20090619Yankel Direct.pdf

W. MARCUS W. NYE
RANDALL C. BUDGE
JOHN A. BAILEY, JR.
JOHN R. GOODELL
JOHN B. INGELSTROM
DANIEL C. GREEN
BRENT O. ROCHE
KIRK B. HADLEY
FRED J. LEWIS
ERIC L. OLSEN
CONRAD J. AIKEN
RICHARD A. HEARN, M.D.
LANE V. ERICKSON
FREDERICK J. HAHN, III
DAVID E. ALEXANDER
PATRICK N. GEORGE
SCOTT J. SMITH
JOSHUA D. JOHNSON
STEPHEN J. MUHONEN
BRENT L. WHITING
JONATHON S. BYINGTON
DAVE BAGLEY
CAROL TIPPI VOLYN
THOMAS J. BUDGE
CANDICE M. MCHUGH
JONATHAN M. VOLYN
MARK A. SHAFFER
JASON E. FLAIG
LAW OFFICES OF
RACINE OLSON NYE BUDGE Be BAILEY
CHARTERED BOISE OFFICE
t01 SOUTH CAPITOL
BOULEVARO,SUITE 208BOISE, IDAHO 83702
TELEPHONE: [phone]"
FACSIMILE: (208) 433~0167
201 EAST CENTER STREET
POST OFFICE BOX 1391
POCATELLO, IDAHO 83204.1391
TELEPHONE [phone]
FACSIMILE [phone]
IDAHO FALLS OFFICE
477 SHOUP AVENUE
SUITE 203
POST OFFICE BOX 50698
IDAHO FALLS, 1083405
TELEPHONE: [phone]
FACSIMILE: (208) 528-8'09ww.racinelaw.net
SENDER'S E-MAIL ADDRESS:elo\Qradnelaw.net
COEUR D'ALENE OFFICE
250 NORTHWEST
BOULEVARD. SUITE toeA
COEUR D'ALENE, 1083814
TELEPHONE: [phone]
ALL OFFICES TOLL FREE
(877) 232-6'0'
L.OUIS F. RACINE (1917-2005)WILLIAM D. OLSON, OF COUNSEL
June 19,2009
Re: IPC-E-09-03
si$
~';rna11-..~
rn,-:
Jean Jewell
IPUC Commission Secretar
P.O. Box 83720
Boise, Idaho 83720-0084
Dear Mrs. Jewell:
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Enclosed for filing you wil find the nine copies of the Direct Testimony of Anthony Yanel,
with one copy being designated as the reporters copy. We are also submitting CD containing the
testimony in MS Word format.
Than you for your continuing assistance.
Sincerely,
--
ERIC L. OLSEN
ELO/nj
Enclosures
c: Service List (via mail and e-mail)
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20n9 JON 19 PH S: l.,
IDAHO PUBUC
UTILITIES COMMISSIONBEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE POWER )
COMPANY'S APPLICATION FOR A )
CERTIFICATE OF PUBLIC CONVENIENCE)
AND NECESSITY FOR THE LANGLEY )GULCH POWER PLANT )
CASE NO. IPC-E-09-03
IDAHO IRRIGATION PUMPERS ASSOCIATION, INC.
DIRECT TESTIMONY
OF
ANTHONY J. YANKEL
JUNE 19,2009
1 Q.PLEASE STATE YOUR NAME, ADDRESS, AND EMPLOYMENT.
2
3 A.I am Anthony J. Yanke!. I am President of Yane i and Associates, Inc. My
4 address is 29814 Lake Road, Bay Vilage, Ohio, 44140.
5
6 Q.WOULD YOU BRIEFLY DESCRIBE YOUR EDUCATIONAL
7 BACKGROUND AND PROFESSIONAL EXPERIENCE?
8
9 A.I received a Bachelor of Science Degree in Electrcal Engieering from Caregie
10 Institute of Technology in 1969 and a Master of Science Degree in Chemical Engineerng from
11 the University of Idaho in 1972. From 1969 through 1972, I was employed by the Air
12 Correction Division of Universal Oil Products as a product design engineer. My chief
13 responsibilties were in the areas of design, star-up, and repair of new and existing product lines
14 for coal-fired power plants. From 1973 through 1977, I was employed by the Bureau of Air
15 Quality for the Idaho Deparent of Health & Welfare, Division of Environment. As Chief
16 Engineer of the Bureau, my responsibilities covered a wide range of investigative functions.
17 From 1978 through June 1979, I was employed as the Director of the Idaho Electrcal Consumers
18 Office. In that capacity, I was responsible for all organizational and technical aspects of
19 advocating a varety of positions before varous goverental bodies that represented the
20 interests of the consumers in the State ofIdaho. From July 1979 though October 1980, I was a
21 parer in the firm of Yane i, Eddy, and Associates. Since that time, I have been in business for
22 myself. I am a registered Professional Engieer in the states of Ohio and Idaho. I have
23 presented testimony before the Federal Energy Regulatory Commission (FERC), as well as the
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1 State Public Utility Commissions of Idaho, Montana, Ohio, Pennsylvania, Utah, and West
2 Virginia.
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7 (Irrgators).
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ON WHOSE BEHALF AR YOU TESTIFYING?
I am testifyng on hehalf of the Idaho Irrgation Pumpers Association, Inc.
WHAT IS THE PURPOSE OF YOUR TESTIMONY IN THIS PROCEEDING?
My testimony wil address:
· Idaho Power's (IPCo or Company) forecasted load that serves as a basis for
the perceived need of the Langley Gulch facilty by December 1, 2012;
. The economic change that has occurred since the forecasted loads were
established that were used to justify Langley Gulch;
. The Company's recent round of updated forecasts;
. System impacts if Langley Gulch is postponed; and
. How the new Company-Option Irgation Peak Rewards Program wil further
reduce peak demand requirements on the system.
WHAT ARE YOUR CONCLUSIONS IN THIS CASE?
I make the following conclusions:
. The decision to build Langley Gulch was based upon data that is now
outdated and thus inappropriate;
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22 Q.
· There has been a signficant economic downtu since the Company
developed its load forecast data upon which its decision to build Langley
Gulch was based;
· Given the recent quarerly economic forecasts made by the Idaho Division of
Financial Management, the growth projections are such that Idaho Power
likely wil not encounter the forecasted loads that Idaho Power relied upon to
justify the need for Langley Gulch in the time frame set out in this case;
· The data in the Company's three new forecasts have been only recently
offered without support or explanation for peer review. Not only are these
new forecasts not aligned with the economic downturn, but they are
internally inconsistent and ignore the abilty to import energy (as opposed to
peaking capacity) on the system;
· There wil be no adverse impact if Langley Gulch is postponed for 10
months, which is effectively what the Company did when it moved the on-
line date of Langley Gulch from June 1 to December 1, 2012;
. The new Irrgation peak rewards program wil significantly reduce sumer
peak demand; thus, furter postponing the requirement for additional
generation; and
. There is no need for Langley Gulch in the timeframe proposed by the
Company in this case.
WHAT ARE YOUR RECOMMENDATIONS IN THIS CASE?
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1 A.Idaho Power has stated that it wil be developing a new load forecast later this
2 year. Given the expected reductions in load growth, there may also be changes in the
3 Company's overall Integrated Resource Plan (IRP), which may furter impact the need to
4 construct Langley Gulch. For these reasons, I recommend that the Commission postpone any
5 decision on the issuance ofa Certificate of Public Convenience and Necessity for at least 10
6 months or until IPCo has updated its load forecast and all parties have had an opportnity to
7 review and comment on that data.
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COMPANY'S JUSTIFICATION FOR LANGLEY GULCH
(2006 IRP AND 2008 UPDATED IRP)
4 Q.UPON WHAT BASIS DOES IDAHO POWER mSTIFY ITS NEED FOR
5 AND THUS ITS REQUEST FOR A CERTIFICATE OF CONVENIENCE AND NECESSITY
6 FOR LANGLEY GULCH?
7 A.Primarly, the Company bases its need for Langley Gulch on the results of its
8 2006 IRP as well as its 2008 Updated IRP. Essentially, it is the Company's position that the
9 loads that are found in the 2006 IRP and the 2008 Updated IRP are best matched by the
10 resources in the 2008 Updated IPR, which includes a 300 MW combined cycle gas tubine such
11 as Langley Gulch.
12 My testimony wil focus on the "need aspect" of the plant and more specifically
13 changes in the Company's load/resource balance since the 2006 IRP and the 2008 Updated
14 IRP. I wil address the forecasted load growth that Langley Gulch is proposed to meet/offset. I
15 wil also address the Company's new load/resource balances as they relate to the need for
16 Langley Gulch. I wil not address the type of resource that could be developed.
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18 Q.WILL LANGLEY GULCH SERVE BASE LOAD OR PEAK
19 REQUIREMENTS?
20 A.Generally speaking, Langley Gulch is capable of sering both peak as well as
21 base or the energy requirements of the system. However, a combined cycle plant is a plant that
22 is designed (from a cost standpoint) to focus more on supplying an energy need as opposed to a
23 peaking requirement. The Company has focused most of its attention on the fact that Langley
24 Gulch wil be serving a base load requirement and that it is supposed to operate at a high
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1 capacity factor. The Company's 2008 Updated IRP shows ver little peaking requirements in
2 the near-ter. The most recent updates to IRP data show even less of a need for peakng
3 capacity.!
4
5 Q.IN THIS CASE, ARE THERE ANY SPECIFIC INACCURACIES THAT YOU
6 WISH TO ADDRESS WITH RESPECT TO THE FORMULATION OF THE 2006 IR OR
7 THE 2008 UPDATED IRP?
8 A.My testimony does not address inaccuracies in these two IRP's, but it addresses
9 the appropriateness of using these IRP's in an economic environment that has so drastically
10 changed since the time that those IRP's were developed. Essentially, the IRP's are an attempt to
11 match resources with forecast load. Over the near ter (the time it wil take to build Lagley
12 Gulch), the growt in load has greatly changed to the point where Langley Gulch wil not be
13 needed in the timeframe specified by the IRP's.
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15 Q.WHAT WERE THE GROWTH PROJECTIONS AND THUS THE LOAD
16 FORECAST IN THE 2006 IRP?
17 A.According to page U of the 2006 IR, the Company's load was expected to
18 increase an average of 40 aMW per year through 2025 and the total number of retail customers
19 was expected to increase from 11,000-12,000 per year through 2025. The number of
20 residential customers was projected to increase from 8,600-10,700 customers per year between
1 Later in my testimony, I wil address the new, Company Option Peak Rewards Program for the
Irrgators that is not included in the 2008 Updated IRP and was not fully included in the more recent
update. Ths Company Option program will fuer reduce peakg requirements below those last
addressed in any of the 2009 IRP data. For these reasons, my testimony wil primarly address Langley
Gulch on an energy as opposed to a peak load basis.
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1 2006 and 20132. Commercial customers were projected to increase from 1,500-1,800 per year
2 between the 2006 and 2013 planing horizon3. The overall system load was projected to
3 increase between 22 and 37 aMW per year over the 2006-2013 timeframe4.
4
5 Q.WHAT DOES THE 2008 UPDATED IRP STATE ABOUT WHY
6 GENERATION RESOURCES MUST BE ADDED TO THE SYSTEM?
7 A.Absent additional conservation and/or DSM programs, the Company's 2008
8 Updated IRP states5 the obvious:
9 Customer growth is the primar factor leading to Idaho Power's need for
10 additional resources.. Population growt throughout southern Idaho-specifically
11 in the Treasure Valley-requires additional resources to meet both the
12 instantaneous peak and the sustained energy needs of the new customers.
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14 Q.WHAT WERE THE GROWTH PROJECTIONS AND THUS THE LOAD
15 FORECAST IN THE 2008 UPDATED IRP?
16 A.The 2008 Updated IR projected more customer growt than did the 2006 IRP~
17 at between 12,500 and 13,000 total customers per year. At page 10 of the 2008 Updated IRP it
18 states:
19 Figue 1 shows a comparson of the 2006 and 2008 updated customer forecasts.
20 Figue 1 shows that there wil be a greater number of retails customers than were
21 forecast in the 2006 IRP-nearly 26,000 more retail customers by 2027. The
22 additional 26,000 more retail customers represent a change in total customers of
23 almost 4% by the end of the 20-year plannng period.
24 Somewhat offsetting this growth in the number of customers, the 2008 Updated IRP
25 demonstrates that at the end of the 20-year planing period that DSM and increases in retail
26 electrc prices results in reductions in the use per customer such that the overall energy usage at
2 See 2006 IR, Appendi A, page 26.
3 See 2006 IR, Appendix A, page 28.
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1 the end of the 20-year planing horizon is less in the 2008 Updated IRP than in the 2006 IRP.
2 However, this is after the 20-year planing perod, but not what is forecasted to occur durng the
3 early years of the planing period.
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5 Q.HOW DOES THE OVERALL FORECASTED SYSTEM LOAD IN THE 2008
6 UPDATED IRP COMPARE TO THE OVERALL FORECASTED SYSTEM LOAD FOR THE
7 FIRST SEVERAL YEARS OF THE PLANNING PERIOD?
8 A.Durng the next several years (when the need for Langley Gulch is claimed to
9 develop), the two IRP's contain the following forecasts for expected system sales:
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2008
20061RP Update
MWH MWH Change
2008 14,855,104 14,773,134 -0.6%
2009 15,134,273 15,318,384 1.2%
2010 15,424,917 15,588,906 1.1%
2011 15,636,244 15,817,567 1.2%
2012 15,831,635 15,934,177 0.6%
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16 Q.HOW DOES THE FORECASTED RESIDENTIAL LOAD IN THE 2008
17 UPDATED IRP COMPARE TO THE FORECASTED RESIDENTIAL LOAD FOR THE
18 FIRST SEVERAL YEARS OF THE PLANING PERIOD?
19 A.Like the total system load, the forecasted Residential load in the 2008 Updated
20 IRP is greater than in the 2006 IRP. Durng the next several years (when the need for Langley
21 Gulch is claimed to develop), the two IRP's contain the following forecasts for expected
22 Residential sales:
4 See 2006 IR, Appendix D, page 44.
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2008
20061RP Update
MWH MWH Change
2008 5,273,003 5,406,449 2.5%
2009 5,364,603 5,519,177 2.9%
2010 5,464,619 5,607,822 2.6%
2011 5,525,263 5,704,610 3.2%
2012 5,561,958 5,759,539 3.6%
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3 Q.WHEN WERE THE LOAD FORECASTS DEVELOPED FOR THE 2006 IRP
4 AND THE 2008 UPDATED IR?
5 A.October 12, 2006 is listed as the date the revised 2006 IR was issued. This is the
6 date of the 2006 IRP publication itself, but not the specific date when the forecast data was
7 formulated that went into the entire IRP. In fact, the forecast load data for that IR was
8 developed at least a year prior to that revision date6.
9 Likewise, the 2008 Updated IR was issued on June 25, 2008, but the customer
10 projections and load projections were updated in August 2007, almost a year before the updated
11 IRP was issued7. Thus, the load data in each of these IR's can be considered somewhat stale,
12 but usable in an environment that is not undergoing major upheavals. However, under the
13 circumstances that have existed over the last year and a half, these historic projections are
14 essentially worthless.
5 ipeo's 2008 Integrated Resource Plan Update page 9.
6 The date provided in response to Staff Request 2 suggests that the forecasted load data came from at
least as far back as October 26, 2005.7 See 2008 Integrated Resource Plan Update, page 9.
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1 CHANGE IN ECONOMIC OUTLOOK
2
3 Q.ALTHOUGH THERE MAY BE A HOST OF ANTIDOTAL EVIDENCE THAT
4 THE ECONOMY IS SLIPPING AND GROWTH ON THE IDAHO POWER SYSTEM MAY
5 BE GREATLY REDUCED, WHAT HAR EVIDENCE IS THERE TO DEMONSTRATE A
6 MAJOR ECONOMIC SHIFT HAS AND IS TAKIG PLACE?
7 A.There are a couple of documents that quickly put into perspective how severe the
8 recent economic downtu has been and how it has impacted Idaho Power's customer count and
9 loads. In the Company's response to The Industral Customers ofIdaho Power's Request 19,
10 there is contained a listing of the Company's actual customer count during 2007 and 2008.
11 Although the 2006 IRP forecasted an increase during 2008 in its Residential customer count of
12 1O,4238i the Residential customer count only increased 3,736 customers between 2007 and 2008.
13 The economic slowdown resulted in Idaho Power acquiring 6,687 fewer Residential customers
14 compared to that projected in the 2006 IRP' Only 35% of the forecasted 2008 growth in the
15 Residential customer count actually occurred.
16 That same data response contained the actual Commercial customer count during 2007
17 and 2008. The Commercial customer count only increased 1,360 customers between 2007 and
18 2008. By contrast, the forecasted increase in the Commercial customer count found in the 2006
19 IRP (based upon forecast data from 2005) predicted an increase of 1,785 customers9. The
20 economic slowdown resulted in Idaho Power acquiring 425 fewer Commercial customers
21 compared to that projected in the 2006 IRP.
22
8 See 2006 Integrated Resource Plan, Appendix A, page 26.
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1 Q.WHAT is THE IMPACT OF THE REDUCTION IN LOAD FROM THESE
2 CUSTOMERS NOT COMING ON TO THE SYSTEM IN 2008?
3 A.The Company's 2006 IRP put the weather normalized Residential usage for 2008
4 at 12,632 kWh per customer. With 6,687 Residential customers not materalizing, this translates
5 into 84,500 MWH that did not need to be generated because of the impact upon the Residentìal
6 customer count in 2008 alone.
7 Likewise, the 2006 IRP put the weather normalized Commercial usage for 2008 at 64,834
8 kWh per customer. With 425 Commercial customers not materializing, this translates into
9 28,000 MWH that did not need to be generated because of the impact upon the Commercial
10 customer count in 2008 alone. When the loss of both new Residential and new Commercial
11 customers in 2008 are combined, approximately 100,000 MWH less electrcity needs to be
12 generated over the year.
13
14 Q.WERE THE DECREASES IN CUSTOMER COUNT PROJECTIONS
15 BECAUSE OF THE PRESENT ECONOMIC CONDITIONS FACTORED INTO THE 2008
16 UPDATED IRP?
17 A.No. As pointed out above, the actual customer count and forecast information
18 that went into the 2008 Updated IRP were actually from August 2007-before the downturn
19 began. Although the impact of the economic downtu upon customer count and load was not
20 factored into the 2008 Updated IRP, there was a brief mention ofa downturn in the wrte-up
21 itself. The 2008 Updated IR merely stated on page 10:
22 The recent cyclical slowdown in customer growth, as indicated in the total
23 number of customers for year end 2007 is approximately thee tenths of a percent
9 See 2006 Integrated Resource Plan, Appendi A, page 28.
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1 lower than forecast (0.3%). The effect of the cyclical downtu on the longer
2 term trend wil be evaluated for the 2009 IRP.
3 Thus, neither the forecast load data for the 2006 IRP nor the 2008 Updated IRP reflect any major
4 economic change. As pointed out above, the 2008 Updated IRP even showed an increase in
5 usage over the first several years of the planng horizon, which seemed to have stil been the
6 Company's expectation regarding growth around the time that the 2008 Updated IRP was issued.
7 The obvious concern here is the fact that the decision to build Langley Gulch was predicated
8 upon the 2006 IR as well as the 2008 Updated IRP-neither of which reflect the signficant
9 downtu in the economy, new customer counts, and ultimately Idaho Power's anticipated load.
10
11 Q.ARE THERE OTHER SOURCES OF DATA THAT DEMONSTRATE HOW
12 THE IMPACT OF THIS SIGNIFICANT ECONOMIC DOWNTURN HAS OR IS EXPECTED
13 TO IMPACT IDAHO POWER'S FORECASTED NEW CUSTOMER GROWTH?
14 A.Yes, there is. The average number of customers added anually to the Idaho
15 Power system over the ten year period 1998-2007 was 11,869. As pointed out above, both the
16 2006 IR and the 2008 Updated IRP (upon which the Langley Gulch decision was based)
17 projected increase customer growth at 11,000-12,000 customers per year (at historic levels) in
18 the case of the 2006 IRP, or at 12,500-13,000 customers per year (above historic levels) in the
19 case of the 2008 Updated IRP.
20 For comparative purposes, a publicly available source of data that comes out quarerly is
21 the Idaho Economic Forecast issued by the State's Division of Financial Management. This is
22 the State ofIdaho's official economic forecast. This report contains both historic as well as
23 forecasted demographic data. The report only contains demographic data for Idaho as a whole,
24 but the Idaho Power serice area covers the major par of the State and its demographics would
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1 generally not be that different than the State's demographics as a whole. The Idaho Economic
2 Forecast contains data regarding housing starts, which is closely akn to new Residential
3 customer growth. I do not offer this data as a replacement for the Idaho Power data, but as a
4 basis for demonstrating what may have happened, had Idaho Power properly updated its forecast
5 data with what is now known to be a major economic downtu.
6 The average historic housing stars reported by the Idaho Economic Forecast over the ten
7 year period 1998-2007 was 14,956 units per year. In July 2007, the Idaho Economic Forecast
8 projected the following level of future housing starts:
9 2008 16,60810 2009 17,35011 2010 18,311
12 Essentially, the Idaho Economic Forecast in July 2007 projected over the next three years an
13 averagelO of 16.5% more housing stars than the ten year historic average-similar to the August
14 2007 forecast of an increase in the rate of customer growth that was used by Idaho Power in its
15 2008 Updated IRP. Generally speaking, durng the sumer of2007, both Idaho Power'S
16 forecast data and the Idaho Economic Forecast were making similar projections.
17
18 Q.HOW DID IDAHO'S ECONOMY OUTLOOK CHANGE SINCE JULY 20077
19 A.According to the Idaho Economic Forecast, the outlook for Idaho's economy
20 went into a downward spiral after the summer of 2007. A few quotes from several of these
21 quarerly reports wil give a flavor of what is well known:
22 October 2007 Executive Sumar: The Idaho economic outlook has been
23 ratcheted down slightly since this summer. Ths adjustment reflects the thrd time
24 this year we have reduced our employment forecast.
10 The average housing stas for these thee years is 17,423.
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1 April 2008 Executive Summary: Idaho's economic outlook has been scaled baqk
2 compared to the Januar 2008 Idaho Economic Forecast. Ths change largely
3 results from the anticipated weaker showing for the national economy. There are
4 about 7,800 fewer Idaho jobs in 2008 in the curent forecast compared to the
5 previous one. Ths gap grows each of the next three years...
6 July 2008 Executive Summar: The outlook for Idaho's economy has been scaled
7 back to reflect more curent Idaho historical data and the revised national forecast.
8 A review of new employment data shows the state's economy grew slower durng
9 the first par of this year than had been anticipated in April 2008.
i 0 October 2008 Executive Summar: The next few years wil be even more
11 challenging for the Idaho economy than had been previously thought.
12 January 2009 Executive Summar: A review of Idaho's economic pedormance last
13 year shows why we are glad it is behind us. The preponderance of evidence shows
14 it was one of the worst years in memory. ... The bad news is this year is expected to
15 be worse than last year. ... The economy is expected to begin moving forward in
16 2010, but the recovery wil be modest.
17 April 2009 Executive Summar: Ths Idaho Economic Forecast lends credence to
18 the adage that bad news comes in thees. After several years of strong growth,
19 Idaho's economy shran last year, and it is expected to tu in disappointing
20 pedormances in both this year and next.
21 Unlike ths publicly available forecast that is updated ever quarer (and that followed the
22 downtu and the degree of the downtu as it occured), Idaho Power's 2006 IR and its 2008
23 Updated IRP have not incorporated any of the significant economic impacts of recent events.
24 Langley Gulch was conceived under a very different set of assumptions than exists today.
25 Although we all hope for a tuaround in the economy (that may require future resources), the
26 present timing of Langley Gulch is out-of-sync with the present reality.
27
28 Q.CAN THE IDAHO ECONOMIC FORECAST BE USED TO DEMONSTRATE
29 HOW FAR OFF THE IDAHO POWER SUMMER OF 2007 FORECASTED LOAD GROWTH
30 MAY BE FROM WHAT IS OCCURRING TODAY?
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1 A.Both the Idaho Economic Forecast and the forecast used by Idaho Power were in
2 sync during the summer of 2007. The only real difference is that the Idaho Economic Forecast
3 has been updated quarerly, while the Company used the summer of 2007 load forecast
4 information as the basis for its decision to build a natual gas-fired CCT located close to its
5 Treasure Valley 100011. In order to. demonstrate an order of magntude change in Idaho Power's
6 projected growth, one can simply look at the overall percentage of change in the forecasted and
7 actual results found in the Idaho Economic Forecast.
8 As stated above, the average historic housing stars reported by the Idaho Economic
9 Forecast over the ten year period 1998-2007 was 14,956 units per year. Also as stated above,
lOin July 2007, the Idaho Economic Forecast projected that the housing stars in the State would be
11 16.5% greater than this 10-year historic average. Reality fell far below these projections for
12 2008 and the forecast for the future has been greatly revised downward12:
13 2008 7,940 (actual)14 2009 5,71315 2010 8,44516 2011 10,27417 2012 13,070
18 The average housing star (actual or forecast) over this five year period is 9,088 per year, or only
19 61% ofthe 10-year historic perod 1998-2007. This is a reduction of39% of the growth
20 projections that were made during the summer of 2007. As an order of magntude estimate, one
21 could assume that Idaho Power's sumer of 2007 growth forecast fell by a similar amount.
22
23 Q.HOW CAN THIS ORDER OF MAGNITUDE REDUCTION BE USED TO
24 ESTIMATE THE IMPACT UPON IDAHO POWER'S LOAD GROWTH PROJECTIONS?
11 See Response to Staff Request 2.
12 Idaho Economic Forecast April 2009, page 33.
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1 A.The Company's load levels in its 2008 Updated IRP (upon which the decision to
2 build Langley Gulch is based) projected an increase in average usage between 2007 and 2012 of
3 187 average megawatts13. If39% of this growt does not take place (as in keeping with the
4 changed growth forecast in the Idaho Economic Forecast), then approximately 73 aM wil not
5 be required at the end of2012, when Langley Gulch is expected to begin operation. This
6 reduction in growth would place the load requirement at 1,924 aMW, where the Company's
7 2008 Updated IRP places the load for 2009. The lack of adjusting Idaho Power's IRP load
8 forecasts for any of the downtu in the state and national economies that has taken in place
9 results in the the need for Langley Gulch being postponed several years.
13 Page 11 of
the 2008 Updated IR list under the 70th Percentile condition a2012 load of 1,997 aMW
and an actual 2007 load of 1,810 aM for a difference of 187 aMW.
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1 ADDITIONAL FORECAST UPDATES
2
3 Q.HAS IDAHO POWER UPDATED ITS LOAD FORECASTS SINCE THE
4 SUMMER OF 20017
5 A.There was a load forecast prepared in September 2008 that sered as the basis for
6 what has been referred to as the 2009 IRP. It should be noted that this 2009 IR was never
7 finalized by the Company or approved/accepted by the Commission. In fact, the Company is not
8 planing to present to the Commission ths IRP, but a different one to be fied in December
9 2009. In response to Request 20 of the Industral Customers of Idaho Power, it was indicated
10 that the Company made adjustments to its load projections (prepared in September 2008) in
11 December 2008. Other than general statements such as "the decision was made to adjust the
12 residential and commercial sectors to reflect a prolonged slowdown in housing and consumer
13 spending", the response gave ver little detail regarding this December 2008 adjustment in the
14 load forecast.
15 Presumably this lack of detail is based upon the fact that the Company recognzes the
16 need to fuher update its forecast. The Response went on to state:
17 Curently, the load forecasting area is working on developing a new load forecast
18 that wil be available in late sumer of 2009. The load forecast wil be reflective
19 of the most current economic forecast drivers, the most recent input from the
20 Company's large power representatives and their contracts, energy efficiency
21 impacts, and the latest forecast of retail electrcity prices.
22 According to the Company's response to Staff Request 85, the Company "has prepared a
23 number of updated load forecasts since the 2006 IRP was published." Thee specific updates
24 were mentioned in this data response that the Company has chosen to share: 1) a September 2008
25 forecast that was used for the 2009 IRP; 2) a December 2008 update which addressed Residential
26 and Commercial loads; and 3) a May 2009 update that changed the forecast loads for special
17 Yanel, DI
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1 contract customers "as par of preparng the newest load forecast, which is expected to be
2 completed in late sumer 2009." (Emphasis Added)
3
4 Q.WAS THE DECISION TO BUILD LANGLEY GULCH BASED UPON ANY
5 OF THESE UPDATED FORECASTS?
6 A.No. As previously stated, the decision to build Langley Gulch was based upon
7 the 2006 IRP and the 2008 Updated IRP and not these updated load forecasts. The December
8 2008 and May 2009 updated load forecasts (which are stil to be furter updated) were first
9 mentioned with respect to this case in response to Request 20 of the Industral Customer of Idaho
10 Power (ICIP) that was issued on May 11, 2009. Upon fuer questioning by Staff Requests 84
11 and 85 (in order to seek more information regarding the Response to ICIP Request 20), the
12 Company supplied more data, and more discussion that included when the 2009 IRP forecast
13 was developed, and what the forecasted loads were in the 2009 IR (forecast in September
14 2008), the December 2008 update, and the May 2009 update. Responses to Staff Requests 84
15 and 85 were sent out on June 4th and June 5th respectively. Interenor testimony was due two
16 weeks later. Basically, there has been ver limited time for peer review.
17
18 Q.ARE THERE ANY GENERAL OBSERVATIONS YOU HAVE MADE WITH
19 RESPECT TO THE FORECAST VALUES FOUND IN THE 2006 IRP, THE 2008 UPDATED
20 IRP, THE 2009 IRP, AND THE DECEMBER 2008 AND MAY 2009 UPDATE?
21 A.As pointed out above, Idaho and the nation has been in a severe economic
22 downtu since the end of2007 or the begining of2008. Even Idaho Power's 2008 Updated
23 IRP recognzed that there was a:
18 Yanel, DI
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1 recent cyclical slowdown in customer growth, as indicated in the total number of
2 customers for year end 2007 ... The effect of the cyclical downtu on the longer
3 ter trend wil be evaluated for the 2009 IRP .14
4 Because the economic downtu occured after the forecast loads were developed for the 2006
5 IRP (developed in October 2005) and the 2008 Updated IRP (developed in Augut 2007), one
6 would not expect that these forecasts would contain information that would reflect the economic
7 slowdown. However, the 2009 IRP (based upon a September 2008 forecast) as well as the
8 December 2008 update, should have shown these changes. Contrar to this expectation, the
9 table below demonstrates that the Company's 2009 IR (September 2008 forecast) and its
10 December 2008 update show additional growth in load during several months, with basically
11 only a minor overall decrease in load (of only 18 aMW between the data generated in 2005 and
12 that generated at the end of 2008:
Ave MW Forecasted At Different Times
2006 less
2009 20061RP 2008 Update 20091RP Dec. 2008 Dec-08
Jan 1,921 1,940 1,912 1,907 -14
Feb 1,802 1,819 1,765 1,760 -42
Mar 1,653 1,675 1,552 1,546 -107
Apr 1,594 1,599 1,554 1,547 -47
May 1,791 1,807 1,751 1,742 -49
Jun 2,178 2,192 2,172 2,162 -16
Jul 2,412 2,413 2,457 2,444 32
Aug 2,256 2,281 2,251 2,237 -19
Sep 1,882 1,892 1,877 1,865 -17
Oct 1,630 1,653 1,599 1,587 -43
Nov 1,709 1,751 1,743 1,728 19
Dec 1,947 2,015 2,049 2,030 83
ave.1,898 1,920 1,890 1,880 -18
13
14 Incredibly, the December 2008 forecast data virtally shows no impact of the recession or
15 major shift from the strong growt projections made in 2005.Some months have lower
142008 Integrated Resource Plan Update, page 10.
19 Yanel, DI
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1 forecasts, while contrary to any reasonable expectations, some months have the forecasted load
2 increase.
3 As pointed out above, the 2009 IR was never finalized by the Company nor submitted to
4 the Commission. It is not only a work in progress, but one that wil be abandoned for a new
5 2009 IRP to be filed in December 2009. Likewise, the December 2008 forecast (to my
6 knowledge) has just surfaced during the last two weeks. I am addressing this data, not because
7 of its validity (which seems to be lacking), but simply because it is data provided by the
8 Company that is in addition to the 2006 IR and the 2008 Updated IRP data that was used as the
9 basis to support the decision to pursue Langley Gulch.
10 The drop in anual average load of only 18 aMW between the 2006 IR and the
11 December 2008 forecast not only greatly falls short of expectations (because of the economic
12 downtu), but the individual monthly changes are ver questionable. For example, the
13 December 2008 forecast for December 2009 was 83 aMW above that projected in the 2006 IRP
14 or 4.3 % greater (in spite of all of the negative economic news). In the days of rapid growth, a
15 4.3% increase in average load would equate to three years of growth. Presumably this major
16 change in forecast is not related to heat load as there was a somewhat large increase in the
17 November forecast, but there were corresponding decreases in Februar and March. In fact, in
18 the December 2008 forecast the March 2009 load decreased by 107 aM when compared to the
19 2006 IR or 6.5%. It is not readily apparent how between forecasts that load in some months
20 could increase 4.3%, while decrease 6.5% in other months.
21 The increase in the December 2008 forecast for July 2009 of32 aMW (1.3%) over the
22 2006 IRP is equally puzzling. Why would the forecast for July increase so much during the
23 economic downtu while June and Augut showed slight decreases in load? Simply, the
20 Yane!, DI
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1 Company's 2008 forecast creates a host of questions and sheds no light on what changes have
2 occurred to the Company's load since the 2006 IRP upon which the Langley Gulch decision was
3 based. Presumably, that is why the Company has announced that its late summer 2009 load
4 forecast (as yet to be completed) wil serve as the basis for its new 2009 IRP.
5 In addition to these questions that are raised, the December 2008 forecast is contrary to
6 the reduction that the Company encountered in its growth projections for 2008 alone. As pointed
7 out above, the difference between the 2006 IR forecasted residential and commercial customer
8 count additions and the actual growth in customer count that occurred in 2008 resulted in
9 approximately 100,000 MWH less sales in 2008 or 11.4 aMW. This is 2/3rd the reduction that
10 the December 2008 forecast suggests for 2009 in total. This 11.4 aM does not reflect
11 reductions in usage by existing customers due to price elasticity, reduction in personal income,
12 and reductions in the goods producing and non-goods producing sectors of the economy. This
13 reflects no change in industral load durng 2008. And then there is 2009 where the economic
14 conditions are getting worse, not better. It is possible to explain twice the 18 aM reduction in
15 the December 2008 forecast by simply the cumulative effect of the reductions in new Residential
16 and Commercial hookups in 2008 and 2009 alone, let alone all of the reductions that may be
17 taking place for the other approximately 98% of the customers that are existing.
18
19 Q.HOW HAS THE OVERALL INCREASE IN RESIDENTIAL CUSTOMER
20 COUNT CHANGED SINCE THE FORECAST LOAD FOR THE 2006 IRP WAS
21 DEVELOPED IN OCTOBER 2005?
21 Yanel, DI
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1 A.Although there was a continuation in the rise of residential customers on an
2 anual basis after the October 2005 forecast was made, the trend started downward in early 2006
3 and continues well into 2009.
Annual Increase In Residential
Customer Count
16,00
14,000
12,000
10,000
8,000
6,000
4,000
2,000 .......... ......."'-......"'......... ..... ... .... .... ... "'''.-'-
.. .....__._"'.,.. "'''......r.........T.....''.''T- '-'-''1 "'''''''.'1'-''''.-''-1 "'..........1'....... '''-.i ._...._......¡ "'.....'1........-1 ''''''.'.r ..............1
f:"''' f:"'(o# r§'o f:d f:~ #. # # r§'br§'b r§'b r§'b r§O)f."C .."C .~~ _,~ f."C ..~ .~~ _,~ ,~ ..~ .~~ _\~ ~~ ..~fl :0' §o .~"\ fl :0' ~" .~"\ øi :0' ~" _~"\ fl i.'~ .;'l ~ \V ~ .;'l ~. \V ~ .;'l ~ \V ..~ .;'lOcl ..1t~ Ocl ..1t~ r: ..'b~ Ocl ..1t('
4
5 In fact, Januar and March of 2009 actually showed decreases in the number of residential
6 customers compared to the previous month. Cerainly none of the increases that the Company's
7 December 2008 forecast shows can be related to a Residential customer count that has drastically
8 dropped over the last few years.
9
10 Q.HOW HAS THE OVERALL INCREASE IN COMMERCIAL CUSTOMER
11 COUNT CHANGED SINCE THE FORECAST LOAD FOR THE 2006 IRP WAS
12 DEVELOPED IN OCTOBER 2005?
22 Yanel, DI
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1 A.Like the growth in the Residential customer count, there was a continuation in the
2 rise of Commercial customers on an anual basis after the October 2005 forecast was made. The
3 trend started downward in October 2007 and continues well into 2009.
Annual Increase In Commercial
Customer Count
3,000
2,500mm..
2,000
1,500
1,000
500
'W,W..'.'..l....~~""mm"l "r='¥-"""'IV_WA"m~"'T"""'~~'==rMV-W-~"""r"~~
~e, ~(o ..(0. ~(o ..(0 ~ ~ ~ S- _C\1: ~1:..1: _C\1: d'~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~- ~
f! "V r; "' ~ "' ~';"' f."' r;"' ~ "' ~"' f! "' r; "' ~ "' ~'V r¿.."' r; "'.~ .;1' ~(l ,\.. # .;'? ~ ,\0\ ~ .;"1 ~ ,\0\ ~ .;1'
0(: ,\"b~ 0(: '\~~ 0(: '\~~ 0(: ,\"b~
4
5 The growth in Residential and Commercial customer counts has been fallng for a long time.
6 Cerainly none of the increases that the Company's December 2008 forecast shows can be
7 related to a Commercial customer count that has drastically dropped over the last years and a
8 half. The Commission should dismiss the mere 18 aMW change in load from the 2006 IRP
9 found in the Company's December 2008 forecast. It is simply contrar to the trends that have
10 been taking place on the system for at least a year and a half for Commercial customers and for
11 the last three years for the Residential customers. These are changes that wil have peranent
12 impacts upon the Company's load. Even if the economy instantly turns around, and the
13 Company stars today to add 12,500-13,000 customers per year as predicted in its 2008
14 Updated IRP, the recent loss of the new customers thus far wil simply postpone (shift) when the
15 increase in customer level/load wil occur.
23 Yankel, DI
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1
2 Q.HOW HAS THE DECREASED GROWTH IN CUSTOMER COUNT
3 IMPACTED THE OVERALL ENERGY SOLD BY THE COMPANY?
4 A.In isolation, a decrease in the rate of growth of the company's Residential and
5 Commercial sector would lead to a slowdown in the rate of growt of the overall energy
6 consumed on the system. Admittedly, there is a lot more to the overall energy consumption on
7 the system than merely the customer count of the residential and commercial customers. This
8 would include such things as usage per customer and usage of the Company's large, special
9 contract customers. As can be seen from the graph below, growth in the total anual load has not
10 just slowed as the growth in the number of Residential and Commercial customers has, but the
11 overall consumption has actually decreased since June 2008:
Total Annual MWH x 1000
15,000
14,500
14,000
13,500
13,000
12,500 ''''''''''''".,'',..........,....'"''''''''''''''".".".."..''''''"u"''''''''''''''''''''''''''''''','''''',,,.,"',.,"""""""",......u..,...."..m.."''''''''''
e VI VI VI VI \.\.\.\.......b 00 00 8 00 0'0 0 0 0 0 g 0 0 0 0 0 0 0 0 0 00000000000000000NNNNNNNNNNNNNNNNMN....~.."-..~"-"-..~.."-..~......~~i:~~u i:~~~i:ct ~u i:ct ~~.0 ::.0 .0 ..::....::.0 .0 ..::....E ('..E E ('..E E ('..E E ('..E E ('
ct ~ct ct ~ct ct ~~ct ~ct ~~u ..........u ..~Q)a.Q)0.Q)0.ct 0-0 Q)Cl ~0 ct 0 Q)0VIV'VI VI
12,000
12
13 This is a permanent shift from the historic trends which wil take time to not only come up to
14 previous levels, but years to go past the previous levels and up to the previous projections.
24 Yanel, DI
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1 Based upon the above, the Company's December 2008 load forecast is out of step with the
2 realities of the trends in usage and number of customers. Contrar to the demonstrated reduction
3 in load that is actually taking place, the Company's last several forecasts stil show increases, but
4 at a ver slightly reduced rate. The forecast of decreased load (as opposed to increased growth)
5 would look much more reasonable.
6
7 Q.DOES THE COMPANY'S MAY 2009 LOAD FORECAST RECTIFY THIS
8 SITUATION?
9 A.No. The Company's May 2009 updated load forecast is the first forecast since the
10 2006 IRP that shows any meaningful reduction in load as would be expected at this time.
11 However, the May 2009 updated load forecast is based upon only changes to the Company's
12 special contract customers, while presumably maintaining the data for the other customer groups
13 from the December 2008 updated forecast. The Company's May 2009 updated forecast does not
14 give any detail as to what circumstances may have brought about the changes to the overall
15 special contract load-these changes may have all been related to Micron, or maybe Micron
16 played a small role in these changes. Based upon all of the unanswered questions that are raised
17 by the 2009 IR load data, the December 2008 update, and the May 2009 update, I agree that the
18 Company needs to completely revisit its forecast. I look forward to reviewing the Company's
19 new load forecast that is supposed to be available late this sumer. The Commission should not
20 use any of the Company's recent forecasts as reflecting the need for Langley Gulch.
21
25 Yane!, DI
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1 Q.BASED UPON THE ABOVE, WHAT is YOUR RECOMMENDATION WITH
2 RESPECT TO THE COMPANY'S DESIRE TO RECEIVE A CERTIFICATE OF PUBLIC
3 CONVENIENCE AND NECESSITY FOR LANGLEY GULCH?
4 A.Based upon the use of stale load forecast data that does not reflect today's
5 economic environment and load growth, it is premature to issue such a certificate at this time. I
6 recommend that the Commission postpone any such decision for at least 10 months as
7 recommended by the Joint Motion of the interenors filed on May 29. At the moment, the
8 Company is asking that the Commission pre-approve one of the costliest projects that Idaho
9 Power has ever undertaken. Such an approval should not be given, based upon critical load
10 growt information that is clearly outdated and inappropriate. The Company has indicated that
11 it has already begu the process of updating its load forecast to account for today's realities. A
12 postponement of 10 months before a decision is made regarding Langley Gulch is both prudent
13 and wise.
14
15 Q.WILL THE POSTPONEMENT OF A DECISION ON THE ISSUANCE OF A
16 CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY BY 10 MONTHS HAVE
17 AN ADVERSE IMPACT UPON THE COMPANY'S ABILITY TO SERVE LOAD?
18 A.No. There are several things for the Commission to consider in this regard. First,
19 under the same load forecast data that was developed in October 2005 and Augut 2007, the
20 Company put out its 2012 Baseload RFP which sought proposals for dispatchable, first call, non-
21 recallable, physically delivered firm or unit contingent energy that was to commence no later
22 than June 1, 2012. This date essentially coincides with the beginnng ofthe summer peak season
23 for the Company. The summer months are not only characteristic of the highest peak (demand)
26 Yanel, DI
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1 loads, but the highest overall energy usage as well. Since the selection of Langley Gulch as the
2 resource of choice, the Company has slipped that commercial operating date six months, to
3 December 1, 2012. However, because the sumer is the Company's peak perod (demand and
4 energy), the postponement of Langley Gulch until December 1,2012 is not that different than
5 postponing it a full 12 months until June 1, 2013.
6 Second, as pointed out above, a good estimate would be that the load growth that the
7 Company projected would be thee years further out than originally planed. A 10-month delay
8 would be well within these limits and thus would not have any implications regarding Idaho
9 Power meeting its properly revised load growt.
10 Third, Request 2 of the Industral Customers of Idaho Power sought information
11 regarding how the Company would meet its loads if, for one reason or another, Langley Gulch
12 was not built. The Company's response stated in par:
13 ". .. the Company would attempt to meet its most critical summertime loads
14 through a combination of the following: (1) short-ter demand management
15 programs, (2) market purchases delivered to the east side ofIdaho Power's
16 system, (market purchases delivered at Mona or Red Butte (both in Utah) and
17 delivered to Idaho Power's firm transmission rights from Red Butte to
18 BorahBrady, (4) reductions in deliveres to Hoku durng the sumer of2012, or
19 (5) purchase delivered to Jim Bridger for loss repayment.
20 Clearly, the Company has available options other than Langley Gulch. These options may not
21 be prefered, and they may not always be the least cost, but they are options. Given the
22 downtu in the economy, Idaho Power should not need to exercise the above options anymore
23 than already planed if the request for a Certificate of Public Convenience and Necessar were
24 put on hold for 10 months.
25
27 Yankel, DI
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1 Q.WHAT CAPACIT FACTOR DOES THE COMPANY INDICATE THAT IT
2 WILL OPERATE LANGLEY GULCH AT DURING 2013 (ITS PROPOSED FIRST YEAR
3 OF OPERATION)?
4 A.The Company's 2009 IRP (which has never been submitted to review or
5 approval), as well as its December 2008 and May 2009 updated forecastslS indicate that it wil
6 operate Langley Gulch at a capacity factor of91 % (251 aM /300 MW) every month.
7
8 Q.IS ALL OF THIS OUTPUT FROM LANGLEY GULCH NEEDED TO SERVE
9 THE RETAIL CUSTOMER LOAD?
10 A.No. As a matter of fact, most of this generation would be used to sere surplus
11 sales. Request 7 of the Idaho Irrgation Pumpers Association sought information regarding the
12 impact on net power supply costs of scenaros with Langley Gulch and without Langley
13 Gulchl6. The Company's Response indicated that Langley Gulch would provide 998,432
14 MW. It also indicated that the generation from Langley Gulch would displace purchased
15 power by 249,717 MWh (25% of Langley Gulch's output), while it would increase surplus
16 sales by 726,673 MWh (73% of the generation from Langley Gulch). The Response went on to
17 state that there would be a net reduction of $1 0.2 milion in net power supply cost (not
18 including non-fuel costs) with Langley Gulch operating. However, the reduction in net power
19 supply costs would not even offset the depreciation expense of$12.8 milion ($427.4 milion
20 time 3%), let alone a rate of return and taxes on $427.4 milion of additional rate base. No
21 matter how much surlus sales there are from Langley Gulch, it wil simply result in a major
15 See Idao Power Company's Response to Staff Request 1 for the 2009 IR resource balance and to
Intervenors' Joint Motion to Stay dated June 12, 2009, Attachments i and 2 for the December 2008 and
May 2009 updated resource balance.
28 Yanel, DI
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1 overall rate increase to customers. Very simply, Langley Gulch wil cost all rate payers a great
2 deal of money for no real benefit over its first few years of operation. A postponement of the
3 decision as to when to build Lagley Gulch is highy warranted.
4
5 Q.is THE 91% CAPACITY FACTOR LISTED IN THE COMPANY'S 2009 IRP,
6 AS WELL AS ITS DECEMBER 2008 AND MAY 2009 FORECASTS THE SAME AS THE
7 998,432 MWH THAT RESULTED FROM THE COMPANY'S RUN OF ITS NET POWER
8 COST MODEL?
9 A.No. The generation of998,432 MWH spread over 8,760 hours in the year
10 translates into 114 aMW. The Company's 2009 IRP and subsequent updates list Langley
11 Gulch operating at 251 aMW in each month. Presumably, if Langley Gulch operates at 251
12 aMW as is claimed in these recent forecasts, then approximately 88% of all of its output wil be
13 for surplus sales.
14
15 Q.is THE 2009 IRP AS WELL AS THE DECEMBER 2008 AND THE MAY
16 2009 FORECASTS INTERNALLY CONSISTENT WITH RESPECT TO THE WAY THE
17 RESOURCES WILL BE UTILIZED?
18 A.No. They all have a consistency problem with respect to the way they treat off-
19 system purchases, which gives the appearance that Langley Gulch is required to sere an
20 "energy" requirement, when in fact it is not. This problem did not exist in the 2006 IR or in
21 the 2008 Updated IRP. All three of the newer forecasts limit the amount of regional energy
22 purchases to 115 aM each month of each year in order to reflect the level of Network Set-
16 Under the load and resource conditions specified by the Company in its last general rate case No. iPC-
E-08-10.
29 Yanel, DI
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1 Aside for Firm Purchases. This limitation is no more than a "new" requirement/imitation
2 placed upon the Company's resources solely for the purpose of justifying Langley Gulch.
3 Contrar to this limitation, the Company's thee new forecasts have no such limitation
4 placed upon the amount of purchased power that can be brought in during the monthly system
5 peaks. These forecasts use the following purchases for the 2013 monthly peak loads:
2013 Peak Purchases from Pacific NW
MWJan 441Feb 536Mar 504Apr 402May 395Jun 365Jul 310Aug 493Sep 416Oct 234Nov 665Dec 670
6 If the Company can plan to bring in hundreds of MW' s at the peak hour of each month, the
7 limitation to energy purchases of only 115 aMW is only an arificial construct that should not
8 be used when the new/real 2009 IRP comes out in December 2009.
9
10 Q.OTHER THAN THE FACT THAT THE COMPANY DID NOT HAVE THIS
11 ARTIFICIAL LIMITATION OF ONLY PURCHASING 115 AM DURING EACH
12 MONTH IN ITS 2006 IRP AND ITS 2008 UPDATED IR, ARE THERE OTHER AREAS
13 WHERE THE COMPANY'S DATA AND CALCULATIONS DO NOT HAVE THIS
14 LIMITATION?
15 A.Yes, there are. The Company's power supply cost model that calculates the
16 overall cost of power supply over 80 water years contains no such limitation. For example, the
30 Yane!, DI
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1 Company's calculations shown in Exhibit 47 of its last rate case No. IPC-E-08-10 under the
2 June 1935 water condition lists a total of market energy and contract energy purchases of
3 151,238 MW or 210 aMW. For the July 1935 water condition it lists a total of market energy
4 and contract energy purchases of383,580 MWh or 516 aMW. Basically, there is no limitation
5 placed upon the purchase of energy that would be greater than any limitation that is placed
6 upon the purchase of demand at the hour of the system peak. The 115 aMW limitation that is
7 used in the Company's thee most recent forecasts seems to be more of an artificial constrct
8 used to justify the need for Langley Gulch.
31 Yanel, DI
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1 IMPACT OF THE NEW COMPANY-OPTION IRRGATION PEAK2 REWARDS PROGRAM
3
4 Q.PREVIOUSLY YOU INDICATED THAT YOU WOULD ADDRESS THE
5 PEAKING REQUIREMENTS LISTED IN THE COMPANY'S 2006 IRP AND ITS 2008
6 UPDATED IRP. DO YOU HAVE ANY ADDITIONAL INFORMATION TO ADD, THAT
7 IS BEYOND THAT FOUND IN THE COMPANY'S 2006 IRP AND 2008 UPDATED IRP?
8 A.Yes. Both the 2006 IR and the 2008 Updated IRP contain estimates of the
9 impact of the Company's then existing demand response programs. At the time, only the NC
10 Cool Credit program for Residential customers and the Peak Rewards program for Irrgation
11 customers were in operation. The Company's projections were that these demand response
12 programs would reach a plateau staring 201017. Since the 2008 Updated IRP, there has been the
13 introduction of a demand response program for larger commercial/industral customers as well as
14 a major change in the Irrgation Peak Rewards program.
15 With respect to the Irrgation Peak Rewards program, a new "Company Option" has been
16 added that not only greatly increases the ability of this program to target peak loads, but has also
17 greatly added to the number of Irrgators that are paricipating as well as the connected load that
18 is involved. The Company's 2009 IRP as well as its December 2008 and May 2009 forecast
19 include new values for the impact of the Irrgation peak reduction programs. These Company
20 documents show major increases related to the Irrgation program with the following
21 impacts/reductions forecast:
22
23
24
2009
2010
2011
88MW
132MW
176MW
i 7 2006 Integrated Resource Plan, Appendix A, page 51.
32 Yane!, DI
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1
2 Q.is THIS ALL OF THE PEAK REDUCTION CAP ABILITY THAT SHOULD
3 BE EXPECTED FROM THE IRRIGATION PEAK REWARDS PROGRAM THIS YEAR
4 AND INTO THE FUTURE?
5 A.No. These estimates that have been provided by the Company were made long
6 before the new "Company Option" program was finalized or approved by the Commission.
7 The reception for the program has past the Company's general expectations. For example,
8 there was a limitation of 1,000 placed upon the number of sites that could be involved in the
9 first year. It is my understanding that over 1,200 requested to paricipate this first year. There
10 are additional locations that are planing to apply next year. A similar program such as this
11 exists in the PacifiCorp serice area of Idaho, and it took a couple of years for customers to get
12 use to the idea and join the program. I assume that the same learning cure wil occur in the
13 Idaho Power terrtory. Although the peak reduction values that the Company originally
14 projected are very encouragig, it would appear that the program may quickly exceed these
15 expectations. In such a case, Idaho Power wil become even less of a utilty with a peaking
16 limitation and more of one with an energy limitation.
17
18 Q.DOES THIS CONCLUDE YOUR DIRECT TESTIMONY?
19 A.Yes.
33 Yanel, DI
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