile Electronic Mail Susan K. Ackerman NIPPC 9883 NW Nottge Dr. Portland OR 97229 Susan.k.ackerman(icomcast.net _ Hand Delivery iU.S. Mail, postage pre-paid Facsimile Electronic Mail Brad M. Purdy 2019 N. 17th Street Boise ID 83702 bmpurdy(ihotmail.com _ Hand Delivery iU.S. Mail, postage pre-paid Facsimile Electronic Mail Don Reading (C) 6070 Hil Rd Boise ID 83703 dreading(imindspring.com _ Hand Delivery iU.S. Mail, postage pre-paid Facsimile Electronic Mail Electronic Copies Only: _ Hand Delivery _U.S. Mail, postage pre-paid Facsimile X Electronic MailRobert Kah rkah(inippc.org Nina Curis Administrative Assistant Cynthia K. Mitchell is the founder of Energy economics, Inc., a consulting firm located in Reno Nevada. She has 35 years experience in utility issues. Ms. Mitchell received her M.S. in Economics in 1981 and B. S. in 1980 from the University of Utah. She began her utilty advocacy career during the 73- 74 OPEC oil embargo as a grassroots community organizer while attending college. In 1981, Ms. Mitchell joined the newly formed Nevada Attorney General's Office of Consumer Advocate (OCA). During her tenure as Senior Economist (1981-1990), Ms. Mitchell was responsible for representing Nevada consumers in electric utilty proceedings before the Nevada Public Service Commission. She worked with the OCA to develop the nation's first full featured Integrated Resource Planning (IR) modeL. As the OCA's Senior Economist, Ms. Mitchell was responsible for the review, case organization, strategy analysis, management of consultants, and presentation of testimony on all aspects of resource planning, including load forecasting, demand-side management, avoided cost calculations, utility and non-utilty supply side resources, resource integration, preferred plan selection, and utility and ratepayer financial analyses. This included a "hands- on" understanding and abilty to review and analyze methodologies and models utilzed in resource planning. As an expert on IR from 1990 to 1996, Ms. Mitchell assisted in the development and implementation ofIR in Colorado, Georgia, Kansas, Louisiana, Mississippi, Montana, Texas, the City of New Orleans, and the District of Columbia. In addition, Ms. Mitchell was co-manager of the National Association of State Utility Consumer Advocates (NASUCA)/ Departent of Energy IR Regulatory Intervention Project. She prepared an IRP training manual for NASUCA and provided or participated in IR workshops presentations in Georgia, Indiana, Mississippi, Missouri, New Mexico, South Carolina, Texas, Utah, and West Germany. She has evaluated energy conservation programs of a number of gas and electric utilities. For the past seven years, Ms. Mitchell has been the principal consultant for The Utility Reform Network (TURN) in analyzing the design and underlying policy direction of California utility energy Cynthia K. Mitchell Energy Economics, inc. efficiency (EE) programs - with statewide utilty EE portfolios now approaching nearly $1 bilion a year. She has been particularly active in efforts to expand programs to encourage air conditioner effciency to reduce residential peak demand. Other recent projects include: assisting AARP with EE incentives in Oklahoma and New Mexico, work with the Arkansas Attorney General's Office on IR and EE rules assisting the Washington Departent of Community Trade and Economic Development (CTED) in drafting rules concerning EE plans for public utilities, work with the Arkansas Attorney General's Offce on IR and EE rules, assisting the Southwest Energy Effciency Project (SWEEP), on the development of an energy effciency strategy and plan for Nevada, work with potential small scale co- generators in Nevada, policy and design considerations for voluntary green pricing in Nevada, program evaluation for Nevada State Welfare Division of Federal Low Income Household Energy Assistance Program activities, working with the Nevada Governor's Energy Advisor on plans for renewable energy and energy efficiency as a hedge against gas prices and development of an incentive framework for renewable energy contracting in Nevada, and work for environmental and consumer groups in several states on utilty restructuring, competition, and stranded investments. Ms. Mitchell is on the Center for Resource Solutions (CRS) "Green-e Energy" Advisory Board. Green-e Energy is the nation's leading independent certification and verification program for renewable energy. Ms. Mitchell's recent March 2009 aricle published in The Public Utilities Fortightly entitled "Stabilzing California's Demand: The real reasons behind the state's energy savings" discusses how the state's GHG-reduction policy largely premised on the state already having achieved a strong and direct "cause and effect" between utilty energy effciency savings and the state's relatively stable per capita electricity consumption is faulty. 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" (2 , 1 9 1 ) De c e m b e r 2 0 0 8 L o a d F o r e c a s t Lo a d F o r e c a s t ( 7 0 t h % ) w / D S M (1 , 8 2 9 ) (2 , 1 5 0 ) (2 , 1 1 3 ) (1 , 9 5 0 ) (1 , 7 1 6 ) (1 , 7 0 5 ) (1 , 8 9 6 ) (2 , 3 0 8 ) (2 , 6 2 3 ) (2 , 4 1 1 ) (1 , 9 9 6 ) (1 , 6 9 4 ) (1 , 8 5 9 ) (2 , 1 8 9 ) Lo a d F o r e c a s t C h a n g e ( D e c e m b e r 2 0 0 8 ) 10 12 11 10 7 5 4 4 4 3 2 2 2 2 Ex i s t i n g R e s o u r c e s Co a l 93 4 93 4 93 4 93 4 88 9 66 1 86 0 93 4 94 0 94 0 94 0 93 9 94 0 94 0 Hy d r o ( 7 0 t h % ) - H C C 36 4 47 8 60 0 60 1 60 0 69 6 83 9 66 2 46 2 36 0 41 1 39 9 36 5 47 6 Hy d r o ( 7 0 t h % ) - O t h e r 20 5 20 8 21 5 30 1 25 3 24 1 32 8 33 9 24 8 24 3 23 5 21 7 20 4 20 7 Sh o s h o n e F a l l s U p g r a d e 0 0 0 0 0 0 0 0 0 0 0 0 0 3 To t a l H y d r o ( 7 0 t h % ) 56 9 68 6 81 5 90 2 85 3 93 7 1, 1 6 8 1, 0 0 1 71 0 60 3 64 5 61 7 56 9 68 5 CS P P ( i n c l u d i n g w i n d ) 12 0 12 5 10 1 12 0 13 0 14 8 18 5 19 5 18 1 17 4 17 2 14 6 12 0 12 5 Elk h o r n V a l l e y W i n d 32 44 34 33 34 35 30 37 37 33 29 35 32 44 Ra f t R i v e r G e o t h e r m a l 10 10 10 10 10 10 10 10 10 10 10 10 10 10 PP L M o n t a n a - J e f f e r s o n ( 8 3 M W ) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Ea s t S i d e P u r c h a s e ( 5 0 M W ) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 To t a l P o w e r P u r c h a s e A g r e e m e n t s 42 54 44 43 44 45 40 47 47 43 39 45 42 54 Ne t w o r k S e t - A s i d e f o r F i r m P u r c h a s e s 11 5 11 5 11 5 11 5 11 5 11 5 11 5 11 5 11 5 11 5 11 5 11 5 11 5 11 5 La n g l e y G u l c h 0 25 1 25 1 25 1 25 1 25 1 25 1 25 1 25 1 25 1 25 1 25 1 25 1 25 1 Bo a r d m a n t o H e m i n g w a y 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Ga s P e a k e r s 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Su b t o t a l 1, 7 8 0 2, 1 6 5 2, 2 6 0 2, 3 6 6 2, 2 8 3 2, 1 5 7 2, 6 1 8 2, 5 4 4 2, 2 4 5 2, 1 2 7 2, 1 6 2 2, 1 1 2 2, 0 3 7 2, 1 7 0 Mo n t h l y S u r p l u s / D e f i c i t (4 9 ) 15 14 7 41 6 56 7 45 1 72 2 23 6 (3 7 9 ) (2 8 5 ) 16 6 41 8 17 8 (1 8 ) 20 0 9 1 R P D S M In d u s t r i a l 2 2 4 4 4 4 4 4 4 4 4 4 4 4 Co m e r c i a l 0 0 1 1 1 1 1 1 1 1 1 1 1 1 Re s i d e n t i a l ~ ~ ~ ~ ~ § ~ ~ ~ ~ ~ § ~ ~ To t a l N e w D S M A v e r a g e E n e r g y 7 7 10 10 10 10 10 9 9 9 10 10 10 10 Mo n t h l y S u r p l u s / D e f i c i t w / N e w D S M (4 2 ) 23 15 7 42 6 57 7 46 1 73 2 24 6 (3 6 9 ) (2 7 6 ) 17 6 42 8 18 8 (8 ) NE T O U T L A N G E L Y G U L C H (4 2 ) (2 2 8 ) (9 4 ) 17 5 32 6 21 0 48 1 (5 ) (6 2 0 ) (5 2 7 ) (7 5 ) 17 7 (6 3 ) (2 5 9 ) Lo a d F o r e c a s t ( 9 5 t h % ) (2 , 5 3 5 ) (3 , 0 1 4 ) (2 , 8 4 3 ) (2 , 6 7 4 ) (2 , 3 8 4 ) (2 , 1 3 5 ) (3 , 0 4 7 ) (3 , 6 4 2 ) (3 , 8 3 9 ) (3 , 4 6 1 ) (3 , 1 9 7 ) (2 , 2 9 4 ) (2 , 5 6 7 ) (3 , 0 6 3 ) Ex i s t i n g D S M 42 42 50 50 51 52 58 14 7 15 0 13 8 55 51 50 51 Pe a k - H o u r L o a d F o r e c a s t (2 , 4 9 3 ) (2 , 9 7 2 ) (2 , 7 9 3 ) (2 , 6 2 4 ) (2 , 3 3 3 ) (2 , 0 8 3 ) (2 , 9 8 9 ) (3 , 4 9 5 ) (3 , 6 8 9 ) (3 , 3 2 3 ) (3 , 1 4 2 ) (2 , 2 4 3 ) (2 , 5 1 7 ) (3 , 0 1 2 ) De c e m b e r 2 0 0 8 L o a d F o r e c a s t Pe a k - H o u r L o a d F o r e c a s t ( 9 5 t h P e r c e n t i l e ) (2 , 4 8 3 ) (2 , 9 5 9 ) (2 , 7 7 9 ) (2 , 6 1 4 ) (2 , 3 2 7 ) (2 , 0 8 0 ) (2 , 9 8 5 ) (3 , 4 9 3 ) (3 , 6 8 6 ) (3 , 3 2 2 ) (3 , 1 4 2 ) (2 , 2 4 2 ) (2 , 5 1 6 ) (3 , 0 1 0 ) Lo a d F o r e c a s t C h a n g e ( D e c e m b e r 2 0 0 8 ) 10 13 14 10 6 3 4 2 3 1 0 1 1 2 Ex i s t i n g R e s o u r c e s Co a l 97 8 97 8 97 8 97 8 97 8 69 0 92 3 97 8 98 3 98 3 98 3 98 3 98 3 98 3 Hy d r o ( 9 0 t h % ) - H C C 51 0 78 5 1, 1 0 2 84 5 59 0 69 0 1, 1 7 0 1, 0 5 6 1, 0 0 5 94 5 1, 0 3 5 72 0 60 0 78 5 Hy d r o ( 9 0 t h % ) - O t h e r 19 4 19 8 19 8 20 0 19 1 20 5 29 6 30 8 24 2 23 1 20 8 20 4 19 2 19 7 Sh o s h o n e F a l l s U p g r a d e Q Q Q Q Q Q Q Q Q Q Q Q Q l To t a l H y d r o 70 4 98 3 1, 2 9 9 1, 0 4 5 78 1 89 5 1, 4 6 6 1, 3 6 4 1, 2 4 7 1, 1 7 6 1, 2 4 3 92 4 79 2 98 3 CS P P ( i n c l u d i n g w i n d ) 62 57 49 50 55 81 12 7 13 7 14 1 13 6 11 9 87 62 57 Po w e r P u r c h a s e A g r e e m e n t s El k h o r n V a l l e y W i n d 5 5 5 5 5 5 5 5 5 5 5 5 5 5 Ra f t R i v e r G e o t h e r m a l 10 10 10 10 10 10 10 10 10 10 10 10 10 10 PP L M o n t a n a - J e f f e r s o n ( 8 3 M W ) 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Ea s t S i d e P u r c h a s e ( 5 0 M W ) Q Q Q Q Q Q Q Q Q Q Q Q Q Q To t a l P o w e r P u r c h a s e A g r e e m e n t s 15 15 15 15 15 15 15 15 15 15 15 15 15 15 Pu r c h a s e s f r o m t h e P a c i f i c N o r t h w e s t 73 4 67 3 44 1 53 6 50 4 40 2 39 5 36 5 31 0 49 3 41 6 23 4 66 5 67 0 La n g l e y G u l c h 0 30 0 30 0 30 0 30 0 30 0 30 0 30 0 30 0 30 0 30 0 30 0 30 0 30 0 Bo a r d m a n t o H e m i n g w a y 0 0 0 0 0 0 0 0 0 0 0 0 0 0 Ga s P e a k e r s 41 6 41 6 41 6 41 6 41 6 41 6 41 6 41 6 41 6 41 6 41 6 41 6 41 6 41 6 Su b t o t a l 2, 9 0 9 3, 4 2 1 3, 4 9 8 3, 3 4 0 3, 0 4 9 2, 7 9 9 3, 6 4 2 3, 5 7 5 3, 4 1 2 3, 5 1 8 3, 4 9 2 2, 9 5 9 3, 2 3 3 3, 4 2 4 Mo n t h l y S u r p l u s / D e f i c i t 0 0 0 0 0 0 0 0 (2 7 4 ) 0 0 0 0 0 20 0 9 1 R P P S M Ne w D S M ( D R - C o m m e r c i a l ) 57 57 57 Ne w D S M ( D R - I r r i g a t i o n ) 17 6 17 6 17 6 Ne w D S M ( E n e r g y E f f c i e n c y ) 2 2 2 To t a l N e w D S M P e a k R e d u c t i o n 0 0 0 0 0 0 0 24 2 24 2 24 2 0 0 0 0 Mo n t h l y S u r p l u s / D e f i c i t w / N e w D S M 0 0 0 0 0 0 0 0 (3 2 ) 0 0 0 0 0 NE T O U T L A N G E L Y G U L C H 0 (3 0 0 ) (3 0 0 ) (3 0 0 ) (3 0 0 ) (3 0 0 ) (3 0 0 ) (3 0 0 ) (3 3 2 ) (3 0 0 ) (3 0 0 ) (3 0 0 ) (3 0 0 ) (3 0 0 )