20111007Ottens Direct.pdf

BraM.Pwy
1 Attorney at Law
BarNo. 3472
2 2019 N. 17th St.
3 Boise, ID. 83702
[phone] (Land)
4 [phone] (Fax)
bmpurdy(Qhotmail.com
5 Attorney for Intervenor
Communty Action Parership
6 Association of Idao
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O"'ci:itn=ni" t: J I,,~ I " L" L
2011 OCT - 7 Pri li: 18
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BEFORE TH IDAHO PUBLIC UTILITIS COMMSSION
IN TH MATTR OF THE APPLICATION9 OF IDAHO POWER COMPAN FOR
10 AUTHORITY TO INCREASE ITS RATESAND CHAGES FOR ELECTRIC SER~CE
11 TO ITS CUSTOMERS IN TH STATE OF
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) CASE NO. IPC-E-II-08
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16 COMMTY ACTION PARTNRSHI ASSOCIATION OF IDAHO'S
DIRCT TESTIMONY OF
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I. INODUCTION
Pleae stte your nae and business address.
My nae is Ten Otens. I am the Policy Dirctor of the Communty Action Parership
Associaton ofIdao headquaered at 5400 W. Frain, Suite G, Boise, Idao, 83705.
On whose behalf are you testifyg in ths proceeding?
The Community Action Parership Association of Idao ("CAPAI") Board of Directors
asked me to present the views of an expe on, and advocate for, low income customers 0
AVISTA.
Pleas descnbe CAPAI's organtion and the fuctions it perform, relevant to its
involvement in ths cas.
CAPAI is an association of Idao's six Communty Action Parerships, the Comnunty
Council of Idaho and the Canyon County Organzation on Agig, Weathenztion and
Human Servces, all dedicated to promotig self-sufciency thug removing the causes
and conditions of povert in Idao's communties.
Wht are the Communty Action Parerships?
Communty Action Parerhips ("CAPs") ar pnvate, nonprofit organtions that fight
povert. Eah CAP ha a designated service area. Combing all CAPS, every county in
Idao is served. CAPS design their varous progrs to meet the unque needs of
communties located withn their repeve service area. Not ever CAP provides all of
the followi servces, but all work with people to promote and supprt increased self-
sufciency. Progr provided by CAPS include: employment prepartion and dispatch,
education assistce child ca, emergency food, senior indepndence and support
clothg, home weathenzon, energy assistace, afordle housing, health care access,
and much more.
Have you testified before ths Commssion in other proedings?
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Yes, I "have tested on behaf of CAP AI in numerous cass involvig, among other,
Idao Power, A VISTA, Rocky Mounta Power and United Wat of Idao.
II. SUMY
Pleas sumar your testony in ths ca?
Firt, CAP AI opposes the proposed settlement executed by the other paries to ths
prog and curntly peding before the Commission by way of Motion and
Stipulation.
Would you pleas bnefly suar the rens for your position and the isues and
concerns that drove CAP AI's decision to not join in the settlement?
The propose setlement sems to addrss the issues and objectives of all pares except
CAPAI and low-income cusomers. CAPAI is concerned about Idao Power's nsing
rates, the pressure and signficance of havig multiple fiings simultaeously pending
before the Commssion, including generl rate cas for the th larges e1ectnc utilties
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and for Idao's largest investor owned public water utityl and a fiing by Rocky
Mounta contendig tht its LIW A progr is not cost-effective. In addition to rapidly
nsing utility raes, the economy seems to be dissolvig into reession, unemployment is
skyocketig, federa assistce progrs for low-income cusomer ar being reduced or
elimated putg vuerble low-income customers diectly in the path of a peect
storm. In spite of ths, the selement agrent fails to include an increase in Idao
Power's low-income weathenzation progr (WAQC) whch han't be increased in
nearly a dece. CAP AI simply could not jusfy joing in yet another black box
setlement agent resulting in yet another rate increase without any offsetting
provision for low-income cusomers.
1 United Water of Idaho; Case No. UWI-W-11-02.
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Does this mean tht CAP AI opposes every identifiable element of the proposed
settlement?
Not necssaly. CAPAI's decision to not sign the settement in whole or in pa was
ceriny not a decision made lightly. There are cert asects of the setement that are
of obvious, positive value from CAP AI's perspective, suh as the fact tht the rate
increae was reduced from the proposed 9.9% to 4.07% and Idao Power agd to not
increae its monthy residential service chage as ongiy requested. In a vacuum, such
compromises are obviously of benefit to low-income cusomers who pay those rates and
chages but CAP AI, lie every other par, asssed the proposed settlement tang into
considertion the totality of everg it contas, as well as what it lacks. Furermore,
CAP AI does not begi an analysis of any requested rate increas with the presumption
tht some degree of rate increase will ultiately be grted. Thus, perhaps a more
jusfiable rate increa in this ca would be considerbly less tha 4.07%; perhaps none
at alL. Regardless, for reasons tht I wi explai in grer detail, CAP AI came to the
conclusion tht agreing to the overal settlement as proposed would not be in the best
inter of low-income cusomer or residential customer on the whole.
ID. GENERA OVERVIW
Are the concerns and the positions you hold in ths procng limted stctly to the
interes of Idao Power's low-income cusomer?
In the past, the anwer to tht question would be an obvious and simple yes. But as
everyone is well aware, we are curently expenencing one of the most severe ecnomic
cnse in our nation's histry. One ofthe many consuences ofthis is that the ras of
citiens who quaif as "low-income" are swelling. Pover rates in Idao have nsen
from 12.6% in 2005 to 14.4% in the 2010 cens figues reresentig an additiona
25,00 Idaho citizens suving under the Federa Pover LeveL. Simultaeously, fede
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fuding of progrs designed to assist low-income cusomers are being reduced or
entily elimated includig the termation of AR2 which provided a substtial, but
tempora, boost in federa low-income weatenzation fuds. The backlog of
households in Idaho eligible for low-income weathenzation is far too grat for AA to
. have even come close to elimiing.
Is there anytg about ths parcular proceng that you believe warants senous
atttion by the Commission?
In my opinon, the present ca provides a very unque observation of senous events
ocurg on not jus a local or nationa scene, but globally. The Commssion is
obviously awar, as are all Amencan, of the mountig economic problem faced by all
sectors of society. Because CAPAI represents the most vunerble element of that
soiety, it is compelled to tae on issues and express concern that it tyically does not
addrss. The curnt pendency of gener rate caes for all thre ofIdaho's electnc
utiities as well as its largest reguatd water utility,3 a proeedg in which low-income
weathenztion ha been caled into question, combined with the problems I.have refered
to, could well be unprecedente. Many residential cusomers who ar slightly above the
low-income thhold as defied for the purse of reeiving federa and stte benefits in
Idao such as LIHAP, are rapidly slipping below that thshold, quaifyg them as low-
income. Furermore, many existg low-income customers have yet to avail themselves
of governenta and utility assistce progr such as W AQC but eventully will,
espeially if the economic cnsis continues or spirs fuer downward. Thus, the
importce of every low-income progr, such as Idao Power's WAQC, continues to
increa.
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2 The "American Recovery and Reinvestment Act."
3 United Water of Idaho; Case No. UWI-W-11-02.
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What role do you see CAP AI filling in terms of its apce before ths Commssion
given what you have descnbe?
Fir unike in some other states, it should be noted tht there is no reguar intervenig
par to Commssion proceegs who represents the exclusive interest of residential
customer. Whle the Commssion Sta cery stnves to sek a fai resut for
residential customers in any given proeeding, its legal madate reuirs th it do so for
all pares, includig the utility. As the percentae ofIdao Power's residential
customers who quaif as low-income increas, CAP AI's involvement in preedings
before ths Commssion expands in depth and scope. Progrs th provide diect
benefits to low-income customers, such as W AQC, also provide benefits to all customer
classes. Thus, whie CAPAI's mandate is to serve and represent the interests of low-
income cusomers, we mus remai aware tht ths paicular population is rapidly
expadin and, unorttely, will include cusomers who do not yet qualify as low-
income.
Would you please suar the more specific considerations that led to CAP AI's
position in ths cas?
Speifcaly, I will address whether the authonzed retu propose in the settement is
fai, jus and reasnable or whether Idao Power's rateyers, paricularly its residential
class, ar being asked to shoulder the bul of the weight ca by our curnt economic
cnsis in ths countr, whether the revenue allocation among cusomer classes is fai, just
and reanable, whether the rate increas disproportonately impacts low-income
cusmer exclusively, and why the failur of the pares to include in thei proposed
settlement an increas in Idao Power's. WAQC fuding is inconsistent with Idao law,
results in a substatial dispaty in the fuding levels of Idao's thee largest electnc
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utities, fais to max what the Commssion has reeatedly deemed to be a prudent
and desirle DSM resources, and is inequitale for a host of other reans.
Ar there any exhbits to your testimony in ths cas?
No.
SUBSTAN AND DISPROPORTIONATE IMACT OF PROPOSED RATE
INCREASE
Wht parcular components of the rate increase propose in the settlement does your
testony address?
As the Commission is well awar, CAP AI tyically does not have sufcient ficial
mea to reta expert witnesses to analyze, and provide testimony for, the gamut of
components tht compnse any given rate increas aìd ha histoncaly limted its scope 0
issues to very few low-income speific issues, such as LIWA fudig, rate design
minum custmer chage, etc.
Is CAP AI expanding its scpe of issues in ths procing?
To a certin extent, yes. Ths is necessitated by sever factors including the curent.
economic cnsis, the unpreented spate of genera rate cas and other proceedings
curntly pending before the Commssion includig a PacifiCorp proceeding that calls
into question the cost-effectiveness of tht Company's low-income weathenzation
progr (Cas No. PAC-E-11-13), the cumulåtive impac tht :fuent genera rate case
filings by Idao's th larges electnc public utilities ha ha on residential and
parcularly low-income cusomers, the fact that those utilties se increasingly shielded
by varous mechasms tha stbilize their eags puttg them in a relatively
advantaeous position in the economy but have shift the buren of nsk to raepayers
and fially, the fact tht all of the other paes agree to settle yet another genera rate
ca using a "black box" settlement that doe not spcif a retu on equity.
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Do you possess any expertise in analyzing the appropnate rates of retu for reguated
public utilties?
No, I do not possess expertse in the areas of utlity ratemag, including calculatig a
fai and reaonable retu. I do have expertise in the peeptions and realities of life for
low-income customers and the burden tht ever-increasing utility bils poses for those
customers. It is in tht spint tht I offer my opinons.
In light of your sttement, is CAP AI tag any spific position on revenue requiement
issues?
Agai not in the tehncal sens. I believe that Sta always conducts a ver thoroug
analysis of spific revenue requirement issues. CAP AI support the spcific issues
rase and positions taen by Stabut notes that Stas settlement position is obviously
the result of compromise. It is entily possible that ha every revenue requiment issue
identified in ths cas ben litigated, the outcome might have been a lesse revenue
reuiement and rate increa th settled upon.
Plea stte your issues and positions from the perstive you have identified.
It is my undersding tha much has chaged in the pas twenty years regaring Idao
Power's rates. Though I was not involved in utilty matter at the tie, I am aware that
up until the early to mid-1990s Idao Power often went for extndedpenods without
gener ra increae filin. Soutern Idao expenenced reord-settg droughts durg
the ealy to mid-1990s placing considerle ficial st on Idao Power. Though
reluctat to file genera rae increases at the time, Idao Power did fie for tempora rate
relief in the form of "drougt surharges." It was ultiately deemed appropnate to
estalish Idaho Power's fi power cost adjustment (PCA) mechasm tht wa designed
to ste a balance between providing financial stbilty for the Company durg drought
year, but also captu the benefits of high water yea and also factor in other vanable
DIRCT TESTIMONY OF TERI OTTENS 8
components of power supply cost such as the cost of coal and off-system power
purha.
Wht other signficant events took place durg ths time penod?
In the year that followed Idao Power, along with other utilities, was ordered to
increase its investment in conseation measures (DSM). As the Compay's investment
in DSM increased, the Company bee increasingly conceed tht investig in
meaur tht reduce consumption also reduces saes revenue. Ths led to a somewhat
protracted process culting in the FCA pilot for whch the Company seeks permanent
approval in ths cas. The FCA provides a mechansm by which the disincentive for the
Compay to invest in DSM is somewht removed.
Wht ha trpird to the present?
The thd and fi leg of ths histonca progression is tht, bas on factors too numero
to list but including increasd operatig and power supply cost, incrasd population
and investment in plant neededto supply tht populaton, the need to upgrde
detenoratig plant and relicense hydroelectnc facilities, frequent genera rate fiings by
Idaho Power and other utilities have now beome commonplace. The days when a
tyica residential customer could read and comprehend his or her bil with relative ease,
and expet th bil to remai largely unchaged for extnded peod of time, are in the
distt pa as additional line items ar added for everg frm taff nders to PCA an
FCA adjustments. Furermore, Idaho Power is oftn grte authonty to reover a
vanety of other accumulated deferred expenses from raepayers by rolling them into the
PCA. Thoug some of thes effectively reuce customer' bils, we all know that costs
in gener always nse. For the tyical reidential cusomer, ths pratice ha rendered the
PCA diffcult if not impossible to understad effectively negating any pnce signs the
25 PCA might have sent in any given year.
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Wh is CAPAI's concern regarding the history you have outlined?
My comments ar intended to provide the perspective of a ~ical low-income cusomer
rather th constute a cntique. In fact, CAP AI support some of what ha developed
over the pas two decades, parcularly increasd investent in DSM and obviously the
WAQC progr. CAP AI support the ICL' s position in ths cas on maitag the
curent DSM taff rider fuding leveL. CAP AI also undersds tht may of the factors
causing costs and rates to increae ar not avoidable by the Compay. From CAP AI's
perpetive, the PCA and FCA revenue stbility mechasms present both benefits and
detnents to low-income customers. They certy provide signficant benefits to Idao
Power who ca better tolerte volatile maret and weather conditions with the "revenue
stbilty" effec th the mechansm provide. Thes revenue stility mechasms create
a band identified by outside pareters beyond which eargs canot fall or nse. The
long-term effec of ths is to reduce eaings volatility whch equates to reduce nsk for
investors seekig long-term predictabilty and for utiity maagement in mag plant
invesent decisions.
Wht ar the detnents of revenue stbilty mechansm to low-income customers?
On the downide, reidential cusomers in genera, and low-income cusomer in
parcular, have expenenced relatively rapid rate increes over the pas ten year. As
power supply costs nse, the combination of revenue stilty mechansms with :fuent
genera and single item rate incres, have created a condition in which rates ar
perceived by many cusomers to be increasing at an ever accelerating pace.
What unque effect ha ths had on low-income cusomer?
Low-income customers, due to a lack of resources, have relatively lited ability to
control their consumption and their bils and constitute the most vuerable customer bas
DIRCT TESTIMONY OF TERI OTTS 10
to increingly higher rates. For these cusomers, the W AQC program is curently the
only viable mea to reduce their electnc bils.
How doe ths factor into your concern about nsk-shig mentioned earlier?
Whe ver few entities or individuas ar completely escing the curent economic
cnsis Idao Power, thugh the mean aleady discusse ha ben advantageously
situed relative to other setors of the economy. Ths is why I have expressed concern
regardig black box selements tht do not identify or discuss the risk component of
overal retu.
Is it your belief tht a lower authonzed rate of retu is always in the best interests of
ratepayers or tht it is always best for the Commssion to specify the Company's
authoried rate of retu in its finl orders?
No. Though my knowledge in ths area is adttedy tht of a layprsn, I do realize that
a utlity mus occaionally borrw money to fice invesent in its business and that
the utity's credit rating afects the interest rate and other borrwing.costs which are
ultiately passe on to ratepyers. Because cret ratis can be inuenced if a spcific
authonz ret on equity ha been adopted by the Commssion and what tht rate of
retu is, ths maes an already complex balancing decision by the Commssion regarding
rate of retu even more diffcult.
Ar you proposing a speific rate of ret in ths cas?
No. I do not purrt to opine what an appropnate rate of retu is for Idao Power in ths
ca. The purse of my testimony is to convey the sens of frtion and even futilty
tht low-income customers expenence when they lear tht a reguated utlity is grted
what they often perceive, corrctly or incorrtly, as a "guteed profit," especially
durg times when even large corprations are declarg banptcy and many famlies
25 are losing their jobs, homes, and livelihoo.
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Is it your belief that the Commssion doesn't aleady factor these considerations into its
ruins on rae of retu?
No. In fact I want to emphasize my :f belief that the Commission taes these
percptions into consideration when it reaches its decision on rate of retu and makes th
best decision it ca considenng all circumtaces. I offer ths tetimony maiy beause
of the fact tht while Idao Power ha aleady ben grted rate increa in roughy
thee of the pas six year (the residential energy rate alone ha increed 81% since
i 989t and ha been grted autonty to recover cert expenss though numerous
sine item filings, it has not increas its WAQC fudin by a single penny since its
curt fudig level was ordered by the Commssion in the Company's 2003 general
rate ca.5
Why do you believe it is necessa to seek a Commission order to obta a W AQC
fudig incree for W AQC?
When asked thugh discovery to provide its raonae for not increing W AQC fudig
in ths cae, the Company respnded in par: "the Compay ha not received any orders
frm the Commssion since June 25, 2007, to alte its fudig for WAQC.',6 Actully,
the June 25, 2007 order that Idao Power refers to is Order No. 30350 issued in Case No.
IPC-E-07-09, did not "alter" WAQC fuding, but simply ordered the Company to
19 "contiue" fuding at the existing level of $1.2 millon.7 In reality, Idao Power has not
20 ben order to increa W AQC fudig since the 2003 ra cas. Beaus W AQC is th
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22 offset Idao Power's rae incrs and the :fquently revise revenue stility
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4 See, Idaho Power Response No. 2 to CAPAI Discovery.
5 Case No. IPC-E-03-13.
6 See, Idaho Power Response No. 7 to CAPAI Discovery.
7 Order No. 30350 at p. 4.
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mechansms ha created a lop-sided sitution disfavonng cusomers and shifting the
burden of increa economic nsk from shaholders to them.
What is your response to those who contend that simply keeping residential rates low is
the best outcome of a gener rate cas filing?
CAP AI believes tht low-income cusomer should not be put into a position where they
choose between an increas in W AQC fuding or a lesser rate increase. The cost to all
ratepayers of the increas in W AQC fuding CAP AI proposes in ths ca is quite modes
in comparson to the benefits to low-income cusomers of addressing the ever-widenig
gap between the need for some form of assistce to reduce their bils though reduced
consumption and the degr of assistace available to help them achieve tht reduction.
Curent W AQC fuding ($1.2 milion) consitutes only one-thd of one percnt oftota
residential class revenues.
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v. REVENU ALLOCATION
Wht is CAPAI's position with respet to the unorm percentage revenue allocation
between cusomer classes proposed in the settement agrement?
Though I am not a rate analyst and have no expese in evaluag a utility's cost of
seice, I am aware that cost of servce models attempt to detere the tota cost of
seg each of a utility's customer classes. I am also awar that they are, by natue,
subjective and often a major point of contention in genera rate cases. Finly, I
undersd tht the Commssion taes cost of sece stdies into considertion when
rendenng its decisions, but has generly chosen to not bind itself to any pacular study.
Why do you oppose a unform revenue allocation in ths cas?
I have reviewèd Idao Power witness Mattew Larkis' Exhbit No. 38, page 9 which is
a sumar of the Company's cost of service model results prepared for the te year.
25 8 See, Idaho Power Response No. 3 to CAPAI Discovery.
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That exhbit demonstes that customer tag servce under Schedule Nos. 1-5, the
Residential Class, ar curntly payig rates tht ar 103% in ter of their cost of
service. Idao Power's speial contract cusomers ar paying rates between 91% and
93% of their cost of service, and the Irgation class is payig 66% of its cost of servce.
Ths mea tht, accepti the cost of serice stuy as acurte, other cusomer classes
ar paying less tha their respective cost of servce and are argubly being subsidized in
pa by residential cusomers includig low-income.
Does the settlement agreement addrss ths potential subsidy?
No. The propose unform pecentage alocaton simply maita any existg
allocation unaiess that might exist. There is no way to speulate how the Commssion
would rule if ths were litigated. CAP AI's concern is tht ths is jus one more
concession th has been given away through settlement tht afects the residential class
as a whol.e, and low-income cusomers in parcular.
VI. WAQCFUING
Wh is CAP AI's proposa regarding W AQC?
CAPAI seeks the $1.5 millon incr necessa to simply bnng Idaho Power into
relative paty with AVISTA. Combined with the curnt fudig of$1.2 millon, ths
would result in tota anua fuding for W AQC of $2.7 millon.
Would you please oute your position on Idao Power's WAQC progr?
To fully explain CAPAls position on WAQC, a bnefhistory of the progr is usfu.
The progr, intially referred to as "LIW A," was implemented in 1989 puruat to
application ofIdao Power in Cas No. IPC-E-89-6. Idao Power was order to
initialy fud the progr at $320,000 anualy for a peod of th year, and increased
to $500,000 for another two year. The futue of the progr was left open. Forreasons
DIRCT TESTIMONY OF TERI OTTNS 14
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not entirely clear, the ongi "LIW A ,,9 program was fuded at an average anua level
of$175,000 for roughy thieen years (1989 thoug 2003). Based on increasing
concern by low-income customers regardig the amount of their utilities bils, CAP AI,
along with AA, intervened in Idao Power's 2003 gener ra Cas No. IPC-E-03-13.
Because it appeared tht LIW A had never been fuly fuded as onginaly ordered, and
based on the benefits the progr provides to low-income cusomers and Inaho Power's
enti system CAPAI sougt an anual fuding level on a going-forward basis of $1.2
millon, a proposa that was grted by the Commssion. 10
Has CAP AI sougt an increase in fudig for WAQC since 2003?
CAP AI ha attempted on numerous occasions by a varety of means to reach an
ageement with the Company to incree W AQC fudig.
Why has CAP AI not sought an order from the Commssion for a fudig increase since
Idao Power's 2003 rate case?
Followig the 2003 case order, CAPAI tued its limte resources toward the
comparble progrs of Rocky Mountan Power and A ~STA. The reason then, as it is
now, was to achieve paty between the fuding levels ofIdao's th largest electnc
public utilities.
Why is panty importt to CAP AI?
Party is a very importt pnnciple åld objecive from CAP AI's view for severa reasons.
Fir it is not fai, jus or reasonable for one utility to fud at signficantly different rates
th other. Afer 2003, Idao Power's fuding level was higher th Rocky Mountain
and A VISTA so CAP AI felt it not only desirble for low-income customers, but also
equitable to I&io Power to sek relatively equal fudig levels from the other utilties.
25
9 There is no practical difference between the acronyms "LIWA" and "WAQC. IT
10 Order No. 29505.
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The pnnciple of party also applies to all Idao cusomer of the thee utilities. If there is
substtial fudig disparty between the the utilities, then cusomers of those utilties
ar either being trated preferentially or discnmated agai. Becus the cost of 10w-
income weathenzation progr are passe on to ratepayers, there exists a legitiate
concern about whether rates ar fair, just and renable, at leas to the extent tht they
ar afected by LIW A fuding.
Wht events have occured since 2003 th have caus disparty in LIW A fuding?
AVISTA's and Rocky Mountain's LIW A progr have been increa several ties,
including with the pas year. A VISTA agreed to nearly double its fuding from
$465,00 to $700,000 though setlement approved by the Commssion in Cae No.
A VU-E-I0-0l. Rocky Mounta's fudig was doubled frm $150,000 to $300,000 and
its alloction of Company (as opposed to federa) fuds us on eah LIWA houshold
frm 75% to 85% by Commssion Orer No. 32196 in Cas No. IPC-E-I0-07 issued
Febru 28 of ths year.
How do the curent fudig levels of the thee utilities compar now?
A VISTA fuding is curently the highest per capita and is more than 200.1 higher than
Idao Power and roughy 25% higher th Rocky Mounta Power.
Pleas explai how you arved at ths conclusion?
I divided the tota progr fuding by the number of eah utlity's Idao electnc
reidential customers. The cusomer numbers were obtaned from each utility and is the
most recnt data I had at my disposal when I made these caculations. To the extent that
ther exist a more accure cusomer count, CAP AI would obviously prefer that figue
for compason purses. A VISTA fuds at $700,000 and ha 104,609 Idao electnc
cusomer for a per capita level of $6.69/customer. Rocky Mounta Power fuds at
$300,00 and has 56,430 Idaho e1ectnc cusomers for a per capita level of $5.32. Idaho
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Power fuds at $1.2 millon and has 391,759 Idao electnc cusomers for a per capita
levelof$3.06.
Do your caculations of per capita fudig and compason between utilities include the
utities' internal adsttive overhea?
No. The signficance of this only rently cae to my attention. In its Discvery
Responss to CAP AI's Fir Discovery Requests, Idao Power stes tht it is fuding
W AQC at more tha the $1.2 millon ordered by the Commssion. For intace, Idao
Power stes tht "(iJn addition to the $1.2 millon pe yea, Idao Power fuds
adnistrve overhea."ii The use of the word "overhea," in the plur is what
caugt my attention. Additionaly, Idao Power stes th durg the test year its W AQ
expenditues tota $1,321,132. Using ths higher fuding level, and a residential
cusomer class population more recent and higher th tht used in my calculations, the
Compay concludes tht it is fug W AQC at $3.21 pe reidential customer compared
to my calculation of $3.06. 12
Wht is your explantion of this apparnt discrancy?
It appe tht in calculatig the per capita W AQC fudig level, Idao Power is
includg the adstrtive overhea cost of both itslf and what it pays to CAP AI to
ader the progr. CAP AI isn't disputg that Idao Power has adstrtive
overhead resulting frm W AQC but has no way of venfyg wht tht expe it.
Regardless, it isn't importt to CAPAI how Idao Power's fudig level is calculated
solely to arve at a comparson point between utilities. When I calculated the respective
funding levels of A ~STA and Rocky Mountain I us only the tota money paid to the
communty action agencies tht implement their LIW A progrs and did not include
11 Idaho Power Response to Request No. 1 (d) of CAPAI's First Discovery.
12 See, Idaho Power Response to Request No. 5 of CAPAI's First Discovery.
DIRCT TESTIMONY OF TERI OTTENS 17
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those utlities' respetive overhea. Thus, to compar aples to apples, either
AVISTA's and Rocky Mounta's fudig levels mus beincrasd by their respective
adstrtive overhead, or Idaho Power's should be $1.2 millon, the money it actuy
pays to the agencies. Furhermore, Idao Power's more accurte residential cusomer
population data is higher and if used for per capita calculation purse, would yield a
lower dollar amount for Idao Power. Ths might also be tre for AVISTA and Rocky
Mountan so CAP AI proposes that population data be amended for all the utilties for
amve at a fai comparson.
So would you please elaborae on CAP AI's attmpts to obta an increase to W AQC
fudin?
Dug the past severa yea when CAP AI was parcipatg in A ~STA and Rocky
Mountan general rate cases, it was in faily frequent contat with Idao Power senior
management to discuss a W AQC fudig incras. These communcatons seemed quite
positive and, bas on long-stdig relatonships with paicular individuals and the
Company in genera, and the desire to resolve the issue without litigation before the
Commission, CAP AI genuiely believed that it would not be necessa to incur the
expens of intervenig in a genera rate fig for Idao Power or to petition the
Commssion diectly in order to achieve the desired outcome.
Was there anytg in parcular tht prvented thes discussions frm coming to
frtion?
There were several thgs tht interrpted CAPAI's attpts to obta incre fudig.
Fir Idao Power had pnontiz completion of its collaborative decupling process
culting in the propose permanent aproval of the FCA in ths ca. Thoug the
FCA was not a pnonty issue for CAPAI, we accepted the Company's representations th
the FCA requied its full focus and resurs. In adition, ther was a key personnel
DIRCT TESTIMONY OF TERI OTTS 18
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chage involving the individua with whom CAP AI had ben discussing a fuding
incree. Followig these events, CAP AI resumed discussions with Idao Power but the
Company changed coure and declined fuer consideration of a W AQC fudig
increase. Morever, Idao Power indicated tht it ha no intention to consider any
increase pendig the results of a cost-effeciveness stdy of the progr scheduled for
completion sometime near the end of2012. Ths position, if acpte by the
Commssion, will mean tht Idaho Power will have not incrased fuding for more than a
dece durg which its raes have climbe consideraly. The present cas is the fist
viable opportty CAP AI has ha to seek a formal ruing from the Commssion to
increase fuding.
Is it possible for CAPAI to fie an application for LIW A fudig increas outside the
context of a pending genera rate cas?
To my knowledge, any individua or entity may file an applicaton or petition with the
Commssion at its discretion but it is not always finacially feasible for CAP AI to do so.
A pending genera rate case offers advantages for an organzation with limited resources
such as CAP AI. I am not an attorney and do not profess to have any legal expertise. I
am however, famiar with the baic elements of Idao law and the Commssion's
proedurl rules perting to interenor fuding. There ar a number of cntea that an
intervenor mus satisfy in order to be entitled to a fuding award. Absent the possibilty
of obtag such an award, it is a fiancial str for CAP AI to formaly intervene in
procings before the Commssion. Furermore, there are essentially economies of
scae th exist when a genera rate cas is pendig for a utilty tht constitute an
ecnomic opportty for CAP AI to have its issues addrsed. Becaus the Commssion
generaly allows any and all isss to be rased durg the cour of a general rate case, it
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is procedurly les complicate and costly for CAP AI to intervene in a pendig case th
to intiate a new one.
Has CAPAI ben succssfu in pas reuests for intervenor fuding?
Yes, and I wish to emphasiz that the Commssion ha never denied CAP AI intervenor
sttu in any proceeing and ha ben quite generous and encourgig in its rulings on
CAP AI's intervenor fuding reuests. Still, a genera rate cas presents considerable
opportties that might not exist otherwse. Thus, a deferr of CAP AI's WAQC
fudig increase proposal in ths ca wil result in additiona cost for CAP AI if it
bemes necessa to intiate a new and searte prog. CAP AI submits that it is in
the be intersts of all concered to maximze the opprtty and convenience that the
curnt proceedg provides to resolve ths issue.
Ar you aware of any hesitation on the par of other pares to an incre for Idaho
Power in th case?
Thoug I do not wish to spe for others, it is CAP AI's peeption that Sta ha certin
concern and objectives regarding the evaluation of low-income weathenztion in genera
that might be presentig an obstle to Sta ageeing to a W AQC fuding increae in thi
cae.
What do you peceive Stas concern and objectives to be?
Staha expresed a desir for some time now to obta gudace frm the Commssion
regardig how to evaluate the cost-effectiveness of al th utties' LIW A progrs,
espcially given the unque charactenstics of LIWA including what are someties
referr to as "non-energy benefits." These beefits include the many positive effects of
LIWA progrs tht do not ditly afect energy consumption including such thgs as
reduced biling and collection cost, improved cash flow, reduced bad debt wnte-off and
other. Thes benefits are very rea and beneficial to a utility's entir customer base, but
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as of yet, there ha not been an estblished methodology mandated by this Commssion
for their. valuation and evaluaon.
Does CAP AI object to Stas objective as you interpret it?
No. CAP AI believes that the thee LIW A progrs are being and have been
implemente in a cost-effecive maner but welcomes a form recogntion of the non-
energy or "system-wide" benefits tht inure from LIW A progrs and will cooperate
fully in any proceeding or investgation initiated for that purse.
Ar ther other objectives that you perceive Staha?
There might be many and I do not purrt to necessaly know or undersd them fuly
yet. I am of the pereption that Staffalso seks a sort ofpanty or unformity in the cost-
effectiveness evaluation metodologies us for the thee utities' progrs. Again,
CAP AI ha no objection to ths objective though the unque chatenstics of the thee
progrs might requie some acmmodation.
Wh concern do you percive that Staffha abut the LIW A progrs?
I am of the belief tht Sta wishes to know whether the progr ar, in fact, cost-
effective under whatever methodology the Commssion ultiately approves. It is quite
undersdable that Sta would want ths inormation and CAP AI certy ha no
objection. I suspect tht Staff likely ha ha ths wish for some time but there has been
an intervenig event that ses to have possibly tued tht wish into a concern.
Plea identi that intervenig event?
It is the fiing by Rocky Mounta Power of an application (Cas No. PAC-E-ll-13) for
authonzion to ceae furter evaluations of the cost-effectveness of its LIW A progr.
The Compay bass its application on a stdy by a th-par contrctor fied with the
Company's application which purrt to show tht Rocky Mountain's LIWA program is
not cost-effective when evaluated under trditional stdas. Rocky Mountan contends
DIRCT TESTIMONY OF TERI OTTNS 21
tht the cost of evaluations, whch ar an added cost of the progr, merely exacerbate
what it contends is a program tht is not cost-effective. Rocky Mounta acknowledges
the importce of its LIW A program and requests tht the Commssion acknowledge the
progr as an acceptable par of the Company's DSM progr portolio.
Wht is CAP AI's position in respons to Rocky Mounta's filing?
CAPAI agrees tht Rocky Mounta's program is beneficial and has intervened in that
procding. CAP AI stnuously disputes, however, not only the resuts of the stdy
supportg the application, but the study itslf which, CAP AI believes, is senously
flawed and undertes the tota value of Rocky Mounta's LIWA progr. I appreciate
tht ths is not the appropnate foru in which to addrss and debate the issues presented
by Rocky Mountain's fiing, but to the extent tht the filing ha caus any reticence on
the pa of Sta or any other par to defer ruing on whether to increas fuding to Idao
Power's W AQC prgr, then it beomes an issue in ths ca. It is CAP AI's position
that Rocky Mountain's application should have absolutly no beg on CAP AI's
proposa to incree W AQC fudig now.
On what do you base ths position?
Firt, though all thee LIW A progr shar common objectives and must adere to
identical implementation stdads dictated by the U.s. Deparent of Energy, a cost-
effectveness evaluation by one utility of one progr should not be deemed to have any
beg on what results would occur if the other progrs were simarly evaluate. Ths
is tre if for no other reason than the "human element" tht is at play whenever
weathenztion meaures ar inlled under a LIW A progr and how the resultig
energy savigs ar estited, audited, and meaur. Thus, though simar in many
respets, the LIW A progr might yield signficantly dierent results from a cost-
25 effectiveness stdpoint.
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Ar there negative consequences of deferng a ruling on wheter to increas W AQC
fudig in ths ca?
Yes, and many have already been state. The progr fudig levels are substtially
disproportonate, resultig in disparty and unaiess for utilities and raepayers.
Second, there are ecnomic consuences to losin the opportty to present the issue to
the Commssion in a pendin general rate cas. Thid, unike AVISTA and Rocky
Mounta, Idao Power has gone nealy a decade without a fuding increase while its
cusomers contiue to be hit with increasing bils thugh rate filings or revenue stabilty
mechasms without any meanfu ability to alter their consption to offset the effect
of these bil incres.
Wht data do you have regaring the existing backlog of Idaho Power customers eligible
for WAQC in light of increased povert?
I will have upded data near year's end. Based on the most rent da I have for Ada
County alone there are 6000 homes th are eligible for W AQC fudig. Bas on
curnt levels of fuding, ths equate to an averae 20 year waiting list for these
applicats. Obviously, ths is so long that peple on the waitig list might never receive
weathention and the backlog contiues to grow.
Do you have additiona inormtion relevant to the incrasing backlog you descbe?
There is a parcularly frtig aspet of attemptig to este the rea nee for .
incred W AQC resources. For example, customers who apply for LIHAP must
quaif by having incomes below 6Ò% of the stte medan income. WAQC allows
pacipants whose incomes ar up to 200% of the Feder Pover LeveL. Becaus
LIHEAP reipients oftn apply for W AQC assistce as well, and beaus of the lited
fuding ofW AQC, those fuds are often exhauste long before al WAQC-eligible
cusomers are seed. Thus, whle estblishig W AQC eligibilty at 2()Jó FPL is a good
DIRCT TESTIMONY OF TERI OTTENS 23
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thg, the reality is that the program comes nowhere close to havig suffcient fuding to
serve al cusomers who quaify.
Ar there other practical reaons to not defer increasing W AQC fudig now?
Yes. CAP AI simply does not underd how the Commission's ruling in the Rocky
Mounta 11-13 filing will determe whether W AQC is cost-effectve. Even if the
Commssion determnes tht Rocky Mounta's LIWA program is not cost-effective, this
will not mean tht any other utlity's progr is not. If the Commssion deternes that
Rocky Mounta's program is cost-effective, an opportty to resolve the disparty with
W AQC in ths case will have been lost. Regardless of whether the Commssion
deteres Rocky Mountai's LIW A progr to be cost-effective, even if the
Commssion adopts an evaluation methodology in tht case, neither Idao Power nor
AVISTA are pares to that case and could legititely complai íf a Commssion ruíng
in tht proding wer applied to their own prgr. Therfore, allowig the Rocky
MQuntain fiing to see as an impeiment to resolvig the W AQC fudig disparty in
ths case creates a procedur conundr.
Has Idao Power indicate its opinon of wheter WAQC is a prudent, cost-effective
progr?
Yes. In its Respons to CAPAI's Fir Discovery Request, Idaho Power confired that
W AQC is both prudent and cost-effective and has ben evaluated for cost-effectiveness.
13
Do you have a proposa th addrsses both CAP AI's position and wht it believes to be
that of Sta and all thee utilities?
Yes. I propose that the Commssion bnng Idaho Power into paty with A VISTA with an
incree to WAQCof$1.5 millon (or whatever amount is ultiately deemed necessar
to achieve party using updated population figues), that the Commssion then determine
13 See, Responses Nos. 8-14, 16 of Idaho Power's Response to CAP AI Discovery.
DIRCT TESTIMONY OF TERI OTTENS 24
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whether the Rocky Mounta filing will provide what is desire by the pares as it is
curently fred, or whether a genenc proedg should be stct so tht ther is no
collatera objections to any attempt to apply the Commssion's ruling on other utilities.
Meanwhle, CAPAI represets that it has reted an expe to assist it in analyzg the
Rocky Mountain evaluation study and will likely propose chages or an entiely different
evaluation methodology. Either way, CAP AI wil paicipate fuy in whatver
procing ultiately results frm the curnt procedur spate of cases and in the event
tht at the end of the process it is determined that changes should be made to improve the
effcacy of the LIW A progrs, the communty action agencies that implement them will
cery comply with applicable Commssion dirtives. Ths should give Sta the
dition it seeks while shonng up the disparty in LIW A fuding for Idao Power by
bngig it in lie with AVISTA. Simultaeously, Rocky Mounta Power's concerns
regarding the cost of fuer LIW A evaluations will be fuly addrse.
VI. CONCLUSION
How would you sume your testony in conclusion?
I grtly appreciate the opprtty to present a low-income customer's perspective on
the may issues and chalenges facing that cusomer tody. I also appreciate the
Commssion's consideration of ths petive. My testimony is obviously not tht of
expert in the techncal aspets of a genera ratemakg such as determing revenue
reuient and allocation. The purse of my testiony is to explai why the ty of
settlement curntly before the Commission is quite unbaanced from the point of view 0
a low-income Idao Power customer who strggles with the fact ththis or her bill seems
to constly increa. The frtion tht accmpanes ths is elevated by that sae
cusmer's inability to do anytg to modify his or her consumption. A settlement that
does nothng but exacerbate the many inequities I sugges exist by failng to simply
DIRCT TESTIMONY OF TERI OTTENS 25
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increase funding of the only resource available to low-income cusomers is neither fair,
just nor reanable.
Dos ths conclude your testony?
Yes, it does.
DIRCT TESTIMONY OF TERI OTTS 2
1
I, the undersigned h
of the foregoing document 0
Lisa D. Nordsom
Donovan E..W aler
Jasn B. Wiliams
Idaho Power Company
1221 W. Idao St.
Boise, ID 83702
Inordstrom(iidahopower .co
dwalker(iidahopower .com
jwiliams(iidahopower .com
Gregory W. Said
Idao Power Company
1221 W. Idao St.
Boise, ID 83702
gsaid(iidahopower.com
Donald L. Howell
Idaho Public Utilities Co
472 W. Washigton St.
Boise, ID 83702
Don.howell(ipuc.idaho. gov
Karl.kleinrguclidaho. gov
Enc L. Olsen
201 E. Cente
Poctello, ID 83204-1391
elo(iracinlaw.net
Anthony Yanel
29814 Bay Vilage, OH 441
tony(iyaneLnet
Peter J. Richadson
Gregory M. Adam
515 N. 27th St.
Boise, ID 83702
DIRCT TESTIMONY OF 27
CERTICATE OF SERVICE
2
3 ereby certfy tht on the 7th day of Septembe, 2011 I served a copy
4 n the followig by electronic maiL.
5
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TERIOTTENS
1
peter(irichardsonandolear.com
greg(inchardsonandoleary .com
Don Reaing
6070 Hil Rd.
Boise,ID 83703
dreading(imindspnng.com
Arur Perr Bruder
Unite States Deparent of En
1000 Independence Ave., SW
Washigtn D.C. 20585
Arhur. bruder(ihg .doe.gov
Kur J. Boehm
36 E. Seventh St., Suite i 51 0
Cincinti, OH 45202
kboehm(ibkllawfrm.com
Thorvald A. Nelson
Holland & Har
6380 S. Fiddler Green Circle
Suite 500
Greenwood Vilage, CO 80111
tnelson(ihollandhar.com
Benjamn J. Oto
Idaho Conservation Leage
71 0 N. Sixt St.
Boise, ID 83702
botto(iidahoconservation.org
Ken Miler
Snae River Aliance
P.O. Box 1731
Boise, ID 83701
kmiler(isnakenverallance.org
Nancy Hich
NW Energy Coaltion
811 1 st Ave., Suite 305
Seattle, W A 98104
nancy(inwenergy.org
Dea J. Miller
420 E. Banock
DIRCT TESTIMONY OF TE 28
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RIOTTENS
1
Boise, ID 83702
joe(ßmcdevitt-miler.com
2 Scott Paul, CEO
Hoku Matenals, Inc.
OneHoku Way
Pocatello, ID 83204
spaul(ßhokucorp.com
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7 D ::7k, Q ;?Bra M, Puy ¿-
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DIRCT TESTIMONY OF TERI OTTENS 2