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HomeMy WebLinkAbout20090731Joint Renewed Motion to Stay.pdfPeter Richardson RECEiVED zan, JUL 3 l Pl' 3= 44 IOAHO PUBLIC" . , UTlUT\ES COMMISt)\ON .¡.C.fÀJl~f .~"' m. ATTOR.NEYS AT LAW Tel: 208-938-7901 Fax: 208-938-7904 pete rli richardso 0 andoleary. co m P.O. Box 7118 Boise,lD 83707 - SiS N. 27th St. Boise,lD 83702 31 July 2009 Ms. Jean Jewell Commission Secreta Idaho Public Utilities Commission 472 W. Washington Boise, ID 83702 RE: IPC-E-09-03 Dear Ms. Jewell: We are enclosing an original and seven (7) copies ofthe RENEWED MOTION TO STAY AND POST HEARNG BRIEF OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER, THE IDAHO IRRGATION PUMPERS ASSOCIATION, INC., THE SNAKE RIVER ALLIANCE, THE IDAHO CONSERVATION LEAGUE, THE NORTH-WEST & INTERMOUNTAIN POWER PRODUCERS COALITION AND THE COMMUNITY ACTION PARTNERSHIP COALITION in the above case. An additional copy is enclosed for you to stamp for our records. Sincerely,f~9. Peter Richardson Richardson & O'Lear PLLC Peter J. Richardson Attorney for the Industrial Customers of Idaho Power Eric Olsen Attorney for the Idaho Irrigation Pumpers Association Ken Miler For the Snake River Allance Betsy Bridge Attorney for the Idaho Conservation League 'RECEIVED 2809 JUL 31 PH 3:~ 5 HO "'1 il" 1-1.IDA f..... i,'"tJdLi~.i UTIUtll::S COMMISSION Susan Ackerman Attorney for Northwest & Intermountain Power Producers Coalition Brad M. Purdy Attorney for Community Action Parnership Association BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF IDAHO POWER ) COMPANY'S APPLICATION FORA ) CERTIFICATE OF PUBLIC CONVENIENCE ) AND NECESSITY FOR THE LANGLEY )GULCH POWER PLANT ) ) ) ) ) ) ) ) ) ) ) ) ) CASE NO. IPC-E-09-03 JOINT RENEWED MOTION TO STAY PROCEEDING AND POST HEARIG BRIEF BY THE INDUSTRIAL CUSTOMERS OF IDAHO POWER THE IDAHO IRRGATION PUMPERS ASSOCIATION, THE SNAKE RIVER ALLIANCE, THE IDAHO CONSERVATION LEAGUE, THE NORTHWEST & INTERMOUNTAIN POWER PRODUCERS COALITION AND THE COMMUNITY ACTION PARTNERSHIP ALLIANCE COMES NOW, The Industrial Customers of Idaho Power, the Idaho Irrigation Pumpers Association, the Snake River Allance, the Idaho Conservation League and the Northwest & Intermountain Power Producers Coalition, joined now by the Community Action Parnership Allance pursuant to this Commission's Rules of Procedure, Rule 56 IDAPA 31.01.01.56 and pursuant to a request from the Commission during hearing and hereby reinstates the moving pary's prior motion for an order from this Commission staying proceedings for ten months in the above captioned matter. In support of the reinstated Motion to Stay of Proceedings your Movants say as follows: I. IDAHO POWER'S FAILURE TO COMPLY WITH COMMISSION ORDER NO. 30201 PROVIDES SUFFICIENT GROUNDS FOR A STAY Company witness Gale assures the Commission that the Company takes the Commission's orders "seriously", that senior Company management endorses "pursuing energy efficiency and demand response diligently" and that expenditures on such energy effciency efforts are "in the neighborhood of five percent of our operating revenues". (Gale Di-Reb Tr. 1201 - 1202) While your Movants appreciate the Company's serious pursuit of energy efficiency and demand response, it is clear that the Company has not fully complied with prior Commission mandates in this arena. Order No. 30201 established that reducing "critical peak hourly demand" has great value and directed the Company to "vigorously pursue all available, cost effective DSM, conservation, and pricing options that could potentially displace or defer the needfor additional future peaking generation." (Order No. 30201 at p. 12) The Company has not fully complied with that direction and as a consequence the public has been, and continues to be, il-served and continues to bear risks for unecessary futue supply-side investments by the Company. The Ninth circuit case of Seattle Master Builders Ass'n v. Pacific Northwest Elec. Power and Conservation 786 F.2d 1359 (9th Cir. 1986) provides both a definition for "cost-effective" conservation and a method for putting relative values on effciency and generation resources. In that case the Court upheld the definition of "cost-effective" conservation measures as all such Renewed Motion to Stay - IPC-E-09-03 2 measures with marginal costs less than the cost of the generating resource to be acquired. The record in this proceeding show that the levelized cost of the generating resource to be acquired (Langley Gulch) is $. 126/kWh. The testimony of Mr. Pengily shows that not only has the Company not implemented all conservation measures costing less than $. 126/kWh, it has yet to even compile a list of all such opportunities. (P. 11 Ex. 901) Other testimony shows that air conditioning and irrgation loads are the primar factors causing the Company's peak loads. But three years after the Commission directed the Company (via Order No. 30201) to dilgently pursue DSM to reduce critical peak hourly demand, the Company's current irrigation demand program only has a fraction of the paricipation level that Rocky Mountain Power has already achieved in Idaho. Even three years from now (i.e. durng the ostensibly critical summer of2012) the Company projects lower levels of paricipation in its irrgation demand shift program than Rocky Mountan has already achieved. Company efforts to upgrade the effciency of air conditioners in its residential customer base are set at an even more rudimentay leveL. The Company's success to date in implementing demand side measures to limit critical peak hourly demand is very limited, and certainly not consistent with the comprehensive, diligent and vigorous actions it was ordered to underte. The Company notes that it has, at times, spent a few hundred thousand dollars more on efficiency programs than was available in the rider fud. In the next year the Company will , dpend $35-40 milion on energy effciency actions. It is asking the Commission to certify the I Ted for a generation facility that wil cost more than ten times that much without even completing an analysis of how much of the need for additional energy or capacity could be eliminated through cost effective efficiency and demand management expenditues. These Renewed Motion to Stay - IPC-E-09-03 3 needed studies and analysis can be completed during the ten month delay in order to determine whether the Langley Gulch plant is truly needed. Idaho Power's customers are not only burdened by the Company potentially procuring new generating resources at a higher cost than effciency upgrades that would delay the need new generation. By failing to focus its historically limited supply of demand side experienced personnel and other resources primarily on opportunities to reduce its peak hourly load, the Company has imposed constraints on the types of generation it will procure and in the process added more uneeded costs for the ratepayers. Testimony provided both by Idaho Power and the Intervenors shows the Company's load is forecasted to continue growing much more rapidly that its overall demand for energy. That continues a pattern that has prevailed throughout this decade. Since the tu of the the growth in the Company's peak load has served as justification for its procuring 90MW of peaking capacity in 2001, another approximately 170MW of similar capacity in 2003, and an additional 170 MW of peakers in 2006. The Company's curent argument for the immediate grant of a CPCN for Langley Gulch is based on an alleged need to meet a forecasted seasonal peak in the sumer of2012. Counting Langley Gulch as 300MW, this would total approximately 730MW of dispatchable generation approved during the decade to serve sumer peak loads. During that same period, the Company has acquired approximately 55aMW energy and about 10aMW of geothermal generation. More than 700MW of seasonal capacity has been added compared to approximately 65aMW of new energy resources. The 65aMW of wind and geothermal sources have provided a lower cost source of energy and some limited capacity than natural gas generation. Under the Company's curent wind RFP, wind resources continue to be available to provide this lower cost energy alternative. Renewed Motion to Stay - IPC-E-09-03 4 As long as the Company fails to use all available, cost effective DSM, conservation and pricing options to slake its demand for sumer peakng capacity, the public wil continue to be precluded from benefiting from the use of these lower cost generating resources. The Commission should renew its mandate in Order No, 30201 and motivate the Company to finally procure all ofthe peak reducing, energy effciency and DSM available to it II IDAHO POWER'S PRE-PURCHASE OF EQUIPMENT SHOULD NOT JUSTIFY DENIAL OF YOUR MOV ANTS' MOTION TO STAY This Commission should not allow the fact that Idaho Power has pre-purchased equipment and is obligated to make an additional payment on said equipment on September 1, infuence its decision on your Movants' Motion to Stay. Idaho Power's pre-purchase of equipment is in direct violation of Idaho Code Section 61-526 which provides: No ... electrical corporation... shall henceforth begin the construction of a plant, or system or of any extension of such. .. plant, or system, without having first obtained from the commission a certificate that the present or futue public convenience and necessity require or will require such construction. Staff witness Sterling pointed out that: By filing its application when it did and by requiring such a tight schedule for initiation and project completion, Idaho Power has handcuffed the commission in its decision making. (Tr. 1106) While Staff may believe that Idaho Power has handcuffed the Commission, the Commission is not so constrained. Surely one of the benefits of compliance with Idaho Code Section 61-526 is that such compliance permits the Commission the opportunity to review major constrction commitment decisions before they are made. Renewed Motion to Stay - IPC-E-09-03 5 III THE RFP PROCESS WAS FLAWED: FAILURE TO DELAY WILL SEND THE WRONG SIGNAL TO THE DEVELOPMENT COMMUNITY On April 24, 2009 Idaho Power filed petitions with the Idaho Commission and the Public Utility Commission of Oregon asking for an extension of the due date for its 2009 Integrated Resource Plan from June 2009 until December 2009, The Integrated Resource Plan serves as the roadmap to help guide Idaho Power in making future resource decisions. The reasons given for the delay include the widespread economic turoil facing the world and specifically, Idaho's economy. Ultimately, this turmoil will have an impact on electric demand and load growt. Granting a CPCN for the most expensive plant Idaho Power wil have built in the last fifty years without a curent IRP to instrct prudence questions is clearly an instance of putting the proverbial car before the horse. Additionally, granting a CPCN to a company-owned resource chosen from the Company's very flawed request for proposals (RFP) process wil send a negative signal to the development community, to wit: Idaho is not a place where independent energy providers should put their time and effort. The undersigned paries encourage the Commission to re-assert the value of timely IRPs by delaying approval of the CPCN until IRP-quality load forecasts are available to the Commission and interested paries. Furher, the Paries urge the Commission to proceed with a generic competitive bidding docket and to adopt transparent bidding guidelines for Idaho utilities so that, when faced with company requests to approve a CPCN under the new law, the Commission can have more confidence that its decision is in the long term interest of Idaho consumers. Renewed Motion to Stay - IPC-E-09-03 6 iv FORECAST DEMAND VERSUS ACTUAL TRENDS SUPPORTS A STAY OF THIS PROCEEDING The difference between Company and the Intervenors with respect to forecast and actual demand stands in shar contrast. Idaho Power paints a picture of immediate need, while the Intervenors believe that the Commission should postpone its decision for a period of time. The Company raises the possibility of not being able to meet its loads (blackouts and curailments), while the Intervenors believe that during the near future that resources wil be sufficient to meet actual load. The reason for these divergent views is based upon the Company's use of its forecast data, while the Intervenors have relied upon actual information. This difference in perception became very clear during the Mr. Gale's closing testimony. He emphatically stated that every forecast that the Company has conducted (as well as all of the input from its consultat Mr. Mace) show that its loads wil be increasing, Mr. Gale did not deny (contrary to the historic trend) that the data on page 24 of Mr. Yanel' s testimony demonstrated that the Company's actual load has steadily decreased over the last nine months of publicly available data. Faced with this steady decline in actual Company load over the last nine months of publicly available data (June 2008 through March 2009), Mr. Gale's defense of the Company's position simply went back to the premise that all of the Company's forecasts show an increase in load, The Intervenors contend that the blind adherence to forecast data, in the face of drastically different actul data does not, to put it mildly, provide a basis for sound decision making. The Company's excessive reliance upon the accuracy of its forecasts is also demonstrated by the testimony of its consultant Mr. Mace. At page 3 of his Directlebuttal testimony, Mr. Mace puts forth his position: Renewed Motion to Stay - IPC-E-09-03 7 My review of the Company's August 2007, August 2008, and May 2009 load forecasts leads me to conclude that these forecasts were reasonable, especially in light of the rapid economic growth experienced in the Idaho Power service area over the last decade. This review/assessment is a red herring. The Intervenors have never contended that the forecasts were uneasonable. In fact, the testimony of the Intervenors concentrates on the inappropriateness of using the Company's forecast data in light of the economic realities that have developed during the last year and a half. 1 It is the Company's position that its forecasts are "reasonable", while the Intervenors focus on the realities of what has taken place in the last year and a half and not blindly rely on speculation of what may occur in the future because of the rapid growth that was experienced in the past. The Company and Mr. Mace recognze that very significant changes have occured during the last year and a half and especially since last fall. He states on page 3: Since the August 2008 load forecast, economic conditions have worsened considerably, but last fall's credit crisis and subsequent shock to the "real" economy were outside the boundaries of "reasonable forecasts," i.e., it was an event that could not have been forecast to occur, not even in a worst case planing scenario. The few economists who did forecast last fall's events were considered extremist or delusional. If one would have been considered to be an extremist or delusional to have forecast the recent economic change/impact, then one must be considered even more extremist or delusional to ignore the recent realities and to simply rely upon the original forecasts for granting the Langley Gulch project a Certificate of Public Convenience and Necessity, paricularly as those original forecasts were based upon data observed before the recession began. The only forecast data that the Company has offered since the recession began is the May 2009 forecast and that data was 1 See Direct testimony of Irrigation witness Anthony Yanel at page 6 lines 5-13. In addition the direct testimony of ICIP witness Cynthia Mitchell addressed curent and trending economic conditions at length. Idaho Power chose not to question Ms. Mitchell on her testimony at the hearing. Renewed Motion to Stay - IPC-E-09-03 8 only "updated" for the Company's special contract customer load. In other words all other forecast loads were based upon data observed prior to August 2008 and the current economic crisis. Additionally, none of the Intervenors have had an opportty to review the information that went into this May 2009 forecast.2 The speculative nature of the Company's position is amply demonstrated by the testimony of Company witness Mace on which Mr. Gale relies almost entirely. A closer look at Mr. Mace's testimony reveals that as an economist, he is postulating on what could be, but not on what is or what will be. This is amply demonstrated by the following examples that appear throughout Mr. Mace's testimony: . "It may be the case that. .. " (page 6 line 9) . "there could be a significant increase ... " (page 6 line 17) . ''the near term could see even higher. . ." (page 6 line 20) . "the Idaho power service area could grow rapidly.,." (page 7 line 4) . "Idaho may lead the country ..." (page 7 line 8) By contrast, the Intervenors have not relied upon forecasts or conjectue. The economy is what the economy is: and is most certainly not what Idaho Power "forecast" it to be. The Commission is being asked to issue a Certificate of Public Convenience and Necessity based upon forecast information that may have been reasonable at the time of the forecast, but is completely out of step with where the Company, Idaho, and the world is today, Not to recognize the unprecedented change to the economy that has taken place would be, to borrow Mr, Mace's words, "extremist or delusional". 2 See testimony of Irrgation witness Anthony Yanel at page 18 lines 4-16. Renewed Motion to Stay - IPC-E-09-03 9 The Intervenors have not taen the position that Langley Gulch will never be needed- simply that the economy has caused a slippage in that "need." It would be to everyone's benefit to postpone the decision on Langley Gulch until both better/timely data is utilzed and the need is based on actual information conclusively to exist. How long should the Commission postpone its approval of Langley Gulch and what information should it use? As pointed out during the hearing by the Commissioners, this is not a decision that lends itself to an exact date or circumstance. The review of Langley Gulch should be more of a sequence of events where the Commission reviews information and then either continues to postpone its decision or finally issues a Certificate. The first general opportunity that the Commission should tae to review data (that is in addition to what has been provided at the hearng) is to review the Company's August 2009 forecast -- when it is made available, Clearly, if the Company's long awaited August 2009 forecast is issued and it shows a much lower load and thus a postponed need for Langley Gulch, then Idaho Power's CPCN application will have been rendered moot. However, it should come as no surrise to anyone that if the August 2009 forecast stil shows a need for Langley Gulch by 2012, the Intervenors would want a full opportunity to review and challenge this data. Given the Company's desire for a decision in this case before September 1, a full review of the Company's August 2009 forecast would be impossible prior to the receipt and complete review of this data. In such a case, the Intervenors propose that if the August 2009 forecast shows the need for Langley Gulch, then the Commission should also require Idaho Power to produce an update to the data that is found on the graph on page 24 of Mr. Yanel's testimony. The data on that page consists of the ruing 12-month total biling sales to residential, commercial, irrgation, industrial and special contract customers as provide in response to Idaho Renewed Motion to Stay - IPC-E-09-03 10 Conservation League Request No, 8. If the Commission is going to look at the August 2009 forecast data (which may find no credibilty with the Intervenors), then it should also look at all of the updated actual anual energy consumption as portrayed on page 24 of Mr. Yanel's testimony. That graph shows decreasing loads since reaching a high in May 2008. This data demonstrates nine consecutive months of lower anual usage data since May 2008. Certainly more updated information can be provided, if not on a publicly available basis, then on a confidential basis for purposes of this case. If the actual data does not show a recovery, or worse yet even more of a decrease, then the Commission should not make its decision for the approval of Langley Gulch based on the Company's forecast of load growth, but rather on the actual data of what the Intervenors believe will be of over a year of decreasing load. V REGULATORY PRE-APPROVAL is UNNECESSARY AND WOULD BE IMPRUDENT IN LIGHT OF SERIOUS CONCERNS SURROUNDING THE LANGLEY GULCH PROJECT This Commission has adequately addressed the regulatory pre-approval issue in prior cases. As discussed below, the Commission's deft hard1ing of the 'pre-approval' question in the past makes use ofthe recently enacted SB 1123 unnecessary. For instance, such a request was made by Idaho Power in its Twin Falls, Milner, and Swan Falls hydro rebuild projects. The Commission adopted its own "regulatory compact,,3. Specifically, in the Twin Falls upgrade, the Commission held: Therefore, the paries are instructed that, in the ordinar course of events, the Company may expect its investment in the Swan Falls project to be recognized in its revenue requirement baring unforeseen circumstaces of a kind not characteristic of hydro electric facilities. Id. Emphasis added. 3 Order No, 25021 at p. 13; Case No. IPC-E-91-4 (The "Twin Falls Upgrade"). Renewed Motion to Stay - IPC-E-09-03 11 The Commission went further in the Twin Falls case to differentiate requests for ratemaking preapproval by noting the unique nature and proven track record of Snake River hydro, Referring, again, to the Swan Falls upgrade, the Commission held that: "In Swan Falls, we noted that our willingness to enter into this 'regulatory compact' was premised, in par, upon the solid track record of Snake River hydro. We held that in contrast to investment in other riskier forms of generation such as thermal and nuclear, ,.. Idaho Power's investment in Swan Falls stood 'at the other end of the spectru." (Citing Order No. 23529 at p. 25, Emphasis added). In elaborating upon the difference between Snake River hydro upgrades, and projects such as Langley Gulch, the Commission held: A certificate does not guarantee a utility recovery when it ignores or defies the laws of economics by continuing to invest in plants no longer necessar or prudent because demand has fallen from projections, A certificate does not guaantee recovery when investment is no longer prudent because costs have escalated beyond reasonable expectation A certificate does not guarantee recovery when investment is no longer prudent because technology has changed. A certificate does not guarantee when management, operation or constrction of a project is beyond the utilty's control and under the direction of others. Order No. 25021 at p. 13. The Commission went on to find that the Twin Falls plant satisfied the numerous criteria that would justify a certn level of ratemaking assurance, That is: having found that Twin Falls is a cost effective resource from the perspective of ratepayers, and given that it is a Snake River hydroelectric project, we find no reason not to offer Idaho Power the same type and degree of assurance for Twin Falls that we offered in Swan Falls and Milner. Accordingly, we find that, in the ordinary course of events, the Company may expect its investment in the Twin Falls project to be recognized in its revenue requirement, baring unforeseen circumstaces of a kind not characteristic of hydroelectric facilities. The ultimate decision determining the appropriate amount of Renewed Motion to Stay - IPC-E-09-03 12 the Twin Falls investment include in revenue requirement wil, of course, be made during the course of a general rate proceeding or a tracker proceeding initiated for that purose. Order No. 25021 at pp. 13-14 Emphasis added The joint intervenors demonstrated during the just completed technical hearings the numerous reasons why a decision on the prudence of constrcting Langley Gulch should not be given immediate ratemaking assurance including, but not limited to, the fact that the Company's load forecasting is significantly in error. Given these errors, binding future Commissions, based on what is known today, would be imprudent. Given the recent enactment of Senate Bil No. 1123, the concerns expressed by the Commission in the Twin Falls, Swan Falls, and Milner cases are yet more compelling. At one point during the hearng, it was suggested that the Commission has somehow been "handcuffed" though, among other things, the premature purchase of tubines for Langley Gulch. Nevertheless, the fact is that this Commission exercises the discretion under Senate Bil No. 1123. The irony is that in exercising that discretion now, this Commission will have eliminated the ability of future commission's to exercise any of their discretion. Should there be a subsequent finding that completion of the Langley Gulch project was imprudent, then the Commission, or its successors, canot withdraw the assurance that Idaho Power seeks in this case. As the Statute itself states, based upon the hearng record, the commission shall issue an order that addresses the proposed ratemaking treatments. The commission may accept, deny or modify a proposed ratemaking treatment requested by the utility. Idaho Code Section 61-541(4). Once the Commission grants its Renewed Motion to Stay - IPC-E-09-03 13 approval, however, said approval cannot be rescinded no matter what the circumstaces, thereby transferrng the properly borne by the utility to squarely and unfairly on the backs of the ratepayers. VI PRAYER FOR RELIEF F or all of the foregoing reasons, and for the reasons provided at hearing, the undersigned respectfully request the Commission delay the procedural schedule in this docket by at least ten months. The Commission should require analyses on how much of the need for additional energy or capacity could be eliminated through cost effective effciency and demand side management expenditues and the effect of price elasticity wil have on future demand. Both of these analyses should be incorporated into the IRP process, Finally the Commission should take advantage of the 10 month delay to adopt competitive bidding guidelines in its generic docket on this topic, Adopting guidelines suitable for Idaho would send a signal to developers that Idaho is open for business. Furher, if a company resource is able to clearly demonstrate, in a truly open and competitive procurement process, that its own resource has substantial benefits over the competition, then the Commission may have more confidence in its decisions in future CPCN applications that it curently has. Signatures on following page: Renewed Motion to Stay - IPC-E-09-o3 14 Respectfully submitted this 31stth day of July, 2009 Signatures.. . 1/~f1T~OWE~Peter J. Richardson ' IDAHO IRRIGATIONS PUMPERS ASSOCIATION, INC, Eric L. Olsen Sk. RIVER A~LIANCE-~ Ken Miler NORTHWEST & INTERMOUNTAIN POWER PRODUCERS COALITION Susan K. Ackerman COMMUNITY ACTION PARTNERSHIP ASSOCIATION~.~BradM:~~ Renewed Motion to Stay - IPC-E-09-03 15 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on the 31 st day of July, 2009, a true and correct copy of the within and Foregoing RENEWED MOTION TO STAY AND POST HEARING BRIEF OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER, THE IDAHO IRRGATION PUMPERS ASSOCIATION, THE SNAK RIVER ALLIANCE, THE IDAHO CONSERVATION LEAGUE, THE NORTHWEST & INTERMOUNTAIN POWER PRODUCERS COALITION AND THE COMMUNITY ACTION PARTNERSHIP COALITION was served in the maner shown to: Ms. Jean Jewell (C) Commission Secreta Idaho Public Utilities Commission 472 W. Washington (83702) PO Box 83720 Boise, ID 83720-0074 x. 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 lnordstrom(fidahopower,com bkline(fidahopower. com x. Hand Delivery _U.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. woodbury(fpuc.idaho. gov L Hand Delivery _U.S. Mail, postage pre-paid Facsimile Electronic Mail QJI~Peter Richardson ..