20111007Reading Direct.pdf

RECEIVEn
BlJlr£JØ~r&0Jr.E~."Yll OCT -1 PH 2: 36ATTORNEYS AT LAW
Tel: [phone] Fax: [phone] IQA.rIO
P.O. Box 7118 Boise, ID 83707 . 515 N. 27th St. Boise, ID¡!tlt:ITIES
October 7, 2011
Ms. Jean Jewell
Commission Secreta
Idaho Public Utilties Commission
472 W. Washington
Boise, ID 83702
RE: IPC-E-II-08 - Testimony and Exhibits of the Industrial Customers of Idaho
Power
Dear Ms. Jewell:
Enclosed please find the Direct Testimony and Exhibits of Dr. Don Reading, Don
Sturtevant, and Del Butler for filing on behaf of the Industral Customers of Idaho
Power in the above-referenced docket. We have enclosed ten (10) copies and a CD with
the testimony, as well as an additional copy for you to stap for our records.
Please contact me with any questions.
'n e ely,0J
Of gory M. Adams
Richardson & O'Lear PLLC
encL.
Peter J. Richardson (ISB # 3195)
Gregory M. Adams (ISB # 7454)
Richardson & O'Lear, PLLC
515 N. 27th Street
P.O. Box 7218
Boise, Idaho 83702
Telephone: [phone]
Fax: [phone]
peterrmrichardsonandolear.com
gregrmrichardsonandolear.com
REC'" n, .. .1 r.
20ll OCT -7 PH 2: 31
Attorneys for the Industral Customers of Idaho Power
BEFORE THE IDAHO
PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER )
COMPANY'S REQUEST TO INCREASE ITS )
RATES AND CHAGES FOR ELECTIC )SERVICE IN IDAHO )
)
)
CASE NO. IPC-E-II-08
INDUSTRIAL CUSTOMERS OF IDAHO POWER
DIRECT TESTIMONY OF DR. DON READING
October 7, 2011
1 Q.
2 A.
Would you please state your name, address, and occupation?
My nae is Don Reading. I am a reguatory and utilties economist employed
3 with Ben Johnson Associates, in Boise, Idaho. The Industral Customers of Idaho Power (ICIP)
4 have retaned my consulting servce to investigate Idaho Power's request to increase its rates and
5 charges for electrc service in Idaho.
6 Q.Have you prepared an exhibit that describes your qualifcations in regulatory
7 and utilty economics?
8 A.
9 Q.
10 A.
Yes. I am sponsoring ICIP Exhbit 301, which contais my curculum vitae.
Have other exhibits been prepared in support of this testimony?
Yes. lam also sponsorig several exhbits contang Idaho Power's responses to
11 discovery requests and other correspondence, which I will describe below.
12
13 A.
Q.What is the purpose of your testimony in this case?
ICIP entered into a Stipulation settling many issues in ths case, which was
14 submitted for Commssion approval on September 24,2011. The Stipulation listed Unresolved
15 Issues under paragraph 11. Those issues include the facilties charge rate determnation
16 methodology and issues relating to ownership of facilties subject to the facilties charge, as well
17 as the proper level of the Energy Effciency Rider. My testiony will address these two
18 unesolved issues.
19 Q.Lets turn to the first section of your testimony. Could you please describe
20 the currently effective facilties charge on Idaho Power's system?
21 A.For Schedule 9, 19 and Special Contract Customer Schedule 29, the facilties
22 charge curently is a 20.4% anual charge, which is assessed on customers' bils as a 1.7%
23 monthly charge. The charge is the Company's rate recovery mechanism for the Company's
Dr. Reading, DI 1
Industral Customers of Idaho Power
1 investments in Company-owned distbution facilties tht are on the customer's propert beyond
2 the point of delivery. These facilties ar usualy comprised of poles, wies, trsformers,
3 switches, meters, etc., that are needed to provide power to the customer. The principal
4 investment amount on which the customer is charged 20.4% anually is the tota of the
5 undepreciated sum of all the investments the Company has made in equipment curently in use at
6 the individua customer's premises, irrespective of the year the investment was made. In other
7 words, the Company's facilties charge imposes a 20.4% anua payment on the initial
8 investment in the Company-owned distrbution facilities on the customer's propert. The
9 principal investment amount changes only when a new piece of equipment is instaled or existing
1 0 equipment is replaced. If a piece of equipment is replaced, the investment amount for the
11 original equipment is removed from the investment tota and replaced by the cost of the new
12 replacement equipment. i
13 Q.Could you provide an overvew of your recommendation with regard to
14 Idaho Power's facilties charge?
15 A.As I will explain in more detal below, I recommend that Idaho Power's proposed
16 revised facilties charge percentage of 17.00% should be re-calibrated to take into account the
17 lower rate of retu and other cost components that will result from approval of the Stipulation in
18 this case. I also recommend that the Commission require the Company to calculate the monthy
19 facilties charge using the depreciated value of the initial investment in distrbution facilties in
There is no facilties chage language or percentage chage amount contaed in tarffs
for Schedules 1, 7, or 15, however the Company's cost of servce study in ths docket indicates
$128,677 (2.1 %) of the tota facilties chage revenue is being collected from customers in these
rate classes. There is facilties charge languge and the 20.4% anua rate contaned in Schedule
24, but there is no facilties revenue collected from that class.
Dr. Reading, DI 2
Industral Customers of Idaho Power
1 use at a customer's premises, not Idaho Power's existig and proposed method which ignores
2 depreciation regardless of the age of the equipment. Furer, I recommend that the Commission
3 require Idaho Power to provide customers with the option to own or purchase facilties charge
4 equipment based on a fair calculation of the depreciated book value of the facilties. Finally, I
5 recommend several changes to the facilties charge taff and recommend notices be sent to
6 customers to provide for, and inform customers of, the charge and the ownership options.
7 Q.How much does the Company receive in facilties charges revenue annually?
8 A.Accordig to the cost of service study fied in the curent docket, Idaho Power
9 expects to collect $6,020,018 for these facilties beyond the point of delivery from customers for
10 the test year. The followig pie char displays the revenue collected from each customer class.11 Graph 1
Idaho Power Facilities Charge - 2011 COS
$13,879,0%
$119,0%
$1,573,678,
26%
. RESIDENTIAL (1)
. GEN SRV PRIMARY (7)
IIGEN SRVPRIMARY(9P)
!"AREAlIGHTING (15)
~ LG POWER PRIMARY (19P)
QMUNY ST LIGHT (41)
t:JR SIMPLOT SC
$67,981,1%
12
13 As depicted above, thee-fifts of the revenue (61 %) is collected is from Schedule 19 customers,
Dr. Reading, DI 3
Industral Customers of Idao Power
1 with 26% coming from Schedule 9 customers, and 9% from the J.R. Simplot Company Special
2 Contract Schedule 29 for facilties at their Don Plant in Pocatello. These thee customer classes
3 make up 96% of the total facilties charges collected.
4 Q.You stated that Idaho Power is chargg Schedule 9, 19, and 29 customers
5 for Company-owned facilties beyond the point of delivery at a rate of 20.4% annuall.
6 How does the Company derive this 20.4% rate?
7 A.When I began investigating the derivation of the facilties chage amount in
8 March 2010, I reviewed the Commission's docket that discussed facilties charges. I found the
9 most recent Commission Order addressing the derivation of the facilties charge was Case No.
10 U-1006-298 in 1988. In Order 21836 in that case the Commission stated:
11 Ths case was initiated by Idaho Power's Application on August 27, 1987, to
12 implement a new line extension taff Schedule No. 71. By Order No. 21475
13 issued in ths case and in Idaho Power's general rate Case No. U-I006-265A, we
14 added two additional issues at the behest of several Idaho cities:
15 (1) Are the existing charges in taiff Schedules 15 and 41 providing for 1.75%
16 monthy rate for underground/overhead costs differences in line extension
17 requests excessive?
18 (2) Is the existing charge in tariff Schedule 19 for 1.7% monthly facilities
19 charges excessive?
20 These issues were residua issues that though inadvertence were unaddressed in
21 Case No. U-1006-265A. No pary opposed these existing charges at either the
22 prehearng conference or the hearg in this proceeding. The Cities did not
Dr. Reading, DI 4
Industral Customers of Idaho Power
1 parcipate in either. The Staf stated that it reviewed the charges and that the
2 charges were reasonable. Accordingly, we fid that the two charges in question
3 are reasonable and lay ths issue to rest?
4 The cities addressed the facilties charge issue in the original case, however the issue
5 appears to have been overlooked and not litigated. There have been no orders since the
6 1987 review of the methodology, and the methodology and its inputs have been the same
7 for at least the past 23 years.3
8 Q.Please describe how the Company justified the 20.4% annual rate in
9 1987.
10 A.The philosophy behind the development of the facilties charge is to
11 calculate a charge to the individual customer that mirrors the costs the Company would
12 incur for an equivalent investment. The charge is intended to cover costs associated with
13 the investment and operation of distrbution equipment on the customer's propert such as
14 taes, operations and maintenance, administration and general, etc., and provide the
15 Company with a fair retu on its investment just like any other rate based equipment.
16 Specifically, the Company has determined the facilties chage should be made up of nine
17 elements. Table 1 below indicates the percentage levels for each of the elements fied by
2 Order No. 21836, Case No. U-I006-298 (1988).
3 In Order No. 29576 approving the curently effective Special Contract between Idaho
Power and the J.R. Simplot Company, the Commission stated, "Section 7.2 of the 2004
Agreement sets fort the monthy Facilties Charge that Simplot agrees to pay for the use of the
Company's distrbution facilities. Under the 2004 Agreement, the monthy facilties charge
remains unchanged at 1.7% per month." Order No. 29576, Case No. IPC-E-04-14, at p.2. Tht
order did not analyze the facilties charge methodology.
Dr. Reading, DI 5
Industral Customers of Idaho Power
1 Idaho Power in Case U-I006-298.
Table 1
Sumar Facilties Charge
Costs Schedule 19; U-1006-
298
Rate of Retu 9.902%
Depreciation 0.560%
Income taes 2.119%
Propert tax 0.880%
Other taes 0.250%
Operation & Mait 4.643%
Admin & General 1.556%
Working capita 0.194%
Insurance 0.379%
Total 20.483%
Monthy Rate 1.71%
2 Q.Do you know how the Company calculated the rate of return factor of
3 9.902% used in deriving the 1987 facilties charge from Case No. U-I006-298?
4 A.Work papers fied by Idaho Power in that case indicate that 9.902% was the
5 overall rate of retu for the Company in 1987. They assumed a capital strctue of 50% debt,
6 10% preferred stock, and 40% common stock. The Company used 7.976% for debt, 10.140% for
7 preferred stock, and an equity retu of 12.250% for a weighted cost of capital of 9.902%.
Dr. Reading, DI 6
Industral Customers of Idaho Power
1 Q.Has the rate of return in the facilties charge been 9.902% since 1987?
2 A.Yes. The Company has not updated the charge since 1987.
3 Q.Is this calculation consistent with the Company's authoried rates of return
4 since 1987?
5 A.No. Idaho Power's curent weighted cost of capita is 8.18%, and it has been
6 below the level used in the 1987 facilties charge calculation since 1994. In fact, the rate of
7 retu component for the facilties charge has been higher than Idaho Power's authorized rate of
8 retu since 1994. I have attached as ICIP Exhbit No. 302 Idaho Power's Response to ICIP's
9 Production Request No. 28, wherein Idaho Power sets fort its Commission-approved authorized
1 0 rate of retu in general rate cases since 1987. The authorized rate of retu was set at 9.199% in
11 1994, 7.852% in 2002,8.1% in 2005,8.1% in 2007, and 8.18% in 2008. At all times since 1987,
12 the rate of retu component of the facilties charge has been 9.902%, which has exceeded Idaho
13 Power's actu authorized rate of retu for the last 17 years, at times by as much as 2.05%.
14 Q.Has Idaho Power explained why it has not lowered the authorized rate of
15 return in the facilties charge since 1987?
16 A.Idaho Power's response contaed in ICIP Exhibit No. 302 is that Idaho Power
17 conducted "periodic validations" to verify that the facilties charge was accurate. Prior to ths
18 general rate case, other representatives of the ICIP and I met with Idaho Power to discuss ths
19 charge and the failure to update the rate of retu since 1987. The Company indicated they
20 believed that the depreciation rate was set too low at 0.560% in 1987, and according to the
21 Company, depreciation should have been set at a straight line value for 31 years at 3.226%
22 (1/31=.03226). According to the Company, the over-statement of the rate of retu and the
Dr. Readig, DI 7
Industral Customers of Idaho Power
1 understatement of the depreciation rate essentially canceled each other out so the impact on the
2 overall rate would not change signficantly.
3 Q.During those meetings before this rate case, did the Company state the
4 charge was stil accurately set at 20.4 % annually?
5 A.The Company did provide the ICIP with an updated facilties charge calculation
6 based on 2009 actual charges that would result in a facilties charge rate that would be essentially
7 the same as the one calculated 23 years ago. The Table 2 below displays the updated value
8 supplied by Idaho Power prior to ths rate case, with the percentage differences from the
9 calculation approved in 1987.10 Table 2
Idaho Power Company
Facilty Charges
Summary of Facilties Charges
2010
(based on 200 actual charges)
11
Insurance
Total
Updated
Rae 19
6.870%
3.226%
4.722%
0.49JOAi
0.020%
3.518%
1.185%
0.290%
0.317%
20.64%
12 Q.Has the Company filed for a new facilties charge in this general rate case?
13
Percentage
Points
Difference
-3.03%
2.67%
2.60
-0.38%
-0.23%
-1.13%
-0.37%
0.10%
-0.08%
0.14%
A.Yes. The Company has proposed a new facilties charge calculation, which is set
Dr. Reading, DI 8
Industral Customers of Idaho Power
1 fort in Mr. Scott Sparks Direct Testiony and Exhibits. The Company's proposal before the
2 Commission in this case is to lower the percentage rate, and it therefore appears to concede that
3 the 20.4% charge has been set too high.
4 Q.What is the Company's proposed revision to the charge in this case?
5 A.For Schedule 19, the Company has proposed a rate of 16.92% rounded up to 17%
6 anually, or 1.41 % monthly, and still proposes to assess that charge as a monthy percentage of
7 the undepreciated initial investment in all distrbution facilities instaled at an individua
8 customer's premises in the month of the charge. Because the Company's charge for Schedule 9
9 cross references the charge for Schedule 19, this 17% anual charge would also apply to
10 Schedule 9. The Company has not proposed to update the 20.4% anual facilties charge for the
11 J.R. Simplot Special Contract Schedule 29. The Company has also proposed to update the rate
12 for Schedules 15 and 41, but those paries do not appear to challenge the charge.
13 Q.Are you challenging how the Company derives the facilties charge in this
14 case?
15 A.Yes. A charge of 17% anually assessed into perpetuity agaist the initial
16 investment in equipment that wil never be amortzed or depreciated is an excessive charge. The
17 percentage rate should be calculated based on the lower rate of retu and other costs contaned
18 in the Stipulation adopted in this case. Most importtly with regard to arvig at a fair
19 calculation of the monthly charge, the pricipal amount of the initial investment in distrbution
20 facilties must be depreciated over tie as the equipment ages, just as the pricipal amount of
21 any other rate based asset depreciates over time. As I will explain below, to treat the facilties
22 charge otherwse would result in individua customers subsidizing the rest of the customer class
23 and, depending on how the over-charge is actually credited or not credited to other customers,
Dr. Readig, DI 9
Industral Customers of Idaho Power
1 may even over-inflate Idaho Power's revenues for equipment that is parally or wholly
2 depreciated.
3 Finally, I recommend that the Commission allow cert customers to tae over
4 ownership and control of distrbution facilties on their propert under more fai and reasonable
5 terms than Idaho Power has offered to date.
6 Q.Could you please explain in detail how the facilties charge is calculated and
7 impacts rates?
8 A.Accordig to work papers and discovery responses the Company has provided to
9 ICIP in this case, the Company appears to derive the facilties charge rate by using costs from
10 distrbution facilties equipment on the Company's own side of the meter. The Company
11 initially includes all of the distrbution equipment, including the equipment subject to the
12 facilties charge in the Company's rate base. But the Company has identified the components of
13 stadad distrbution equipment that it believes should be allocated to an individua customer for
14 use of distrbution facilties on the customer's own propert. The Company has used FERC
15 Form 1 account figures to calculate the percentage amount for each identified component that it
16 believes it would need to recover from an individua customer to recover the amounts that it has
17 placed in rate base for these distrbution facilties on the customer's side of the meter. In that
18 maner, the Company calculated the individua components of the facilties charge set fort in
19 the tables above, including income taes, propert taes, other taes, operations and
20 maintenance, administration and general, working capital, and insurance. Along with rate of
21 retu and depreciation, these components make up the Company's estimated charge to the
22 individua customer for its use of the distrbution facilities on its propert.
23 The sum of these nie components is the anua facilties charge rate. The product of the
Dr. Reading, DI 10
Industral Customers of Idao Power
1 monthly rate and the value of the initial undepreciated investment in the distrbution facilties on
2 the individua customer's propert is the customer's monthly facilties charge. For example, if
3 the Company's tota initial investment in equipment in servce at a customer's premises was
4 $100,000, that customer would pay 1.41 % monthly, which is $1,410.00 each month or
5 $16,920.00 per year, for that equipment and any needed maitenance.
6 Once the Company receives the facilties charge revenue from the individua customer, it
7 "credits" that revenue back to that individua customer's class in the cost of service modeL. In
8 theory, the credit thereby makes the rest of the class whole for the distrbution facilties and
9 services already included in rate base for the whole class. The credit should directly offset the
1 0 cost of the distrbution facilties already included in rate base for that customer class. I have
11 included ICIP Exhibit No. 303, which is the Company's explanation of how this "credit"
12 mechanism works in its Responses to ICIP Production Request Nos. 6, 7,46, and 47.
13 Q.You stated earlier that the facilties charge does not take depreciation into
14 account. Does the distribution equipment subject to the facilties charge depreciate in rate
15 base?
16 A.Yes. Ths is the major failure in the rationale of the facilties charge. Facilties
17 charge revenues are treated as a credit back to the customer's class, and hence reduce the
18 revenue required from that class when rates are set in a general rate case. As I stated above, the
19 value of the facilties chage revenue and its credit back to the customer class's revenue
20 requirement should directly mirror the costs already included in the customer class's revenue
21 requirement for that customer's distrbution facilties. The Company does not account for the
22 fact that the Company is depreciating the same equipment in rate base while at the same tie
23 charging individua facilties charge customers for the accumulation of original, undepreciated
Dr. Reading, DI 11
Industrial Customers of Idaho Power
1 costs - irrespective of the age of the equipment. This means facilties charge customers are
2 compensating the Company for a portion of rate base that has already been depreciated. In some
3 instaces, it appears that equipment was fuly depreciated by the time the Company even began
4 utilzing the facilties charge, yet the Company began charging individua customers the facilties
5 charge on the ful initial value of the completely depreciated equipment.
6 ICIP discovered this treatment only afer extensive discovery requests. I have included, as
7 ICIP Exhibit 304, Idaho Power's Responses to Production Request Nos. 21, 22, 23, 24, 25, 45,
8 60,64,65,66,67,69, and 71. Through these responses the Company explains the lack of
9 depreciation. The Response to ICIP Request No. 65 is most direct - "The use of depreciated
10 values has never been approved by the Commission and the Company has never used
11 depreciated values to calculate monthy facilties chages."
12 Q.Do you think this is fair rate treatment?
13 A.No. This tratment either amounts (1) to an unfair subsidy from individua
14 facilties charge customers to other ratepayers, or (2) if the Company is not crediting the entire
15 amount of facilties charge revenue back to the customer class, ths treatment could be resulting
16 in the Company being overcompensated for depreciated assets. It is not entirely clear to me what
17 the impact of the charge is on all customers. For example, the J.R. Simplot Company operates
18 its Don Plant under a Special Contract subject to its own rate class '- Schedule 29. It is not clear
19 how the Company credits back this significant facilties charge revenue from this customer.
20 Q.What is the Company's justification for this diferent treatment between the
21 individual customer's facilties charge rate and the amount included in that customer's
22 class's revenue requirement?
23 A.The Company's justification is not entirely clear to me. ICIP Exhbit 304
Dr. Reading, DI 12
Industral Customers of Idao Power
1 contas their justification in Response to ICIP Production Request No. 69(b). The Company
2 stated:
3 Because the facilties charge calculation is based on a levelized revenue
4 determination method and base rates are determined using a single test period
5 method, there will always be differences in the anua revenue requirements
6 determined under each method. These timing differences or "subsidies" go in
7 either direction for individual customers depending on the average age of the
8 facilties subject to the facilties charge. For example, a customer with newer
9 facilties will pay less in facilties charges than the actu anua revenue
1 0 requirement with the rest of the customer class paying the difference though their
11 base rates. The opposite is tre for customers with older facilties who pay more
12 in facilties charges than the single-year revenue requiment would suggest.4
13 This does not really explain the need for this differential treatment, or why the Company canot
14 calculate the facilties charge based on a single test period method similar to all other rates. It
15 also appear to concede that the charge constitutes a subsidy by individua ratepayers whenever
16 that individua customer's equipment is "older."
17
18
Q.Do most facilties charge customers have "newer" equipment?
A.Not based on the evidence provided by Idaho Power. Idaho Power provided the
19 average age of the facilties charge equipment in Response to ICIP Production Request No. 60,
20 which is contaed in ICIP Exhibit 304. The average ages of equipment for the priar facilties
21 charge customer classes are set fort below:
4 ICIP Exhibit 304, Idaho Power's Response to ICIP Production Request No. 69(b).
Dr. Reading, DI 13
Industral Customers of Idao Power
1 Table 3
2
Customer Class Average Age of Equipment
Schedule 9 17 years old
Schedule 19 18 years old
Special Contract Schedule 29 24 year old
3 This clearly shows that on average customers do not have "newer" equipment, and that
4 individual customers are being overcharged for distribution facilties on their premises. As I
5 explai below, the dollar weighted age of the equipment is even older than these average ages for
6 the customer sites I have analyzed.
7 Q.What happens if a piece of facilties charge equipment fails prior to
8 expiration of its assumed 31-year depreciation schedule?
9 A.Again, ths equipment does not appear to be failing early on average. However,
10 Idaho Power and other customers do not appear to lose when equipment fails early. When ICIP
11 representatives and I fist met with Idaho Power regarding this charge, Idaho Power
12 representatives stated the lack of depreciation in the facilties chage was justified in par because
13 Idaho Power would have to replace any equipment tht did not last for its ful usefu life. Idaho
14 Power believed that if equipment failed and had to be replaced prior to the 31 years assumed in
15 the depreciation schedule used in the levelized facilties chage rate, the facilties chage
16 customer would benefit from Idaho Power replacing that piece of equipment at no additional cost
17 to the customer. But this reasoning overlooks thee importt points. The insurance
18 mechanisms and effect of early failure of equipment are explained in the Company's Responses
19 to ICIP's Production Request Nos. 14, 15, 16, 18,53,54,58, 70, and 73, which I have included
Dr. Reading, DI 14
Industrial Customers of Idao Power
1 as ICIP Exhbit No. 305.
2 First, the facilties charge customer pays for "insurance" as one of the components of the
3 facilties chage. Idaho Power has stated in discovery that the actu insurance policy, accounted
4 for in the FERC Form 1 account from which the chage is derived, does not cover losses typical
5 with facilties charge equipment. Ths is demonstrated in the Company's Response to ICIP's
6 Production Request No. 24( c), where the Company stated very clearly tht it has never made an
7 insurance clai for facilties charge equipment. Because the insurance charge to facilties charge
8 customers includes a chage for an insurance policy that does not cover facilties charge losses,
9 that facilties charge insurance revenue should not be considered to be used by Idaho Power to
1 0 actuly pay for the insurance policy. Instead, those payments for insurance from the facilties
11 chage customer could be considered to be used in the aggregate to replace any failed equipment.
12 Second, Idao Power has also stated tht the replacement costs for facilties charge
13 equipment that fails early are passed onto other ratepayers, including the individua facilties
14 charge customer, though the Company's recovery under its "self-insurance" provisions. That is,
15 customers are Idaho Power's "self insurance," and the customers' rates ultiately make the
16 Company whole for any unecovered expenditues associated with facilties charge equipment
17 which fails prior to the Company recovering its full expenses.
18 In addition, it can be reasonably assumed, due to inflation, the cost of the equipment
19 replaced wil be more expensive than the older failed equipment included in the tota amount of
20 undepreciated Company investment. The investment amount would increase, and the charges to
21 the facilties charge customer would therefore increase.
22 Thus, in the rare case that a piece of equipment fails before completion of the assumed
23 31-year life, the Company is kept whole by ratepayers "self-insuring" Idaho Power, and the other
Dr. Reading, DI 15
Industrial Customers of Idao Power
1 ratepayers should be kept whole by the payments for insurance on the facilties charge for an
2 insurance policy that does not cover facilties chage equipment failure. Agai, those insurance
3 payments paid by facilties chage customers are credited back to reduce the revenue requirement
4 of the customer's customer class. In sum, the arguent tht the equipment might fail and have
5 to be replaced prior to the individua customer paying for it completely though the 31-year
6 levelized facilties charge rates is simply not a justification for ignoring depreciation in the
7 facilties charge.
8 Q.You stated that some of the equipment that was in rate base was fully
9 depreciated at the time the Company began charging the facilties charge percentage of
1 0 20.4 % against the initial investment of the fully depreciated equipment. Could you provide
11 evidence of that?
12 A.Yes. In fact, the Company admits ths is the case in Response to ICIP Production
13 Request Nos. 65, 66, and 67, contained in ICIP Exhbit No. 304. For example, Idaho Power
14 stated tht the oldest piece of facilties charge equipment for a Schedule 19 customer was
15 instaled in 1945. That piece of equipment was 31 years old and thus presumably fuly
16 depreciated in rate base by the time Idaho Power initiated the facilties chage for Schedule 19 in
17 1976. However, Idao Power admits that it used the value of the initial investment in tht piece
18 of 1945 equipment when Idaho Power fist calculated the facilties charge in 1976 and has done
19 so ever since in calculating tht Schedule 19 customer' s monthy facilties charge. The same is
20 tre for a Schedule 9 customer still paying a chage calculated against the initial investment on a
21 piece of equipment from 1969, and for the Simplot Special Contrct Schedule 29 customer
22 paying for a 47 year old piece of equipment. These items should have long ago been fuly paid
23 off by rates, but individua customers are. still paying for them.
Dr. Reading, DI 16
Industrial Customers of Idao Power
1 Q.Do you have any examples of an individual customer with very old facilties
2 charge equipment?
3 A.Yes. At the request of one ICIP member company, the J.R. Simplot Company,
4 Idaho Power completed a ful audit of all of Idaho Power's equipment on Simplot s propert. As
5 shown in Graph 2 below the oldest facilties charge equipment for which Simplot is paying the
6 facilties charge dates back to immediately following World War II in 1945.
7 Graph 2
JRS Facility Charge Equipment By Age
70
60
50
10
40
30
20
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0(;~
~
. Average Age . Oldest . Newest
8
9 The oldest items the Company is applying facilties charges to ar 66 years old. The items ar a
1 0 transformer and switch installed in 1945 at Simplot s Caldwell plant, which is a Schedule 19
11 customer. As discussed above, a safe assumption would be that the transformer and switch have
Dr. Reading, DI 17
Industrial Customers of Idao Power
1 long since been fuly depreciated and taen off Idaho Power's books, yet Simplot is curently
2 being charged 20.4% anualy for the origial cost of the trformer and switch when instaled
3 in 1945. Depending on how the accountig has been handled in the rate proceedings since 1976
4 when the Company initiated the facilties chage for Schedule 19, those payments have either
5 been credited back to subsidize the rates of other customers in Schedule 19, or, if not properly
6 credited, the payments may have otherwse increased Idao Power's revenues above what should
7 have been authorized.
8 Q.If Customers are paying for facilties installed as early as 1945, is that when
9 the Company began the facilties charge?
10 A.Apparently not. The Company has explaied in Response to ICIP's Production
11 Request Nos. 45 and 64, which are included in ICIP Exhbit 304, that Company records indicate
12 that facilties charges have in place since Februar 1995 for Schedule 9, Janua 1976 for
13 Schedule 19, and 1964 for one special contract customer. The Company explained fuer that
14 prior to implementing the facilties charge provisions, the costs associated with most customer-
15 dedicated distrbution facilties instaled beyond the Company's point of delivery were included
16 in the Company's general rate base and allocated to the associated customer class. Ths would
17 mean, at least for the transformer and switch instaled in 1945, that the J.R. Simplot Company
18 began paying facilties charges based on the original cost for a piece of equipment that was 31
19 years old when the charges began in 1976, and for which customers had already paid for 31
20 years.
21 Q.Do you have any information regarding the total amounts paid in facilties
22 charges and the accumulated original cost of the equipment for any customers?
23 A.The data we have is, again, for the J.R. Simplot Company. As shown in Graph 3
Dr. Reading, DI 18
Industral Customers of Idaho Power
1 below, it is apparent that Simplot has paid an amount in facilties charges several times over the
2 cost of installed equipment with plenty left over for fair operation and maintenance expenses. At
3 two of Simplots plants, Caldwell and WSI, Simplot has paid in facilties charges more than four
4 times the accumulated original costs of the equipment curently installed.
5
6
7 Graph 3
8
Total JRS Facilities Charges
$12
$10
$8
$6
$4
$2
$0 o~ ~ e(.'V b.: ~e
(,:; r¿4;¥J
_\9 ~~ '\~~
~~~
~ ~'5q Á..1t~ ~~
6(.~
.~~ ~e'i~ol ~
Ç)0
. Installed value ~ Paid to date
9 Q.Who decides whether the Company can place distribution equipment on the
10 customer's propert and charge the customer the monthly facilties charge rate?
11 A.According to the Company's taiffs, the Company has the sole option to place
12 equipment on the customer's premises. The taffs for Schedules 19 contans the following
Dr. Readg, DI 19
Industral Customers of Idao Power
1 language:
2 At the option of the Company, transformers and other facilties instaled
3 beyond the Point of Delivery to provided Primar or Transmission Servce may
4 be owned, operated, and maintaied by the Company in consideration of the
5 Customer paying a Facilties Charge to the Company.
6 According to ths languge, Idaho Power can place distrbution facilties on a customer's
7 premises without even asking the customer for permssion to enter their propert. Additionally,
8 the Company can refuse a customer's request for the Company to provide distrbution facilties
9 on the customer's propert even if the customer is willng to pay the facilties charge.
10 Q.Are you aware of whether the Company obtains any formal consent from
11 customers prior to placing distribution facilties on their propert and charging the
12 customer for such equipment under the facilties charge?
13 A.I have included ICIP Exhbit 306, which contans Idaho Power's Responses to
14 ICIP's Production Request Nos. 19,20,57, and 72. Those responses explain Idaho Power's
15 position on its authority and the customer's consent that it obtais. To sumarze, Idaho Power
16 has stated that it only places facilties beyond the point of delivery afer it receives a request from
17 a customer, but Idao Power has not obtaned wrtten consent from customers in the form of a
18 unform contract or otherwse. Idaho Power believes a customer's request and the taff itself
19 provides it with adequate legal permission to enter onto a customer's propert and to subject the
20 customer to the facilties charge for whatever equipment the Company chooses to place there. In
21 2010, Idaho Power began requesting tht customers sign a "Service Request form" indicating
22 that the facilities chage will be added or adjusted on a monthy power bil. However, even ths
23 form does not contain any express explanation of the chage that would allow customers to
Dr. Reading, DI 20
Industral Customers of Idaho Power
1 understad they are agreeing to pay 20.4% anualy on the initial investment of an asset that will
2 never be depreciated.5 Also, Idaho Power has not stated that it keeps any formal record of
3 customer "requests" prior to 2010.
4 Q.Can customers purchase the distribution facilties on their propert for the
5 remaining book value in order to stop paying the charge?
6 A.Idaho Power does not appear to be allowig that option at ths point in time. I
7 have attched ICIP Exhbit No. 307, which contans the Company's Reponses to ICIP's
8 Production Request Nos. 9, 10, 11, and 68 on ths issue as well as correspondence between the
9 ICIP representatives and Idaho Power representatives in the year prior to this rate case. The
10 Company allowed one customer - the Sinclair Oil Company dba Sun Valley Co. -- to purchase
11 distrbution facilties at remaining book value in Case No. IPC-E-05-16. However, the Company
12 has now taen the position that it will not sell distrbution facilties to other customers.
13 Q.Are you aware of any customers who have tred to take over ownership and
14 control of all distribution facilties on their premises and thereby stop paying the charge?
15 A.Yes. As described in greater detal in ICIP Witness Don Stuevant's Direct
16 Testimony and evidenced in letters and emails contaned in ICIP Exhbit No. 307, there were
17 discussions in the past year between Simplot and Idaho Power for the potential sale of the
18 facilties subject to the facilties charge. Durng the course of the discussions Idaho Power made
19 the decision tht it would not be willng to sell the facilties, at any price, to the customer. Idaho
20 Power stated that the factors that went into that decision were: (1) the Company's statutory
21 obligation under I.C. § 61-328 to hold other customers harless in selling utility owned assets;
22 and (2) the way the Company rus its business as a reguated public utility.
5 See ICIP Exhbit No. 306, p. 6.
Dr. Reading, DI 21
Industral Customers of Idaho Power
1 Q.Please explain your understanding of why the Company believes it cannot
2 hold other customer's harmless in a sale of the assets at book value?
3 A.According to Idaho Power, any reduction in facilties charge revenue though the
4 sale or removal of the Company's equipment would result in signficant increases in rates for the
5 customer class tht was being credited with those specific facilties charge revenues. Because of
6 the credit back to the customer class's revenue requirement, Idaho Power believes that a
7 reduction in facilties charge revenue afer the sale of the facilties charge equipment would
8 result in a corresponding increase in the revenue requirement for tht customer class.
9 This approach ignores the other side of the facilties charge equation. For example,
1 0 should the customer purchase the facilties, the rate base and maintenance costs assigned to that
11 customer class would be reduced because the Company should remove the equipment from the
12 revenue requirement altogether. If the Company no longer owned the facilties, then it would no
13 longer incur the other costs that are used in the calculation of the facilties charge. The charges
14 that should no longer exist anywhere in the Company's revenue requirement would include
15 taes, insurance, operations and maintenance, administrative and general, and workig capita.
16 The customer class's revenue requirement would be "credited" with the book value "sale price"
17 paid by the individua customer, and the class would thereby be kept whole. For longer lived
18 assets discussed above dating back to 1945, the customer has paid for the equipment several
19 times over and has been subsidizing other ratepayers. If the facilties were sold for their
20 depreciated value of zero dollars, the Company and other customers would still be made whole
21 and the associated costs would cease. Basically, if the facilties go away then all the costs should
22 also go away as well. If the customer pays the depreciated book value, the two sides of the
23 equation balance out and should keep all paries whole. But as I testified earlier, Idaho Power is
Dr. Reading, DI 22
Industral Customers of Idao Power
1 not willng to agree to ths arangement.
2 Q.Has Idaho Power provided customers with any option to ever stop paying the
3 charge once Idaho Power places distribution facilties on the customer's propert?
4 A.The taiff only provides an option for the customer to pay Idaho Power to remove
5 the facilties. The taff for Schedule 19 states:
6 In the event the Customer requests the Company to remove or reinstal or
7 change Company-owned Facilties Beyond the Point of Delivery, the Customer
8 shall pay to the Company the "non-salvable cost" of such removal, reinstalation
9 or charge. Non-salvable cost as used herein is comprised of the tota depreciated
1 0 costs of materials, labor and overheads of the facilties, less the difference
11 between the salvable cost of material removed and removal labor cost including
12 appropriate overhead costs.
13 Q.How would that process work?
14 A.I have included ICIP Exhibit No. 308, which includes the Company's Response
15 to ICIP's Production Request Nos. 12 and 51 and two letters regarding the removal option. To
16 sumarze, it would be a time consuming and diffcult process for the customer, which would
17 include shuttng off power to the customer's facilties. Although ths option has been in place for
18 some time now, it appears that no customers have exercised ths option. I am aware that J.R.
19 Simplot Company has expressed interest in exercising ths option to the Company afer the
20 Company refused to sell the equipment. The Company has recently responded with an outline of
21 a very complicated valuation process to even provide the customer with an estiate of the cost of
22 removal. In fact, the Company suggested that J.R. Simplot Company must pre-pay Idaho Power
23 to even obtan a removal cost estimate and removal plan before they can even determine the cost.
Dr. Reading, DI 23
Industrial Customers of Idaho Power
1 The actual removal process may requie "multiple project plans tht reflect phased work efforts."
2 I have included the Company's letter to the attorney assisting J.R. Simplot Company, which
3 explains the Company's removal proposal in ICIP Exhbit No. 308.
4 Q.What are your thoughts on that option the Company has provided?
5 A.It is entirely uneasonable and unecessar. The customer has obviously paid for
6 its equipment many times over, and rather th agree to sell the equipment or arange some
7 mechansm that will not require interrpting servce, Idaho Power is now insisting on an
8 unecessar removal process. It is not even clear that Idaho Power will be able to fid a use for
9 all of the J.R. Simplot Company equipment if it is removed, which would of course increase the
10 removal cost to J.R. Simplot Company. From an economist's perspective, this makes no sense at
11 all when the equipment is already being used in an effcient maner. The Company should not
12 provide removal as the only option because the Company has now proved that it is an
13 unworkable and unealistic option.
14 There are valuable benefits to the customer of owning its own facilties, and the
15 Company should provide its customers with a realistic and fair opportty for such ownership.
16 If a customer owned the facilties on their propert, the customer could maintan them and not be
17 requied to compensate Idaho Power for their rate of retu. Customers could also take
18 advantage of any depreciation and ta benefits. Also, as described in Mr. Don Stuevant's
19 testimony, there are considerations with makng sure the customer is adequately insured for any
20 accidents tht may occur on its own property, which may compel certn customers to prefer to
21 own the equipment themselves.
22 I understad tht when J.R. Simplot Company approached Avista Utilities with very
23 similar concerns regarding that company's facilties charge for a plant in Washington, Avista
Dr. Reading, DI 24
Industral Customers of Idaho Power
1 agreed to sell the facilties to J.R. Simplot Company and to reduce the facilties charge to a fair
2 operations and maintenance leveL. It is not clear why Idaho Power canot do the same for its
3 customers.
4 Q.Idaho Power's proposal is to lower the facilties charge from 20.4% to
5 17.00% annuall. What are your comments on that proposal?
6 A.Updating the percentage is a good sta, albeit long overdue. Also, the
7 Company's proposed facilities chage percentage would need to be recalculated to match the
8 costs contaned in the Stipulation. For example, the proposed facilties chage rate in the rate
9 case filing was based on the Company's curent weighted cost of capita of8.18%. The
10 Stipulation specifies 7.86% rate of retu on page 4. Therefore, the rate of retu component
11 would need to be adjusted downward. Also, the Company requested a revenue increase of
12 approximately $83 milion; the Stipulation reduces that request by $43 millon down to $34
13 millon. The corresponding deceases in the FERC Form 1 accounts used to calculate the
14 facilties charge should also be updated to ensure that the chage and its credits back to each
15 customer class closely match the value of the assets contaned in tht class's revenue
16 requirement. Furer, as described below, I recommend tht the revised percentage be calculated
17 against the depreciated value of the initial investment using appropriate amortization schedules
18 discussed fuer below.
19 I also recommend that the Commission consider investigating the components of the
20 proposed charge other than the lack of depreciation. The FERC Form 1 accounts used for the
21 calculation the facilties charges are based primarily on the Company's distribution system.
22 However, depending on the customer, the cost to Idaho Power for the facilties could var
Dr. Reading, DI 25
Industrial Customers of Idaho Power
1 signficantly. For example, the Operation & Maintenance component charge in the proposed
2 rates is 3.58% which means the Company is collectg $1.25 milion anualy to maintan
3 facilties on the customers' propertes. Because these facilties are on a customer's propert, in
4 many cases, they would require signficantly less attention th distribution systems located on
5 public roads or in rual areas. A time and materials charge to each individual customer may be
6 more appropriate than ths system wide average calculation. Each of the individual components
7 tht make up the facilities charge could be subject to similar analysis. For customers who wish
8 remain on the facilties chage, I would recommend the Commission open a docket to examine
9 the equity of each of the elements tht make up the facilties charge.
10 Q.What are your overall recommendations for changes to the ownership
11 options for facilties charge equipment?
12 A.Over a 15 year time period at an anua interest rate of over 14%, the payback
13 equals 2.5 times. Thus, I propose it would be fair for the Company to assign ownership of
14 facilties charge equipment to existing facilties charge customers who have paid overall facilties
15 chage rates of more than 2.5 times the original cost for the equipment curently instaled. For
16 example, the J.R. Simplot Company has paid for their equipment 3.4 times, when a firm has paid
17 ths many times over it would seem fair tht they should be allowed to just assume ownership.
18 For existing facilties charge customers who have not paid more th 2.5 times the original cost,
19 I propose that the Company provide such facilties chage customers with the option to purchase
20 the facilties at depreciated book value for each piece of equipment based the Company's
21 Commssion-approved depreciation schedule for tht specific tye of equipment.
22 I also recommend that the Commission direct Idaho Power to implement an ownership
23 option which allows the customer to tae over ownership of the equipment and pays a "limited
Dr. Reading, DI 26
Industral Customers of Idaho Power
1 facilties chage" for the Company's ongoing operation and maintenance expense. This was the
2 resolution tht J.R. Simplot Company reached amicably with Avista Utilties in Washigton, and
3 it would likely be usefu to Idaho customers who would like to have Idaho Power continue to
4 operate and maitain the equipment necessar for delivery to the customer.
5 Q.Do you have an alternative proposal for a purchase price if the Company
6 believes it is unable to calculate the depreciated book value for each piece of equipment
7 based the Company's Commission-approved depreciation schedule for that specifc type of
8 equipment?
9 A.Yes. I believe that the remaining book value can be approximated by calculating
1 0 the initial value of all equipment instaled at a customer's facilty by an appropriate depreciation
11 schedule that would apply to all facilties charge equipment. An appropriate depreciation
12 schedule can be estimated by determining the dollar weighted age of the facilties chage
13 equipment at actual customers' premises with facilty charge equipment. Calculating the dollar
14 weighted age of the equipment provides a more accurate pictue of the economic or rate impact
15 of the equipment's age th a simple average age of the equipment would provide. Using data
16 supplied by the J.R. Simplot Company for the Caldwell Plant and the Don Plant, I developed a
17 dollar weighted age of facilties charge equipment. This first requires a simple calculation of the
18 original cost of the equipment multiplied by the age for each item. Next, I calculated the percent
19 of the tota facilties charge dollar amount for each year beginng when the oldest piece of
20 equipment was installed to the present. The results are shown in Graphs 4 and 5 below.
21
22
23
Dr. Reading, DI 27
Industrial Customers of Idaho Power
1 Graph 4
J.R. Simplot Caldwell Plant Percent of Original Year Investment
By Dollar Weighted Age
10%
r~/rr/í~
I
-)f
100%
90%
80%
70%
60%
50%
40%
30%
20%
0%
1945 1954 1959 1961 1964 19661969 1971 1973 1975 1978 1981 1983 1985 19871989 1991 1994 1997 2002 2007 2009
Year
_Percent of Original Year of Investment by Dollar Weighted Age
2
3 Graph 5
J. R. Simplot Don Plant Percent of Original Year Investment By
By Dollar Weighted Age
30%
~J-;,
.~
1
~..~~~
100%
90%
80%
70%
60%
SO'
40%
20'
10%
0'
1964 1966 1969 1971 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2008
Year
4 ..Percent of Original Year of Investment by Dollar Weighted Age
Dr. Reading, DI 28
Industral Customers of Idaho Power
1 As can be seen in Graph 4 for the Caldwell Plant, approximately half (49.2%) of the
2 cumulative amount of the dollar weighted age of the facilties charge equipment pre-dates 1975.
3 In other words, from a dollar value perspective, half of the equipment was installed prior to
4 1975. That was 30 years afer the first piece of equipment was instaled by Idaho Power, and 36
5 years ago from the present. For the Don Plant, depicted in Graph 5, with the first piece of
6 equipment instaled in 1964, 60% of the dollar weighted age of the facilties charge equipment
7 predates 1986, which is 25 years ago. The Company uses 31 years in their calculation of the
8 depreciation component of the facilties charge rate. However, Graphs 4 and 5 demonstrate that,
9 from a dollar value perspective, much of the equipment at these two actu customer sites is well
1 0 beyond its 31- year life expectancy, and J.R. Simplot Company has been paying for much of the
11 equipment long afer it has been fuly depreciated in rate base. Because these dollar-weighted
12 ages of much of the equipment at these representative customer sites show tht the customer has
13 already paid for fully depreciated assets beyond Idaho Power's assumed 31-year life, customers
14 should be entitled to purchase the equipment at the remaining book value on a more accelerated
15 depreciation scale than Idao Power's assumed 31-year scale.
16 Each customer's facilties would have a different dollar weighted age profie, but these
17 representative customer sites demonstrate that an accurate calculation of remaining book value
18 would require the Company to use a depreciation schedule far shorter than 31 years. Otherwse,
19 customers will get no credit for their ongoing payment for facilties charge equipment that has
20 long been fuly depreciated. Thus, if Idaho Power canot calculate the actu remaining book
21 value, I recommend for simplification and compromise that customers be allowed to purchase
22 the equipment from Idao Power at a depreciated book value using a.15-year straight line
23 depreciation schedule.
Dr. Reading, DI 29
Industral Customers of Idao Power
1 Q.How do you propose the Company modif the facilties charge for those
2 customers who do not want to buy the equipment from the Company?
3 A.I recommend that Idao Power's proposed facilties charge percentage of 17.00%
4 anually be re-calibrated for the costs contaed in the Stipulation, and going forward be
5 adjusted consistent with general rate case results. I also propose tht the re-calibrated percentage
6 amount be charged against the depreciated value of the equipment using a 15-year straight line
7 depreciation schedule for equipment already instaled, and the Company's approved depreciation
8 schedule for the specific tye of equipment for any new or replacement equipment.
9 Q.Do you have any other recommendations?
10 A.Yes. I recommend that the Commssion require Idaho Power to inform each
11 facilties charge customer in wrting withn 90 days informing customers of the facilties charge
12 and its costs over the life of the equipment and to inform them of their ownership options
13 outlined above. This should include a disclosure showing payoff amounts at different
14 milestones, effective interest rates and other components of the charge and require written
15 consent from the customer. The buy-out option described above should be clearly provided for
16 in the taiff. Also, the taiff itself should state that a customer can choose to own its own
17 distrbution facilties, rather th be stated in a maner that appears to provide only the Company
18 with the option to decide whether to sign a customer up for the facilties charge. Finally, Idao
19 Power should allow for a mix of ownership between the Company and customers on customer
20 propert. That would allow the customer to have the choice of which equipment will be owned
21 by itself or be subject to the facilties charge.
22 Q.Does that conclude your facilties charge testimony?
23 A.Yes.
Dr. Reading, DI 30
Industral Customers of Idaho Power
1 Q.You stated earlier that you would also testify as to the Energ Efficiency
2 Rider percentage. Could explain that issue?
3 A.The curent level being collected by the Energy Effciency Rider (EE Rider) is
4 4.75% of a customer's base rates. The Company has proposed moving the recovery of
5 approximately $11.3 milion projected for thee demand response programs' incentive payments
6 into "normal" base rates as a net power supply expense rather than being collect though the EE
7 Rider.6 At the curent level of Company's sales revenue, leaving the EE Rider rate at 4.75%
8 afer removing the $11.3 millon of demand response costs would mean Idaho Power would
9 collect approximately $7.5 milion more than the curent level of overall demand side
10 management expenditues.
11 Even though some demand side management costs will be collected in base rates rather
12 than though the EE Rider, the overall rate impact of Idaho Power's proposal on customers is the
13 same as increasing the Rider by $11.3 milion. If the EE Rider is left at 4.75%, and the demand
14 response programs are moved to base rates, customers would be effectively paying the
15 equivalent of a 6.1 % EE Rider. A dollar for dollar reduction in the rider from removing the
16 $11.3 millon demand response incentive programs would equa an EE Rider of approximately
17 3.8%.
18 Q.What is your recommendation for the treatment of the EE Rider in this
19 case?
20 A.A dollar for dollar reduction to 3.8% may be an equitable and justifiable path,
21 paricularly since ths is how I understad the Commssion treated Rocky Mountan Power's EE
6 Idaho Power Application, IPC-E-II-08, p. 6.
Dr. Reading, DI 31
Industral Customers of Idaho Power
1 Rider afer one of its conservation programs was moved out of the rider.
7 However, the ICIP
2 fuly supports the Commission Stas testimony and recommendation of lowerig the EE Rider
3 to 4.0%.
4 Q.Does this conclude your testimony?
5 A.Yes.
7 Order No. 32196, Case No. PAC-E-1O-07, p. 26.
Dr. Reading, DI 32
Industral Customers of Idaho Power
BEFORE THE
IDAHO PUBLIC UTILITIES COMMSSION
CASE NO. IPC-E-II-08
INDUSTRI CUSTOMERS OF IDAHO POWER
READING,DI
TESTIMONY
EXHIBIT NO. 301
Dr. Don Reading's Curriculum Vitae
Pres e It t po s ito It
Educ ation
Honors and
awards
Profe ¡sio Ita'
and business
history
Don C. Reading
Don C. Reading
Vice President and Consulting Economist
B.s., Economics - Utah State University
M.S., Economics - University of Oregon
Ph.D., Economics - Utah State University
Omicron Delta Epsilon, NSF Felowship
Ben Johnson Associates, Inc.:
1989 Vice President
1986 ---- Con suItig Econ omist
Idaho Publi Utilies Commission:
1981-86 Economist/Director of Policy and Administration
Teaching:
1980-81 Associate Professor, University ofHawai-Hilo
1970-80 Assocate and Assistant Professor, Id aho State University
1968-70 Assistant Professor, Middle Tennessee State University
Exp e Tie nee Dr. Read ing provide s expert testim ony con cerning ec onom ic and regulatory issues.
He has testified on more thn 35 occasions before utity reglatory commissions in
Alaska, California, Colorado, the District of Columbia, Hawaii, Idaho, Nevada,
North Dakota, TexaS, Utah, Wyoming, and Washington.
Dr. Reading has more than 30 years experience in the field of economics. He has
participate in the development of indices reflectig economic trends, GNP growth
rates, foreign exchange markets, the money supply, srock market levels, and
inflation. He has analyzed such public policy issues as the minimum wage, federal
spending and taxation, and import/ export balances. Dr. Reading is one of four
economists providing yearly forecasts of sttewide personal income to the State of
Idaho fo r puroses 0 f establishing state per sonal incom e tax rates.
In the field of telecommunicatins, Dr. Reading has provided expert testimony on
the issues of maignal cost, price elasticity, and measured service. Dr. Reading
prepared a stare-specifc snidy of the price elastcit of demand for local telephone
service in Idaho and recentl conducted research for, and direcred the preparatin
of, a repor to the Idaho legislature regarding the status of telecommunicatins
competition in that state.
Exhibit No. 301
IPC-E-11-08
Reading, ICIP
Page 1
.
Don C. Reading
Dr. Reading's areas of expertse in the field of electric power include demand
forecasting, long-range planning, price elaslicity, marginal and average cost pricing,
production-simultion modeling, and econometric modeling. Among his recent
cases was an electrc rate design analysis for the Industral Customers of Idaho
Power. Dr. Reading is curently a consultant to the Idaho Legislature's Committee
on Electrc Restructuing.
Since 1999 Dr. Reading has been affited with the Climate Impact Group (CIG) at
the Univeisity of WashinglOn. His woi: with the CIG has involved an analysis of
the impact of Global Warming on the hydo facities on the Snake River. It also
includes an investigaton into water markets in the Northwest and Florida. In
addition he has analyzed the economics of snowmaking fur ski area's impacted by
Global Warming.
Among Dr. Reading's recent projects are a FERC hydropower reicensing study (for
the Skokomish Indian Tribe) and an analysis of Nortern States Power's Nort
Dakota rate design proposals afrectig large industrial customers (fur J .R. Simplot
Company). Dr. Reading has also performed analysis for the Idaho Governor's
Office 0 f the impa ct on the Nortwest Po wer Gr id of varous plans to increase
salmon runs in the Columbia Rier Basin.
Dr. Reading has prepared econometric forecasts for the Southeast Idaho Council of
Governments and the Revenue Projeclion Committee of the Idaho State Legislanie.
He has also been a member of several Northwest Power Plannin Council Statistical
Advisory Committees and was vice chairman of the Governor's Economic Research
Council in Idaho
While at Idaho State University, Dr. Reading performed demographic studies using a
cohort/ surival model and several economic impact studies using input/ outpUt
analysis. He has also provided expert testmony in cases concerning loss of income
resulting from wrongful death, injur, or employment discrination. He is
currently a adjunct professor of economis at Boise State University (Idaho
economic history, urban/regional economics and labor economic.)
Dr. Reag has recently completed a public interest wate rights trsfer case. He is
currentl a member of the Boise City Public Works Commission.
Exhibit No. 301
IPC-E-ll-08
Reading, ICIP
Page 2
..
Don C. Reading
Publications "Energizing Idaho", Idaho Issues Online, Boise State Universit, Fall 2006.
ww.b oisestate.edul history lissueso nlinel fal12006 _issues lind ex.htt 1
The Economic Impact of ù:e 2001 Salmon Season In Idaho, Idaho Filh and
Wildlife Foundation, April 2003.
The Economic Impact of a Restored Salmon Fishery in Idaho, Idaho Filh and
Wildlife Foundation, Apri~ 1999.
The Economic Impact ofSteelhead Fishing and the Retum of Salmon Fishing in
Idaho, Idaho Fish and Wildlife Foundation, September, 1997.
"Cost Savings frm Nuclear Resources Reform: An Econometric Model" (with E.
Ray Can terbery and Ben j oh nson) Southern Economic Journal, Spring 1996.
A Visitor Anlysis for a Birds of Prey Public Attaction, Peregrne Fund, Inc.,
November, 1988.
Investigation of a Capitalization Rate for Idaho Hydroelectrc Projects, Idaho State
Tax Commission, june, 1988.
"Post-PURPA Views," In Proceedings of the NARUC Biennial Regulatory
Conference, 1983.
An Input-Output Analysis of 1he Impact from Proposed Mining in 1he Challs Area
(with R. Davies). Public Policy Research Center, Idaho State University, February
1980.
Phosphate and Southeast: AS ocio Economic Anafysis (with J. Eyre, et al). Government
Research Institute of Idaho State University and the Sooth east Idaho Council of
Governments, August 1975.
Estimatg General Fund Revenuer of the State o/Idaho (with S. Ghazanfar and D. Hol1ey).
Center for Business and Economic Research, Boise State Universit, june 1975.
"A Note on the Diltribution of Federal Expenditures: An Interstate Comparion,
1933"1939 and 1961-1965." In The American Economist,
Vol. XVII, No.2 (Fal11974), pp. 125-128.
"New Deal Actity and the StaleS, 1933-1939." In JONrnal of Economic History, Vol.
XXXIII, December 1973, pp. 792-810.
Exhibit No. 301
IPC-E-ll-08
Reading, ICIP
Page 3
., ..
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-II-08
INDUSTRIL CUSTOMERS OF IDAHO POWER
READING,DI
TESTIMONY
EXHIBIT NO. 302
Idaho Power's Responses to Production Request No. 28 Regarding
Idaho Power's Authorized Rates of Return Since 1987
,-...
REQUEST FOR PRODUCTION NO. 28: Referenc Direct Testimony of Scott
Spars, p. 41, lines 1-3 (sting that the primary cost component that has driven the
reuction in the facilites charge rates is the Rate of Return, which has decreased since
the last update).
(a) Please admit or deny that th Rate of Return used in the 1987 calculation
for ScheUle 19 was 9.952%. If deny, please ideiitithe Rae of Return used in 1987.
(b) Please identif the Commission case number for all general rate cases
filed by Idaho Power since 1987, and the Company's authoried Rate of Return in each
of those case.
(c) Please admit or deny that the Rate of Return autorized in 2005 (IPC-E-
05-28),2007 (IPC-E-Q7-Q8), 200 (IPC-E-08-1 0), was less than the Rate of Return used
to calculate the facilities charge since 1987. If deny, please explain.
(d) Please explain why the Company has not updated the facilities charge
since 1987 in light of the decrase in Rate of Return occurrng at the time of general
rate case filings listed in (c). Has the Company been overcharging for the facilities
chrge by failng to update the charge prior to now?
RESPONSE TO REQUEST FOR PRODUCTION NO. 28:
(a) The rate of return use in the 1987 calculation for Schedule 19 was 9.902
percnt, which correponds to a levelized rate of return of 6.905 percnt. In
comparison, the 2010 rate of return use in the proposed facilities charge calculation is
8.013 percent which corrsponds to a Ieveliz rate of return of 4.81 percnt; as shown
on page 40 of the Dire Testimony of Mr. Sparks.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND REQUESTS
FOR PRODUCTION OF THE INDUSTRIA CUSTOMERS OF IDAHO POWER - 31 Exhibit No. 302
IPC-E-ll-08
Reading, ICIP
Page 1
,....
(b) The Commission case numbers for all general rate cases filed by Idaho
Power since 1987 and the Company's authorized rates of rem in eachofthose cas
are shown in the table below.
General Rate Rate of
Case Year Filed Ca Number Return
199 IPC.E-94-5 9.199%
2003 IPC-E-03-13 7.852%
200S IPC-E-oS-28 8.1%
2007 IPC-E-07-08 8.1%
2008 IPC-E-0810 8.18%
(c) Please see the Company's response to (a) and (b) above.
(d) The Company has not updated the facilities charges. since 1987 becaus
it peridic validatins of the existing facilities charges did not warrant an update when
using the currnt approved calculation methdolo.
The response to this Request was prepared by Scott D. Sparks. Senior
Regulatory Analyst, Idaho Power Company, in consulttion wih Jason B. Wiliams,
Corporae Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND REQUESTS
FOR PRODUCTION OF THE INDUSTRIL CUSTOMERS OF IDAHO POWER - 32 Exhibit No. 302
IPC-E-ll-08
Reading, ICIP
Page 2
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-II-08
INDUSTRI CUSTOMERS OF IDAHO POWER
READING,DI
TESTIMONY
EXHIBIT NO. 303
Idaho Power's Responses to Production Request Nos. 6, 7, 46, and
47 Regarding Idaho Power's Facilties Charge "Credit"
REQUEST FOR PRODUCTION NO.6: Reference Direct Testimony of Scott
Sparks, p. 41 (stating that the estimated reductn in revenue received by the Company
through the facilities charge "wll reult in increases in the revenue requirements for
each customer class that collect facilits charge revenue").
(a) Please admit or deny that the Company's filing submits thata fair, Just and
reasonable facilites charge for Schedule 9, 19, and 24 customers would be 1.41%
monthly, which is a reucion from the chrge currently in effec of 1.7 % monthly. If
deny, please explain.
(b) Please admit or deny that the Company's filing submit that the reuction
in revenue collec from customer classes attbutable to the propose reducn in the
facilities charg should result in a corrsponding increase in revenue reuirement for
those cuomer classes. If deny, plse explain.
(c) If the response to the (a) and (b) is to admit, please explain the
Company's justication. Speifcally, please fully explain why a reuction in Company's
rate of return since 1987 (or any other reducton in any other component of the facilites
charge) and a corrsponding nee to reuce the facilities charge should be coupled
wi a corrponding incrase the revenue requirement for thes custmer clsses.
RESPONSE TO REQUEST FOR PRODUCTIN NO.6:
(a) The Company's filing submits that a monthly facilites chrge rate of 1.41
percent is a fair, just, and reasonable facilites charg for Schedule 9, 19, and 24
customers.
(b) A reuction in revenue collected frm customer classs attbutable to the
propose reuction in the facilities charges will reslt in a corrnding increase in
revenue reuirement for those customer classes.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND REQUESTS
FOR 'PRODUCTION OF THE INDUSTRIL CUSTOMERS OF IDAHO POER - 4 Exhibit No. 303
IPC-E-II-08
Reading, ICIP
Page 1
(c) Revenue received frm customers paying facilities charges is direy
related to the Company's cost of owing, operating, and maintining facilites that are
solely dedicated to these custmers. As a reult the revenue reiv frm these
customers is applie as a dire off or crit to the revenue reuirement for the
corresponding customer class. Because these facilites are only used by customers
subject to facilites charges, it is reasonable to offset the respective custmer classes'
revenue requirement. Therefore, a reuction in the revenue creit assci with
facilit charges results in a corrsponding increase in the revenue reuirement.
The response to th Request was prepared by Scott D. Sparks. Senior
Regulatory Analyst, Idaho Powr Company, in consulttion with Jason B. Wiliams,
Corporate Counsel, Idaho Powr Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POER - 5
Exhibit No. 303
IPC-E-II-08
Reading, ICIP
Page 2
REQUEST FOR PRODUCTON NO.7: Reference Dire Testimony of Scott
Sparks, p. 41 (stting that the estimated reducton in revenue received by the Company
through the facilities charge "wll result in increase in the revenue reuirements for
each customer class that collecs facilities charge revenue").
(a) Dos the Company believe that it is entited to remain revenue neutl wi
reard to any changes in the faciltie charge calculated in 1987? Does the Company
cosider th level of facilites charg set for Schedule 19 customers in 1987 in Case No.
U-1006298 to be a "grandfaere" rate to which it is entitled into perptuity If not,
plese explain.
(b) Please identif any other rate revery mechanism authorize by the
Commission which allows the Company to increase a custmer class's revenue
reuirement solely to keep the Company revenue neutral when it is fair, just and
reasonable to reuce some component of tht customer clss's rates.
RESPONSE TO REQUEST FOR PRODUCTION NO.7:
(a) As wi all rate, charges, and creit in Idaho Powets tariff, the Company
flies to update cost periodically in order to keep all rates, charges, and crits currnt
wih theaåUal co incurr by the Copany. In the Company's revenue requirement
calculation for the determination of base rates, facilites charges are trated as a
revenue creit. Therefore, a reucton in the revenue creit results in an incrse in the
revenue require from base rates. The Company believes this is the appropriate
manner in which to determine it revenue requirement regardless of the year in which
the currntly effecve facilites charge rate was determined. The Company does not
consider th level of facilities charge set for Schedule 19 custmers in 1987 in Case No.
IDAO POER COMPANY'S RESPONSE TO THE SECOND REQUeSTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 6 Exhibit No. 303
IPC-E-II-08
Reading, ICIP
Page 3
U-1006-298 to be a "grandfathere" rate to which it is entiled into perpetuit. This is
evidenced by the Company's currnt request to adjust the facilties charge rate. The
Company believes that it should have an opportnit to rever it pruently incrr
cost and earn it autrized rate of rern. This is tru whher the assiate revenue
comes frm facilties charges or base rates.
(b) All of the Company's revenue for "non-rurrng chrges" such as
connecion and disconnection charges as well as field visit charges and servce
estblishment charges are trte in the same manner as facilites charges in the
Company's revenue requirement determinatin for each class. That is, as revenues
frm non-reurrng charges move up or down reulting from changes in the charge
amounts witut a corrponding change in costs, the reveue required from base rates
is naturally adjusted accordingly. Furter, under the Company's Rule H, New Servce
Attachments and Distrbution Line Installations or Altertins, revenue colleced frm
contributions in aid of constructon ("CIAC") are booked as a direct offset to the
corrsponding customer classs' revenue reuirement. As a result, if the Company's
collecn of CIAC's is reuce for a partcular customer class, then the classes'
revenue requirement wil increse as a result.
The response to this Request was prepare by Scott D. Sparks, Senior
Regulatory Analyst, Idaho Power Company, in consultation wih Jason B. Willams,
Corporae Counsel, Idaho Power Company.
IDAHO POWER COMPANS RESPONSE TO THE SECOND REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 7 Exhibit No. 303
IPC-E-ll-08
Reading, ICIP
Page 4
.. .....
REQUEST FOR PRODUCTION NO. 46: In response to ICIP's Reques for
Productin No.6 (c) the Company stated, "Revenue received frm customers paying
facilities charges is directy related to the Company's cost of owning, operating, and
maintaining facilites that are solely dedicated to these customers."
Plese explain why a decrese in the cost of owning, operating, and maintining
facilties should cause the rates for the customer class to increase. Does Idaho Power
agre that this is counterintuitive to basic ratemaking principles?
RESPONSE TO REQUEST FOR PRODUCTION NO. 46: The cost of owning,
operating, and maintaining all Idaho Power facilites, including thse subje to facilities
charges, is included in the Company's base rate revenue requirement determinations.
However, in renition tht Idaho Power receivs revenue frm customers through
facilities charges on certain isolated facilities, the Company offsets the revenue
requirement that would othrwse be recovered through base rates wih annual facilites
charge revenues reeived for those isolated facilities. If the facilties charg rate was
incrase, thereby increasing facilities revenue, there would have to be an associated
reuctn in base rates. The opposite is tru whn the facilites rate Is decreased, as
proposed by the Company in this case. Th Company does not agree that this is
counterintuitve to basic ratemaking principles, but rather the Company believes that its
tratment of facilites charge revenue is aligned wi basic rate making principles.
The sum of the revenue frm base rates and th revenue frm facilites charges
alwys reflects the recovery of the most currntly approved cost of owning, operating,
and maintaining facilities. This would be the case regardless of the amount of the
facilities charge rate. The amount of the facilities charge rate and the resulting level of
IDAH POWER COMPANY'S RESPONSE TO THE SIXT REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 2 Exhibit No. 303
IPC-E-ll-08
Reading, ICIP
PageS
.. ~ ,.
revenue included in a revenue reuirement case simply detennines the amount of the
overall revenue requirements that the Company expecs to collect frm facilities charg
customers and the amount to be recovered in base rates.
The response to this Request was prepare by Timothy E. Tatum, Senior
Manager of Cost of Servce, Idaho Power Company, in consulttion wih JasonB.
Williams, Corprate Counsel, Idaho Power Company.
IDAHO POWER COMPANYS RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIL CUSTOMERS OF IDAHO POWER - 3 Exhibit No. 303
IPC-E-II-08
Reading, ICIP
Page 6
REQUEST FOR PRODUCnON NO. 47: In response to IClP's Request for
Producton No. 7 (a) the Company stted, "In the Company's revenue reuirement
calculation for the determinatin of base rates, facßities charges are trated as a
revenue credit."
(a) Please explain why the monthly payment of a facilities charge is
considere a "creit rather thn revenue to th Company such as the rate per kWh.
(b) Please explain fully how a "revenue credil differs from other monthly
revenue the Company receives from a customer. Please also Identif the Commission
order, page and line number authoring this "revenue credit" treatment.
(c) Please explain whether there is a corrsponding "debit" or charge to the
customer class (or all customer classe) for the Company's costs associated wih the
facilties charge prior to payment of the facilties charge by the customer and the "credit"
to the customer class revenue reuirement calculation. Please fully explain how the
costs associated wi and revered for the facilties charge are factore into each
phase of th calculation of revenue requirement and base raes.
(d) Please explain how the custmer class's revenue .requirement and base
rates would be affeced by a failure of all customers in the class to pay the facilites
charge. In tht case, would the Company recover its cost assiated wih the facilities
charge through the customer class's base rates rather than through indivdual
customers' paymen of their facilitie charges? If not, please explain how the
Copany would recover the cost associated wi the facilitie beyond the point of
delivery for that customer class.
IDAHO POWER COMPANYS RESPONSE TO THE SIXT REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 4 Exhibit No. 303
IPC-E-II-08
Reading, ICIP
Page 7
l ' .,
RESPONSE TO REQUEST FOR PRODUCTION NO. 47:
(a) Monthly facilities charges are booked as other revenue to the Company
for revenue requirement determinations. Revenue recived frm customers paying a
facilities charge is applied as a credit or offset to the assciated customer classes' base
rate revenue requirement. This accunting treatment is no diferent than how all "Oter
Revenue" Is creited to the assciated customer classes' revenue requirements.
(b) Idaho Power prepares its revenue requirement in a general rate case for
the purpse of determining the level of revenue to be collected through base rates.
Because the purpse of the revenue requirement determination is related to base rate
development, all "Other Revenue" is applied as an offset. This accounting treent
has been authorized in the Idaho Public Utilites Commission's ("Commission") approval
of previously filed cost-ot-service models, including the Company's last general rate
case, IPC-E-08-10, Order No. 30722.
(c) Prior to accounting tor the revenue from facilites charges, all costs for the
facilites instlled beyond the Company's point of delivery are included in the assoiated
customer classes' revenue requirement. When the facilites charge revenue is applied
as a revenue crit or offset, the associated custmer classes' revenue requirement is
thereby reuce. Please see the Company's reponse to Micron's Request No. 3-3 for
an explanation of how revenues are applied as a credit in the Company's cost-of-
servce modeling.
(d) If the Company receives revenue frm faclites charge customers that is
either reuce or eliminated, then the amount of the offet or revenue creit to the
associated customer classes' revenue will be reuced and the overall revenue
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 5 Exhibit No. 303
IPC-E- i i -os
Reading, ICIP
PageS
requirement for that assciated customer clss will increse as a reult. In a case
where all customers in a class failed to pay the facilities charge, the Company would
recover all of its cost assciated with the facilities charge through the customer class's
base rates as th would be no offet (revenue credit) to the customer class. See the
Direct Tesimony of Scott D. Spark, p. 41, the Company's response to the Indu$trial
Customers of Idaho Powets ("ICIP") Request for Proucton Nos. 6(b), 7(a), and 46
which explain how reuctions in revenue wil reult in a corrsponding incrase in
. revenue requirement for the associated customer class.
The response to this Request was prepared by Scott D. Sparks, Senior
Regulatory Analyst, Idaho Power Company, in consultation wi Jason B. WIllams,
Corate Counsel, Idaho Powr Company.
IDAHO POER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRiAl CUSTOMERS OF IDAHO POWER - 6 Exhibit No. .303
IPC-E-ll-08
Reading, ICIP
Page 9
REQUEST NO. 3-: How.are Acc. 456 and each sub-unt crit to retail
and any other customer group? Cite filing reereces for such credit.
RESPONSE TO REQUEST NO. 3-3: The firs step in creitng Account 456
revenues to customer groups is to classif and functnallze each sub-accunt. As
show on lines 290-297 of Larkin Exhibit No. 31, each sub-account that comprises
Accunt 45 Is classifed as being eiter customer-related, demandrelated, or energy-
related and is furtr identifie wih one or more of the Company's operating functions,
such. as prouction and/or trnsmission. Once each sub-accunt has been classifed
andfunctionalized, as shown in Larkn Exhibit No. 31, the segmented revenues are
transerred to the "Other Revenues" summary table, provided as page 3 of Larkin
Exibit No. 32. This table compiles revenue frm Accunts 415,451,454, and 456 by
classifcation and functional category in order to align the various compone of each
account wih the appropriate allocatin factors. After these revenues have been
compiled by classifcation and functonal category, they are allocated to rate classes as
shown on pages 25 and 26 of Larkin Exhibit No. 33. Finally, class-allocated revenues
are summe on line 18 of Larkin Exhibit No. 35, serving as a creit to each class in the
development of final classspecific revenue requi~ments.
The response to this Request was prepare by Mattew T. .Larkin, Regulatory
Analys, Idaho Power Company, in consultation wih Lisa D. Nordstrm, Lead Counsel,
Idaho Power Company.
IDAHO POWER COMANY'S RESPONSE TO THE THIRD PRODUCTION
REQUEST OF MICRON TECHNOLOGY, INC. TO IDAHO POWER COMPAN ~ 4 Exhibit No. 303
IPC-E-ll-08
Reading, ICIP
Page 10
BEFORE THE
IDAHO PUBLIC UTILITIES COMMSSION
CASE NO. IPC-E-II-08
INDUSTRI CUSTOMERS OF IDAHO POWER
READING,DI
TESTIMONY
EXHIBIT NO. 304
Idaho Power's Responses to Production Request Nos. 21, 22, 23, 24,
25,45,60,64,65,66,67,69, and 71 Regarding the Lack of
Depreciation of Facilties Charge Equipment
REQUEST FOR PRODUCTION NO. 21: Reference Direct Tesmony of Scott
Sprks, p. 38, lines 12-13 (stting that the "Book Depreation" component of the
facilties charge uses "a straight line annual depreciation of assets based on a levelized
31 year basis").
(a) Please admit or deny that the Company does not reuce the principal of
the initial investment in facilites by a depreciation factr. If deny, please explain how
the Company reuce the principal.
(b) Please admit or deny that the principle (sicl on facilities .subject to the
facilites charge is the same in year 1 as it would be in year 50. If deny, please explain.
RESPONSE TO REQUEST FOR PRODUCTION NO. 21:
(a) Under the Company's approve and effctive facilities charge
methodolo, the principal of the initial investment for a piece of equipment does not
change unless it is removed or replace. However, the depreciatin component of the
faciUtes charg repreents a declining net book value that has been converted into a
levelized amount based on a 31-year useful life assumption.
(b) Please se the Company's reponse to (a) ab.
The reponse to this Request was prepare by Scott D. Sparks, Senior
Regulatory Analyst, Idaho Power Company, In consultation wih Jason B. Wiliams,
Corprate Counsel, Idaho Power Company.
IDAHO POWER COMPANS RESPONSE TO THE SECOND REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 23 Exhibit No. 304
IPC-E-ll-08
Reading, ICIP
Page 1
REQUEST FOR PRODUCTION NO. 22: Reference Direct Testmony of Sctt
Sparks, p. 38, lines 12-13 (stating tht the "Book Depreciation" component of the
facilities charge uses "a stight line annual depreiation of asse based on a levelized
31 year basis"). Please explain why customers should pay an addifionai charge for the
depreciation in value of the facilities. Please explain why. depreciation in value of the
facilities over time should not decrease th amount customrs pay over time for use of
that equipment.
. .RESPONSE TO REQUEST FOR PRODUCnON NO. 22: Please" se th
Company's response to the Industrial Customers of Idaho Powets ("ICIP") Request for
Proucton No. 21.
The reponse to this Reques was prepared by Scott D. Sparks, Senior
Regulatory Analyst, Idaho Power Company, in consultation with Jason B. WUliams,
Corporate Counsel, Idaho Power Company.
IDAHO POER COMPANYS RESPONSE TO THE SECOND REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 24 Exhibit No. 304
IPC-E-II-08
Reading, ICIP
Page 2
REQUEST . FOR PRODUCTION NO. 23: Reference Direc Testimony of Scott
Sparks, p. 38, lines 12-13 (stating that the "Book Depreiation" component of th
facilities charge uses "a straight line annual depreiation of asset based on a levelized
31 year basis"). Please identif any rate-base asst for which the Commission allows
the Company to charge the same annual rate on the same principal amount over time
when the value of the asset decse over time.
RESPQNSE TO REQUEST FOR PRODUCTION NO. 23: There are no rate-
base asset for which the Commission allows the Company to charge the same
annual rate on the same principal amount over time when the value of the asst
decreses over time. This is also not the case wi the facilites charg. As described
by Mr. Spark on page 38 of his testimony, the facilities charg is calculated using a 31..
year depreciable life assumption.
The response to this Reques was prepare by Scott D. Spark, Senior
Regulatory Analyst, Idaho Power Company, in consultation wih Jason B. Wiliams,
Corprate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPOE TO THE SECOND REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 25 Exhibit No. 304
IPC-E-II-08
Reading,lCIP
Page 3
REQUEST FOR PRODUCnON NO. 24: Reference Direct Testimony of Scott
Sparks, p. 38, lines 12-13 (staing that the "Book Deprecation" component of the
facilties charge uses "a straight line annual depreciation of assets based on a level¡zed
31 year basisll).
(a) Please explain what steps Idaho Power takes if a piece of equipment fails
prior to the expiration of the 31-year depreatin schedule.
(b) Dos th Company have manufacturets warrnties on any of the
equipment subje to the facilties charge?
(e) Has the Company ever filed an insurance claim to replace equipment
subjec the facilties charge sinc 1987?
RESPONSE TO REQUEST FOR PRODUCTION NO. 24:
(a) If a piece of equipment fails prior to the expiration of the depreciation
schedule, then it is removed frm the customets facilities charge investent calculation
and the investment costs for a replacement piece of equipmen is added to the
customets facilites charge investnt.
(b) The Company has limied manufactrets warrnties on some equipment
subjec to the facilties charge, such as trnsfrmrs.
(c) No. Please see the Company's response to iaip's Request for Prouction
No. 18.
The respnse to this Request was prere by Scott D. Sparks, Senior
Regulatory Analyst, Idaho Power Company, in consulttion wih Jason B. Willams,
Corprate Counsel, Idaho Powr Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND REQUESTS
FOR PRODUCTION OF THE INDUSTRiAl CUSTOMERS OF IDAHO POWER - 26 Exhibit No. 304
IPC-E-ll-08
Reading, ICIP
Page 4
REQUEST FOR PRODUCTION NO. 25: Reference Dire Testmony of Scott
Sparks, p. 38, lines 12-13 (stating that the "Book Depreation" component of the
facilites charge uses "a straight line annual depreciation of assets based on a levelized
31 year basis").
(a) Please explain if Idaho Power contnues to charge the facIlites charge
(the monthly percntage rate multiplied by the Company's inital investnt) after the 31
year deprciation peri expires.
(b) For Schedules 9, 19, 24 and Speial Contra Customers, please identif
the oldest piece of equipment for which the Company is stil assessng the monthly
facilities charge to a customer in each class. Please include the year the Company
purcased and installed the equipment, the Scheule of th customer, and the initial
cost of the piece of equipment.
(c) Wit reard to the pieces of equipment identified in (b), is the Company
still calculating the customers' monthly facilites charge by multiplying the monthly
facilities charge percntge by the initial investment?
RESPONSE TO REQUEST FOR PRODUCTION NO. 25:
(a) Under the facilites charge provisions, Idaho Power charges a monthly
facilits chrge for equipment installed beyond its point of delivery as long as the
equipmen is instlled and used and usefuL.
(b) For Schedule 9, the oldest piecs of equipment (24 in total) for which the
Company is assessing a monthly facilities charge were purchased and instlled in 1969
with a combined initial investment $15,329. For Scheule 19, the oldest piece of
equipment (2 in total) for which th Company is assessing a montly facilities charge
IDAHO POWER COMPANS RESPONSE TO THE SECOND REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 27 Exhibit No. 304
IPC-E-ll-08
Reading, ICIP
PageS
were purcse and installed in 1945 wi an inital invent of $259. No customers
under Scheule 24 are being assessd a facilities charge.
Importntly, whether a piece of equipment fails 5 years or 45 years after
installation, the Company, under the tanf facilites charge provisions, will replace the
pie of equipment and adjust customers' facilites charge for the equipment being
removed and the equipment being installed.
(c) Yes. Please se the Company's respons to (a) above.
The rens to this Request was prepared by Scott. D. Sparks, Senior
Regulatory Analyt, Idaho Power Company, in consulttin wi Jason B. Willams,
Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOND REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 28 Exhibit No. 304
IPC-E-II-08
Reading, ICIP
Page 6
~IDA~PO~
An IDACRP Company
JASON B. WILLIAMS
Corprae Counsel
jwilliamslidahopoer.com
September 22, 2011
VIA HAD DELIVERY
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
Boise, Idaho 83720
Re: Case NO.IPC-E-11-08
General Rate Case
Dear Ms. Jewell:
Enclosed for filing are an original and one (1) copy of Idaho Power Company's
Corrected Response to the Industrial Customers of Idaho Power's Request for Producon
No. 45 in the above matter. It was recently discovered that a couple of the date ranges
provided in the table in Idaho Power Company's initial response were incorrect. In
addition, language has been added to the response for clarification. For everyone's
convenience, the wording that has been added or changed from Idaho Power Company's
initial response has been underlined.
If you have any questions about this corrcted response, please do not hesitate to
contact me.
Very trly yours,
,ßá/de
Jason B. Wiliams
.s; ~
JBW:csb
Enclosures
cc: Servce list
121 w. kl~i\hllWÆ 304
P.O. Box 76'
Boise, ID il&7-E- 11 -08
Reading, ICIP
Page 7
REQUEST FOR PRODUCTION NO. 45: Reference Direct Testimony of Scott
Sparks, pp. 34-41.
(a) How long has Idaho Power charged a facilities charge for Schedules 9,
19, and Special Contract customers?
(b) Please provide the monthly facilities charge for each year separately since
the Company first began charging the facilities charg for Schules 9, 19, and Special
Contract customers who have paid a facilities charge.
CORRECTED RESPONSE TO REQUEST FOR PRODUCTION NO. 45:
(a) Existing Company rerds indicate that facilities charges have ben in
place since February 1995 for Schedule 9, January 1976 for Schedule 19, and 1964 for
one special contract.
(b) Based on available Company rerds, the historical monthly facilites
charge rates for Schedule 9, Schedule 19, and one speal cotrct customer are
provided in the table below.
Year
1995 - Present
1976 . Present
1964-1976
1976 - Present
Schedule 9
1.7%
Schedule 19 Special Contract
1.7%
1.25%
1.7%
Tariff and special contract revisions went into effct in January 1976. which
revised the monthly facilties charge rate from 1.25 percnt to 1.7 percent per the Idaho
Publfc Utilities Commission's Order No. 12307 in Case Nos. U-1006-100 and U.10Q6
101.
IDAHO POWERCOMPANY'S CORECTED RESPONSE TO THE
INDUSTRJAl CUSTOMERS OF IDAHO POWER'S REQUEST FOR PRODUCTION NO. 45 _ fxhibit No. 304
IPC-E-ll-08
Reading, ICIP
PageS
The response to this Request was prepared by Scott D. Sparks, Senior
Regulatory Analyst, Idaho Power Company, in consultaion with Jason B. Willams,
Corporate Counsel, Idaho Power Company.
DATED at Boise, Idaho, this 22nd day of September 2011.
\~ ",~~.omey for Idaho Power Company
IDAHO POWER COMPANY'S CORRECTED RESPONSE TO THE . .
INDUSTRIAL CUSTOMERS OF IDAHO POWER'S REQUEST FOR PRODUCTION NO. 45 _ lxhibit NOO.s304
IPC-E-ll-
Reading, ICIP
Page 9
REQUEST FOR PRODUCTION NO. 60: Referece the Company's Response
to ICIP Request No. 25.
(a) What is the average and median age (in years) of distributn facilites
installed beyond the point of deliver curry in servce? Please organize the response
by schedule or Special Contract.
(b) What is the average and median age (in years) of distbution facilties
instafled beyond the point of deliver at the time that the equipment fails or is taken out of
servce by the Company? Please organize the response by schedule or Specal
Contract.
RESPONSE TO REQUEST FOR PRODUCTION NO. 60:
(a) The average and median age (in years) of distributon facilities installed
and currently in service beyond the Company's point of delivery for Schedule 9,
Schedule 19, and one Special Contract customer is provided in the table below.
Average Age MedianAae
Schedule 9 17 14
Schedule 19 18 16
Special Contract 24 25
(b) The Company does not track or record the average and median age (in
years) of distribution facilites installed beyond the point of deliver at the time that th
equipment fails or is taken out of service by the Company.
The response to this Request was prepared by Scott D. Sparks, Senior
Regulatory Analyst, Idaho Power Company, in cònsultation wih Jason B. Wiliams,
Corprate Counsel, Idaho Power Company.
IDAHO POWER COMPANYS RESPONSE TO THE SIXT REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 27 Exhibit No. 304
IPC-E-ll-08
Reading, ICIP
Page 10
REQUEST FOR PROOUCnON NO. 64: Reference the Company's Response
to ICIP Request No. 45.
(a) Please provide the Company's rerds demonstating that the facilities
charge has been in place sinc 1995 for Schedule 9, 1976 for Schedule 19, and 1964
for Schedule 29/Specil Contct
(b) Please explain how the Company charged customers for distrbutn
facilites beyond the pont of delivery poor to these dates for each scedule.
RESPONSE TO . REQUEST FOR PRODUCTION NO. 64:
a) Please se the attached PDF file for Company rerds demonstrting
wh the facilities charge wet into place for Schedule 9, Schedule 19, and Scule
29 (Special Contract).
b) Prir to implementing falities charge prvisions, the costs assoiated
with most customer-dedicated distnbutn facilities mstlled beyond the Company's
point of deliver were included in the Company's general rate base and alloced to the
associated customer class. For some large power users, the Company had servce
contrcts in place tht accunted for faCilites installed beyond the Company's point of
delivery.
The respnse to this Request was prepared by Scott D. Sparks, Senior
Regulatory Analys, Idaho Power Company, in consulttion wi Jason B. Willams,
Corprae Counsel. Idaho Power Company.
IDAHO POWER COMPAN'S RESPONSE TO THE SEVENTH REQUESTS
FOR PRODUCTN OF THE INDUSTRIA CUSTOMERS OF IDAHO POWER - 2 Exhibit No. 304
IPC-E-II-08
Reading, ICIP
Page 11
IDAH POWER COMANY
SCHEOLE9
lA GENERAL SEJ(Cotiue)
MtPU UTCOIS
ORIGINAL SHEE NO. 9-2
AP EFCT
FE3-'9 æi-'9
Y4.. Jl ~ u.n. __
I.P.U.C. NO. 26, TARIff NO. 101
fACILIES BEYOND THE POINT OF DEUYERY
At th option of th Com. trorer an oih faciti inaßed beyond th Poit of
Deiver to prvid Prma or Transmiion Seice may be ow. opeed. and rnlntaine by the
Co in coer of th Custom paing a Fa Cl to the Company.
CopaYnOne Fait Beond th Poit of DelVer W11 be set for in a Diti faitfInest Repo prded to th Cusomer. As th Comy's invesent ln Facili Beyond th
Poit of Dever chaes in order to prvide the Customs seic requiments. the Comny shll
noti ll Cusmer of the additions an/or delefi of facrifies by forng to ll Customr a
revi Dibution facties Investmt Repo.
In th event the Cusom requests the Company to remove or reinsll or chane Company-ow Faits Beond the Poit of Oeriver. the Custome shall pay to th Compa th "non-
saab cos" of such removaL reiallatn or change. Non-abl cost as us herein is coedof th total ongil co of maerls. labor and over of the facritle. le the diference betwn
th saable cost of materl removed and reval la co inclding apprpnate overead cos.
POR fACTOR
Wher th Cus's Power Faor is le thn 85 pert. as deterined by measurent
un actual lod. eoon. th Coy may adjus th lcW meed to deterine th BilingDend by mulg th measure kW by 85 pecent and diidng by the actual Power Fator.
MONTHLY CHARGE
The Mothly Ch is th su of th Customer. th Bac. the Oeman. the Ener. and the
fali Chaes at the folowing rate
SECNDARY SERVICE
CusChge
$5.50 per meter pe mont.,
Baic Charge
$0.36 pe kW of Bac Lod Caci
De Cha
$2.68 per Ièw for all kW of Demand
En Che
BgRate2.7~
Poer CosAdiusf*
O.14491t
Efectie~
2.71971t pe kWh for alf kWh
IDAHO
Isue - Febniay 3. 1995
Efe - Fe 1. 1995
Per IPUC Or No. 25
. Iss by IDAHO.PO!lYl~~~i
D. H. Jacksn. Vice Presld _ _ t\ll~
1221 Wes Idaho Slr a g, ~
Page 12
I.P.U.C. NO_ 17, TARIFF NO. 101
ORIGINAL SHEET NO. 19
IDAO POWER C(JPA/Y
SCHEDULE NO 1 9
UNIFO RATE tøCT
AVAILABILITYÄt points on the Comny's distribution system in Idaho, for loads fro 750 to 15.000 kilowatts where, inthe Cony's sole judgmt. existing facilities of adequate capacity and desired voltage are adjacent tottie
premise to be served. and additional investmnt by the Comany for new transmission, substation. distribution
or tetminal facilities is not necessary to supply the desire service, and subject to provisions set fo~t" inan Electric Service Agreemnt between th Comny and Customr
APPLICABILITY
To all firm electric service suppl ied to a Customer at one preiise, where all service required by theCustomr is supplied under this Schedle, at one point of delivery and mesure through one meter Not applicable to seasonal, brekdow, standby, supplemtary, resale, shared service, multi.famfly dwllings, electric
boilers exceeing 2,00 KW capait- or in rete areas.
TYPE OF SERVICE
Three-phase at approximately 60 cycles and at the distribution voltage available at the premise to be
served.
MOLY CHARGESThe sum of Dend, Energy and FaciHties Charges at the following rates
Denø Charge
$3.35 per KW for the first 250 KW of Dend2.05 per KW for each additional KW of Dend
Energy Charge
11.90 miiis per KWH for the first 100 KWH per KW of Dend
5.90 mills per KWH for the next 190 KW per KW of Dend
4.10 mills per KW for all additional KW
Facilities Charge
Service shall be supplied hereunder at primary distribution voltage and the Point of Delivery Shall
be where the Coiny's lines first becom adjacent to CUstomer's property. Transformrs and/or other
facilities, beyond the Point of Delivery and used to deliver powr at utilization voltage to points of use
at the option of the Comany, may be owed, operated and maintained by Company in consideration of Custor
paying to Comany a facilities charg of one and seven-tenths percent (1.7%) per month times the Company's
investnt beyond the Pofnt of Delivery
High V01ta~e Discount (When service is taken at 44 KV or above)
$90 0 for thë first 250 KW of Dendo 24 per KW for each additional KW of Dend
Dend Determination
The average KW supplied during the 15-consecutive-minute period of maximu use during the month,
adjiisted for power factor, but not less than 100 KW (not less than 250 KW when service is supplied at
44 KV or above)
Poer Factor Adjustmentwhëre the Custor's power factor is less than 85%, as deteriined by measurent under actual loadconditions, the Comany may adjust the KI measured todetermine the Dend by multiplying the measure KW
by 85 and dividing by the actual power factor
Ninfmt Charseth minimu charge shall be the Facilities Charg plus the highest of the following
(A)
(B)
The Dend Charge for the currnt month' s maximum Dend
An amunt sufficient to make the Dond and Energy Charges for service under tti agreemnt,for the 12-month period ending with the current moth, equal to 9 5 times the maximuDemnd Charge billed for any month during the term of the Agret and any renewals or
extensions theref
The minimum charge speified in the Agreent The Company may require the Customr to
execute a service agreent specifying a higher minimu annual charge than would be
provided under (A) or (8) when necessary to justify the Comny's investmnt in servicefacilities
(C)
IDAHO
Issued - January 26, 1976
Effe~tlve - January 28, 1976
Per IPUC Order No. l2307
Issued by IDAlI POER COMPAN
By JAMS E BRUE, Preident
1220 Idaho Street, Boise, Idaho Exhibit No. 304
IPC-E-U-oS
Reading, ICIP
Page 13
~
AGRE FOR SUP OF POWE AN EN
0.1
1964, by and between J R SIMLO COMAN, an Idao com opratiI a plat
for the production of fertilizer near Pocatello ~ Idao.. hereiier referrd
to as "Customer~ "and :m POWE COAN, an electric utilty authorized
to do business in the State of Ido, hereinafter referrd to as "Conrpa.yft;
WITNESSETH:
o .2 'W.. J R Simlot Comp has pioneered the use of Southern Ida i s
phosphate rock deposits and for may ;yars has operated a plant near Pocatello l
Ido.. processin phosphate rock in ordr to maufactur phosphate fert11zers;
and J R S1ilot Company is now in the process of instal' 1 ng a. new amnia.
plan £or th production o£ various grads 0:1 amonium phosphte f'erilze..
which new plat 'Wll requre the use of' increasingy J.ge amts .of power
in order to iirocess the phosphate rock an the electric povir reqJrents
a.t this plat have increased from appro:itely 1,00 KW in 1952 to appro-
mately 6,800 KW in 1962, an it is anticipated that the new amnia plat
'Wll incra.se the power requireents to approtely 15,00 KW; a.
0.3 WH, the continued growth an exanion of ths pJ.t an th
use and deeloent of the phosphate rock deosits of Soutl:rn Idao ar of
vitaJ imrtance to the grwth and prosperty of the econo of the state
of Ida an the esta.blishm of an intrial rate for elctric power
suplied to this type of buine ss wi materialy aid and assist the econom
of Idao; and .
0.4 WB, the Idao Power Comany has developed a 1arge indstrial
rate for customers whose uses will be in the neighborhoo of l5.. 000 KW or
Exhibit No. 304
IPC-E-ll-08
Reading, ICIP
Page 14
- 2 -
more and. ar engagd, in the State of Idao, in minng, milli, smeltin;
refinng or processing, 'Were such delivery can be mae from the Coanyls
exstin 138 KV transmission lines without requring adtioxi exense for
fa.cilities SUppliéd by the Comany; and
0.5 WB, the load of the ;¡ R Simlot Compan at its plat near
Pocatello Wi meet these requrements, since this load. will be used in
processin, delivery can be mae at the Con's existing Don Substation
'Wthout adtiona exense to the Coy an the rate will aid in deeloping
and fostering the econom of Idaho; and
.0.6 WH; the parties hereto desire to set forth an establish the
terms and conditions under whch power will be available to Customer;
NOW, TERE, in consideration of the premses an the mutual
benefits from the covenats hereinaer set forth, the paries hereby age
as follows:
Aricle I - Term of Ageement
1.1 The origial term of this agreement sha be for a period beginnng
on the date of initial servce and ending June 30, 1974, whch term shal
be automticall renewed and exended for an ad.tiona period of five (5)
years, an from year to year thereafer, uness and until either pary sba
natify the other pary in wrtin not less tha twelve (12), months prior to
any such exiration date of its intention to termi:rte ths agemnt.
1.2 The date of initial servce under this ageement sha be the first
day 01' that month in whch the Customer first establishes a llaX'mi:i dem
of 10.1 000 kilowatts of power.
Aricle n - Power to be SUpplied
2.1 The Customer agees to purchase, receive and pay for, and the Coany
ages to supply" al electric servce required by Customer for 1ts ifft~4
IPC-E-ll-08
. Reading, ICIP
Page 15
- 3 -
maufacturing operations near Pocatello, Idaho, such power and energy, up to the
amount of 20,000 kilowatts, Sh be supplied and. paid for at the rat.e set. forth
in paragph 5.1, it. bein ageed that when the CUtomer's demad exceeds sucb
amunt. it is the int.ention of t.he paries that nevand superseding rates will be
ageed u.pon, applicable to Customer i s load and service as t.hen required.
2.2 The Contract Amunt of this ageement for each mont.h sba be the ma
dema (kiiowatts) of power taken by Customer in any clock li-hour interv
du the calendar month but not less tha 15,000 KW; provided, however, àUring
the devlopment period subsequent to the date of initiai servce, the Cotract.
Amout for the month sh be the actua maim d. (kilowat.ts) delivered t.o
Customer in an clock ha-hour period durg the calenda month. The Contract.
Amunt for the exired. term of this ageement shall be the mai. Contract
Amunt established in a.y month su.bsequent to the date of int.ial service uner
this agement.
Aricle III - Facilities to be Provided
3. i Pover and energ to be sUplied hereunder by the Coman is available to
the Cutomer at. 12,500 volts at the Coan's Don SUbstation near Pocatello, Idao,
W1thout a.tioi: investment by the Coy. Al facilities including sWitchng,
trasformtion, regution and protective deices necessary for the delivery .of
powe and energy at that point are installed.
3.2 The Customer requests the Compy and the Coan is ~ea.ble to inst.al,
ow, operat.e, an maintain the facilities necessar to deliver the power fr
the Don SUbsta.tion to the Customer's plant at 12,500 volts an the traf'orm-
tion equipment requred by Customer i 5 ut.ilization equpment. Customer ages
to pay the cost of such facilities and equipment in accordce with the pro-
visions of' paaph 5.4 in:f. Material and labor required beyond the seconda
termnas of trasformers shall be instaled, owned, operated, mataind, and
pad for by Cutomer. It is understood and agreed that al t.he work performed
Exhibit No. 304
IPC-E-ll-08
Reading, ICIP
Page 16
- 4 -
by the Coan under this paragaph shal be in accordce with a. J.ocaJ and
state rues and regutions in respect to construction of said facilities:i
and the equpment used sha be stand items in th Coany's system.
3.3 It is understood an agd that the facilities requred by Customer
may va f'rom time to t:i:i and the Company's investment in these f'a.iJties
upn 'Wch chages herein sh be based:i sha be determned in accordce
With the Coan iS norm bookkeeping system. The Customer sha be notified
of' any chae in eq¡ipmnt or investment:i a.t the earliest practicaJ date su.bse-
quent to a.y ch in such equpment or investment:i by J.tter :f the Coar
.to Customer, which letter or letters of' notification sba comr1seEibit A
and sha be a pa of' this agement:i and each su~ letter sha show the
net investment incured by the Company in facilities requred. to delive power
and energy f' the Don Substation to the Customer iS pla.
Aricle IV - ßervce Specifications
4.1 The electric povrr supplied under this agement shal be in the form
of "thre-phase) aJternting current at a frequency of aprotely 60 cycles
per /Second, and at a nomnal phase to phase potential of approximately 12,500
volts except under emergency condtions.
4.2 The point of delivery for power supplied hereundr sha be on the
12,.500 voJ.t side of the Coy's Don Substation located nea Pocatel, Id.o.
4.3 Th Coan wi provide suitable metering equipment for obtaining
measents requred in connection with settlements under this agement.
Coan sba:l at its own exense, test such meteri equipmnt once in eac
caend year.
Aricle V - Chrge s
5. i All electric power and energy, up to the amount hereinabove specified:i
Exhibit No. 304
IPC-E-ll-08
Reading, ICIP
Page 17
- 5 -
shal be suplied an pad for at the Coiy i s Pocatell of'ice 1n accord-
ance with the follwi monthly rate:
(a) Dean Che -$1.80 per KW of Bill Demd
(b) Energy Charge -
3.0 mill per KW for al energy
(c) Billng Ded -The Bil) jng Dem sl be the Contract Amt ofpower for the cunt month estblished in accordce
with :irapb 2.2.
(d) Ta Adustment Chge -
If, afer the date of this agement, an new or in-
creased ta or taxes (other tha income taxes andtaxs based on incom) payable by Coan ar imsed
upon revenues received from Customer hereunr, or
upon po'lr or energy sold to Customer hereuner, or
upn power or energy generated for supply of Customr
hereunr, Customer sha pay, in adtion to the
chages hereinabove specified, an amunt su1cientto cover any such taxs payable by Coan.
5.2 Themin1mum monthl charge shal be an amunt equaJ to $2.00 times
the Contrat Amunt 1'01' the exired term of this agemnt in accordce with
parph 2.2.
;.3 Power :factor corrective appaatus or equpmnt necessar to matain
at al tims as near unty power factor as possible shal be provided by
Customer; however" in even Cutomer's power factor is less th .95 lang"
'te Com;a. sh have 't right an may elect toinstaJ aationa power
facor corrc-ive equpmt in accordce with an under the prosions of
pah 3.3 hereof.
5.4 .In considetion for the facilities instald by the Coy in
accordce 'Wth Aricle TIl, Custoer sha pay to Coany eac moth one
an one-quarer percent (l~) of the totaJ cost'to the Coy as shown in
the last letter submitted by Comany to Customer in Exbit A of this agement.
Exhibit No. 304
IPC-E-ll-08
Reading, ICIP
Page 18
- 6 -
In the event it becomes necessar to remove the f'acil:ties instaled by the
Company as provided by Aricle III and reinstal or chaethe f'acill"ties,
the Customer shll pay to Compan the "non-salvable cos"tlJ of such remaJ,
reinstaition or chaie. Non-salvable cos"t as used herein is comrised of
the "total cost of material, 1abor and overhead of' intaling the facilities,
J.SB the difference between the salvable cost of materiaJ reoved and the
revaJ labor cost includ appropriate overhead costs.
Aricle VI - Iáabiliti
6. J. Each pary will indemfy and save haress the other pary agait
10a6, dage or liability, excJ.usive of costs and attorneys' fees, resuitin
:f cls asserted by third persons aganst either or bot paies to this
agemnt on account of' injur or dea.th to persons or daage or destruotion
of property occuring on such (indemfyng) pary's side of the a:oreslÛd
point of dellvery, uness such inJur or damge sha have resui"ted frm the
sole neglence of' the other pay; provided, however, that each pay sh
be soleJ.y responsible for clais of an paymnts to its emJ.yees an agents
f'or injures occurrin in connection 'Wth their emlo~ or arising out of
an 'Wrkmen' a comensation law.
Aricle VII - Waivers
7.1 An waiver at any time by either pay of a right with respect to any
matter arising under this agement, or s; failur to give any notice provided
f'or hereuner, sha not be deemd to be a waiver with respect to any subse-
qunt matter, nor as the establ1sment of or consent to an practice unr
this ageement or an interpretation of' any term or prosion hereof'.
Exhibit No. 304
IPC-E-II-08
Reading, ICIP
Page 19
... ~.
- 7 -
Aricle VIII - Successors and ASsigns
8.1 Ths agreement sha inur to the benefit of an be binding upn
the successors in interest, assigns and lega representatives of Customer
an Company.
Aricle IX - Comission JUsdiction
9.1 Ths agreement.1 the rates) term and provsions herein set forth.1 and
the respective rights an obligations of the parties hereunder.1 sJ be sub-
ject to the jursdiction an reguatory authority of the Idao Public Utilities
Comissión and the laws of the State of Idao.
Aricle X. - Te:ination of Existing Ageement
10.1 The contra.ct between the parties.1 dated J'uly 18.1 1961, is hereby
termna.ted on the d.te of initial service set forth in parph 1.2 of this
agemnt.
IN 'WS 'WF, the paries have executed this agement by their
respective proper officers) .thereunto dul auhorized.1 on the day and ye
first hereiibove wrtten.
J' R SDf COMPAl
~
(COBPTE SEA)
l3~~~-i~Presidè
~~L... £,
..~~
(CORPRA SEA)
JJ POWE OOAlBy,"~~Pres1~
Exhibit No. 304
IPC-E-II-08
Reading, ICIP
Page 20
REQUEST FOR PRODUCTION NO. 65: Referenc th Company's Response
to ICIP Reques No. 45, stting that the facilties charge has ben in place sinc 1995
for Schedule 9, 1976 for Scheule 19, and 1964 for Schedule 29/Speclal Contrct.
Please reconcile this. statement with Company's Response to ICIP Request No. 25(b),
stating that the oldest piec of equipment installed for Schedule 9 was installed in 1969,
for Schedule 19 was installed in 1945, and Company's Response to ICIP Request No.
25( c), stating that the Company is still calculating the monthly facilites charge by
multplying thø montly facilities charge percntage by the initial. investent for these
pies of equipmen.
For equipment alrey in th Company's possessin at the time of
commenment of the facilties charge, did the Company use the value of the initial
investment or the depreiated value of the equipment at the time of commencement of
the facilities chrge? Please provide supporting evience for the explanation.
RESPONSE TO REqUEST FOR PRODUCTION NO. 65: The equipment
identifed in the Company's Response to the Industrial Customers of Idaho Powets
("leIP") Request No. 25(b) was instlled prior to implementatin of the facilties charge
for Schedules 9 an 19. Once the facilites charge provisions were approved by the
Idaho Public Utilites Commission ("Commission" or "IPUC") and implemented per the
Company's tariff schedules, the initial value of this customer-dedicated equipment was
included on the assoated customets Distrbutn Facilties Investment report ("OFI")
use to calculate the monthly facilities charge. As stated in the Company's reponse to
ICIP's Req No. 25(a), th equipment wil reain on the OFI as long as it is instlled
and us and usefuL.
IDAHO POER COMPANY'S RESPONSE TO THE SEVNTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIA CUSTOMERS OF IDAHO POWER - 3 Exhibit No. 304
IPC-E-ll-08
Reading, ICIP
Page 21
For facilties beyond the point of delivery that were in service and in the
Company's possssion prr to implementatin of the facilities charge provisions, the
Company use the inital investent in its calculatin of th montly facilties charge.
The Company's currnt OFI's sho the inital investment values use to calculate each
facilites charge customer's monthly facilies charge. The use of depreciated values
has never been approved by the Commission and the Copany has never use
depreated values to calculate monthly facilites charges.
The resnse to this Request was prepared by Scott D. Sparks, Seior
Regulatory Analyst, Idaho Power Company, in consultation wih Jason B. Wiliams.
Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANS RESPONSE TO THE SEVENTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIA CUSTOMERS OF IDAHO POWER - 4 Exhibit No. 304
IPC-E-ll-08
Reading, ICIP
Page 22
REQUEST FOR PRODUCTION NO. 66: With regard to the equipment
discussed in Request No. 65, did the Company began charging the custmer in
Schedule 9 a facilities charg in 1995 base upon the initial investment in a pie of
equipment installe in 1969, or did the Company use the depreciated value of the 1969
piece of equipment in 1995? What value did the Company use and base on what
depreciatin schedule
RESPONSE TO REQUEST FOR PRODUCTION NO. 66: Please see the
Company's respnse to ICIP's Request No. 65.
The respnse to this Request was prere by Scott D. Sparks, Senior
Regulatory Analyt, Idaho Power Company, in consultion with Jason B. Wiliams,
Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SEVENTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 5 Exhibit No. 304
IPC-E-ll-08
Reading, ICIP
Page 23
REQUEST FOR PROUCON NO. 67: Wit reard to th equipment
discssed in Request No. 65:
(a) Did the Company began charging the customer in Schedule 19 a facilites
charge in 1976 based upon the initial investment in a piece of equipment instlled in
1945, or did the Company use the depreciated value of the 1969 piec of equipment in
19951
(b) What value did the Company use and base on what depreiation
scedule? What value is the Company using for this piece of equipment today, the
value at installation in 1945. or the depreiated value when the charge commence in
1976?
(c) Please explain why this piec of equipment was not fully depreciated at
the time the Company initated the facilities charge 31 years after the equipment was
initially installed.
(d) Please explain how the Company has not over-recovered for this fully
depreciated asset frm the Schule 19 customer since 1976?
RESPONSE TO REQUEST ~OR PRODUCTION NO. 67:
(a) Please sethe Company's reponse to ICIP's Request No. 65.
(b) Please se the Company's response to ICIP's Request No. 65.
(c) Including the depreiated value of equipment at the time the Company
initated the facilities charge was not, and currently is not, the Commission-approved
methodlogy for calculating monthly facilities charges under the Company's tari.
(d) For this asst and other assets instlled under the Commission-approve
facilites charg provisions, the Company has fully recovere the cost of a depriated
IDAHO POER COMPANY'S RESPONSE TO THE SEVENT REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 6 Exhibit No. 304
IPC-E-II-08
Reading, ICIP
Page 24
piece of equipment if and when it reaches it assumed 31-year depreciable life, as
descbed on page 38 of Scott Sparks testimony and the Company's reposes to
ICIP's Request Nos. 5, 21, 22, and 23. If a piece of equipment is installed and used
and useful beyond 31 years, the Company contnues to provide readily available utilit
grade equipment inventories, tools, manpower, response servces, and electrical
knowledge and experience for keeping that piece of equipmen in operation. In
additn, the Company disagrees wih th characterization that it has "over-recovered"
as the Company charges and colles what has been autorized by the Commission.
The response to this Request was prepare by Sco D. Sparks, Senior
Regulatory Analys, Idaho Power Company, in consultation with Jason B. Willams,
Corprate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SEVENT REQUESTS
FOR PRODUCION OF THE INDUSTRIA CUSTOMERS OF IDAHO POWER - 7 Exhibit No. 304
IPC-E-ll-08
Reading, ICIP
Page2S
REQUEST FOR PRODUCTION NO. 69: Refere the Company's Respons
to ICIP Request No. 47(c), stating that all cost for facilities installed beyond the point of
delivery are included in the assiaed custmer classe' revenue requirement, and
when the facilities charge revenue is applied as a credit or offt, the associated
customer classs' revenue requirement is reduce.
(a) When the Company includes the cots for distribution facilties beyond the
point of delivery in the revenue requirement, does the Company use a depreciation
schedule as it must for distrbution facilties on the Company's side of the meter
included in the revenue reuirement? Please explain how depreiation is considred
when facilities beyond the point of delivery are included in the revenue requirement prior
to the point that the Company crits facilities charge revenue back to the cusmer
class's revenue requirement.
(b) If the amount of the revenue requirement decrease over time to accunt
for depreciation, but the principal amount of the facilites charge to the individual
customer does not decrse over time, please explain how the indivual facilities
charge customer is not subsidizing the rest of the customer class.
(c) If the. amount of the revenue requirement does not decrease over time to
accunt for depreation of distributon facilites beyond the point of delivry, please
explain how the Company is not over-reovering for depreciated assts.
RESPONSE TO REQUEST FOR PRQDUCTION NO. 69:
(a) Yes. When determining revenue requirements for base rates, the
Company dos not identify and treat separately facilities instlled beyond the
Company's point of delivery. That is, the Company uses the same depreiatin
IDAHO POER COMPANY'S RESPONSE TO THE SEVENH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAH POWER - 9 Exhibit No. 304
IPC-E-ll-08
Reading, ICIP
Page 26
methology for all distribution facilities whn determining it test year revenue
requirement.
(b) Becuse the facilities charge calculation is base on a levelized revenue
determination method and base rates are determined using a single test period methd,
there will always be diffrences in the annual revenue requirements determined under
each meth. These timing diferences or "subsidiesn go in either direction for individual
customers depending on the average age of the faclities subje to the facilites charge.
For example, a customer wi newer faclities will pay less in facilities charges than the
actual annual revenue reuirement with th rest of the customer class paying the
diference through thir base rates. The opposie is tne for customers with older
facilites who pay more in facilites charges than the single-year revenue requirement
would suggest.
(c) The amount of revenue reuirement determined in a test year for a
customer class that is eligible for facilties charges decreases over time to account for
depreciatin of distbution facilites installed beyond the point of delivery. All revenue
reived frm facilties charge customers is creited back to the asociated customer
class leaving no chance for over-rvery.
The response to this Request was prepared under the direction of Scott D.
IDAHO POWER COMPANYS RESPONSE TO THE SEVENTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIA CUSTOMERS OF IDAHO POWER -10 Exhibit No. 304
IPC-E-ll-08
Reading, ICIP
Page 27
REQUEST FOR PRODUCOON NO. 71: Reference the Company's Response
to ICIP Request No. 53(c) , stating that the Company recovers costs associated with
uninsure amounts relate to failed facilities charge equipment by boking thse costs
as expenses and including them in custmer rates. In light of this response, please
explain the basis for not allowing for the facilites charg equipment's initial value to
decrase over time as the piece of equipment depreiates. Plese explain why the
Company includes depreciation as a positve component to the facilites charge that will
increase the amount the customer pays, rather than decrease it
RESPONSE TO REQUEST FOR PRODUCTION NO. 71: The facilties charge
rate calculation is based upon a 31-year depreciation schedule which is reflected in the
return and depreiation components of the rae.
Depreiation is a positive component of the facilities charge becuse it reflects
the Company's recover of it investment in th customer-dedicated facilities that it
installs, owns, operates, and maintains without incrsing the rates of cutomers in th
assocated customer class. The monthly facilites charge is designed to recover all
cost assoiated wih customer-dedicated facilities installed beyond the Company's
point of delivery through a levelized cost-revery approach.
The response to this Requet was preare by Scott D. Sparks, Senior
Regulatory Analys, Idaho Power Company, in consultation with Jason B. Willams,
Corporate Counsel, Idaho Powr Company.
IDAHO POER COMPANY'S RESPONSE TO THE SEVENT REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER -12 Exhibit No. 304
IPC-E-ii-08
Reading, ICIP
Page 28
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-II-08
INDUSTRIAL CUSTOMERS OF IDAHO POWER
READING,DI
TESTIMONY
EXHBIT NO. 305
Idaho Power's Responses to Production Request Nos. 14,15,16, 18,
53, 58, 70, and 73 Regarding the Insurance and Early Failure of
Facilities Charge Equipment
REQUEST FOR PRODUCTION NO. 14: Reference Direct Testimony of Scott
Sparks, p. 39, lines 15-20. Does the insurance carred by the Company cover or
indemnif customers from accent or injury assocted with Company- owned facilites
installed beyond the Company's Point of Delivery If not, does the Company make new
customers aware of the customets lack of coverage or indemnification for Idaho Power
equipment on their propert
RESPONSE TO REQUEST FOR PRODUCTION NO. 14: For Company-owned
facilites installed beyond the Company's point of delivery, the insurace carred by the
Company would cove any loss for which the Company was deemed neligent in an
accient or injury.
The respnse to this Request was prepare by Tim Tucker, Properl and
casualt Administrator, Idaho Power Company, at th direcion of Sctt D. Sparks.
Senior Regulatry Analy, Idaho Power Company, in consulttion with JasonB.
Willams, Corporae Counsel, Idaho Power Company.
IDAHO POER COMPANY'S RESPOSE TO THE SECOND REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 15 Exhibit No. 305
IPC-E-II-oS
Reading, ICIP
Page 1
REQUEST FOR PRODUCTON NO. 15: Reference Dire Testimony of Scot
Sparks, p. 39, lines 18..19 (stating the policy covers equipment subject to the facilities
charge for "propert, casualt, and workers compensation"). Please explain what
"propert is covere and in wht fashion. Please explain why Idaho Power believes
that the policy covers "propert but doe not cover "facilit replacement costs."
RESPONSE TO REQUEST FOR PRODUCTION NO. 15: The propert covered
is the equipment on th custmer's facilities charge and the resulting exposure crated
by Idaho Power owning, operating, and maintaining this equipment, which can result in
propert, third-part liabilty, and workers' compensaion losss. Idaho Power's propert
insurance polic covers "prope damage that results from an insure event but does
not cover "facility replacement costs" asciated with normal wear and tear.
Additionally, virtually all "insured" propert losse occurrng beyond the Company's point
of delivery would fall under Idaho Power's self-insure retention (deductible) and would
be an expens incurr directy by the Company.
The response to this Request was prepare by Tim Tucker,. Propert and
Casualty Administrator, Idaho Power Company, at the directon of Scott D. Sparks,
Senior Regulatory Analys, Idaho Power Company, in consultn wi Jason B.
Willams, COrprae Counsel, Idaho Power Company.
IDAHO POER COMPANY'S RESPONSE TO THE SECOND REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POER -16 Exhibit No. 305
IPC-E-ll-08
Reading, ICIP
Page 2
REQUEST FOR PRODUCTION NO, 16: Reference Diret Testimony of Scott
Sparks, p. 39, lines 15-20. Please provide a copy of the currntly effect insurance
polic(ies) referenced, and ident the provisions that apply to equipment subject to the
facilities charge.
RESPONSE TO REQUEST FOR PRODUCTIN NO.. 16: Please se th
attchd summaries of insurance programs currtly in place. Technically, there are no
provisions that refer direly "to equipment subjec to the facilities charg" as Idaho
Power's insurance stctre is a large "blanket" program that would cover catastrophic
losses assciated wih third-part liabilit, property, and workers' compensation losss
that could ocur at or near the facilities and equipment in question. Most losses that
would occur with facilites charge expoure would fall under deducble levels and would
be paid directly by Idaho Power wiut any insurance recovery.
The response to this Request was prepare by Tim Tucker, Propert and
Casualt Administrator, Idaho Power Company, at the direction of Scott D. Sparks,
Senior Regulatory Analyst, Idaho Power Company, in consultation with JasonB.
Wiliams, Corprae COunsl, Idaho Power COmpany.
IDAHO POWER COMPANS RESPONSE TO THE SECOND REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 17 Exhibit No. 305
IPC-E-ll-08
Reading, ICIP
Page 3
Propert "All Risk" Program including Boiler & Machinery
Named Insured: IDACORP and any subsidiary, and IDACORP's interest in any
partnership or joint venture in which IDACORP has management contrl or ownership as
now constted or herer is acquire, as the respee interest of each may appear.
Mailng Address: P.O. Box 70
Boise, 10 83707
Carrer: Factory Mutal Insurance Company Policy #UW415
Policy Term: May 1, 2010 to May 1, 2011
Perils: All Risks of direct phyical loss or damage induding the perils of earthquake
and flood, including boiler and machinery, and vehicle physical damage.
Policy Form: Power Generation GE 812008
Limit of Liabilit: $2,000,000,000 Policy Limit
Sublimits of Liabilty: The Company wil pay up to the following sublimits of liability in
anyone ocrrnce. These sublimit are part of, and do not serve to increase, the limit
of liability above or the aggregate limits of liabilit below:
$ 200,000,000 Annual aggregate Earthquake
$ 200,000,000 Annual aggregate Flood
$ 200,000,000 Annual aggregate Dams and Dikes
$ 2,000,000,000 Annual aggregate TRIA
$ 2,000,000,000 Demolition, Increased Cost of Constcton
$ 100,000,000 Automatic Coverage (90 days reporting required) - Excludes
EM/Flood
$ 100,000,000 Valuable Papers and Recrds
$ 100,000,000 Accunts Recivable
$ 10,000,000 Data, Prorams or Softare and Computer Systems - Non
Physical Damage combined
$ 100,000,000 Errrs & Omissions
$ 10,000,000 Miscllaneous Unnamed Loctions - EXCludes EM
$ 10,000,000 Bridges and Tunnels
$ 10,000,000 Protection and Preservation of Propert - Time Element-
Excludes Terrorism
$ 10,000,000 Debris Removal
$ 10,000,000 Decontamination Cost
$ 20,000,000 Expeditng Expense and Exra Expense
$ 50,000 Land and Water Contaminant Cleanup, Removal and Disposal
$ 10,000,000 Rentallnsurance
$ 10,000,000 Service Interption - Non-Generation locations only-
Excludes EM
$ 100,000,000 Fine Arts
$25,000 + 50% of Los Professional Fees
Included in Definition of Propert Course of Construction
$ 10,00,000 Soft Cos
$ 10,000,000 Transpotion
'SEE ATTACHED"
Exhibit No. 305
IPC-E-ll-08
Reading, ICIP
Page 4
Deductibles: $1,000,000 Combined all coverage's Including ers, except:
$ 500,000 at locations 22,23,24,25,26,29.32.33, 34 and 41
Combined all coverage's
$ 100,000 Combined all coverage's mobile equipmenUvehicle
physical damage
5% wih $500,000 Min PO & TE Wind coverae in Comonwealth of Puerto Rico
and 1 st Tier Wind Counties
3% with $500,000 Min
PO & TE Wind coverage in 2nd Tier Wind Counties
$ 50,000 Transprttion
2 Day / $500,000 Min. Computer Systems - Non-physical Damage
1% with $100,000 Min Terrsm
Replacement cost, except on Transfrmers 25 years or older, or have not
Valuation: been completely rewound wihin the past 25 years and mobile equipment,
ACV
60-day notice of cancellation, 10 days for non-payment of premium
Exclusions: * Business Interrption
* Nuclear
* New Turbines Instlled or Acquire afer Inception
* Setting, crcking, shrinking, bulging or expansion of dams and dikes.
Special Conditions: * Ex Expense Coverage does not apply to the purchas of
replacement power
* Ex Expense Coverage does not apply to los frm power/energy trading or brokering
activties
* Definition of Occurrence: 72 Hours for Wind, Flood, Earthquake
* Written Notice of LandlWater Contaminant Loss Require in 180 Days
This Summary of Insurance is for your refence only. Please refer to your policy
fo additonal tes, conditions and exclusions that may apply.
Total Insurable Value: $ 4,986,217,000
$ 1,897,000 Annual Premium
Premium: $ 229,000 Terrsm Premium
Included Engineering Fees
None Fees & TaKes
Total Annual Premium: $ 2,126,000
Rate (per $100): 0.038
'SEE ATTACHED"
Exhibit No. 305
IPC-E-ll-08
Reading, ICIP
Page 5
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IPC-E-ll-08
Reading, ICIP
Page 6
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MARSH
r= MARSH MERCER KROLL~ GUY CARPENTER OLR WYMA
IDACORP, Inc.
Di & Ofrs UabDity
AprD 21, 2010 to AprD 21, 2011 Poli Term
/~~"::j:, .............::j.~;...".
'::;IJiítTH, " '$~S:'øo~öO ..
Retention:
-Insg Agment
I(A)
-Insurng Ageeent
I(B)
Premium
-Rated Prum inel
TRA
-ctinuity Creit
-Tota
$0
$500,00
',~.~ai
$35',00;00
$0
$500,000
$713,250 $660,00
$64,16755,83
-7.4%-$53,250
-$64,079
+$10,829
$128,246
$55,00*
-50%
+1.09%
$18,857
$17,024
~~Fl'.~~)tr(li'~tígê'.'$S~"~_ot$3~,"IO'. ,"
ElM (Energy Ins 585,000* 544 050*M~~ ,
:~~t:.~itl;ex~ilj~r(ßì1I'~e.e)'~:sis,Q(~"'.~of.;.;."..
Chubb $115,000 $106,950
Ace $15,00,00 $150,00 - $165,00 $10,000 - $11,000
$ I 5,00,00
$ 1,00,000*
Chubb $95,00 $6,333
* Additional limt for
Indedent Directors
$15,00,000
$ 1,00,000*
Travelers $63,750 $4,250
* Addition limit forIndep Dirtors
Estimated Prmium
only
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thn Travelers with:
. Side-A Fiduciar
coverage included
. A narw pnor
notice exclusion
''rquires
acceptace"
. Conduct Exclusion
trgger is nawer
refeng to a final
adjudicaion in the
underl. action
Like Chubb a ver
solid form.
. Offer $25k of
Identity Fraud
expense not offered
b Chubb:.itòtl.~
SI00 milion Fun Coverae
Incumbt ReneWal Program
$85 mion Fun Coverage
S15 mion Side A DlC - Travelers
Alternate Pro
"~ ':,,!, -. "
Limts $100,000,00
Tota Premum 200 $1,285,00
Tota Prum 2010 $1 46,833Savings $38,171
)tòt:~e:ß~.~lIlt~er:t~~:XLj'sj~ee..~.~.
* Non - admtt carrers (an addional 2.75% Idaho State Surplus Lines Tax I Fee Applies)
'SEE ATTACHED"
Exhibit No. 305
IPC-E-ll-08
Reading, ICIP
Page 16
AEGis Endorsents: Changes / Enhancements frm prior ye
Endormets attched to
the pri AEGIS
policy
1. Employee Ouide Position Covege - Not-For-Profit Orgaatons (Form 6525
10/200); as pe exirg Endorsment No. I
2. Outside Position Cove - For-Profit Orgaons Including Magement or
Optig Cottee (For 6623 1012008), ODL Exteon for th following.
Replacg ex Endoemet No.2:
· Secty Ofshore Insance, Ltd (S.O.I.L..);
. Alled Utity Network;
. Marle Hyd Par;
. HazltonIilson Joint Ventue;
· Y -8 Hydro an Herston Power Parerhip;
. Bridger Coal Compy;
. I W One Percent LLC;
. I W Energy Fund LLC;
. Snow Mount Hyd LLC;
· Y -8 Hydro Parers
. Sout Forks N;
3. Amende Defition of Diror or Offcer- Section VI, Definitons (0) to include th
Genera Counsel, as pe exping Endorsement No.3;
4. Clea Air Act, Title IV and Title V Acid Ra Prog Design Repretative and
Responsible Ofcial Endorsent For 65 i i 512007 as per expirg endormet No.
4;
5. Corprate Entity Securties Clai Endorsent (Cr For Admnistrative
and Reguatory Preeings, Co-efendat)(Form 6627 9/200) With respet to the
endorsment, Pendig and Pror Litigation Dat ~ 4/21/1990 - standd form replacing
expirg endorment No.5;
6. Amended Conduct Exclusion Endorsment (Manusript) - Per expirg Endoremt
NO.6A:
7. Amende Reprentation and Severility- Seties Cla Endorsement (For
6573 11/2008) - stadad form replaing expirg Endorsent No.7;
8. Outside Position Coverag - Ouide For.Profit Orgaization Including Mangement
or Operg Commttees (Scheduled Perns an Position)(Form 6622 10/2008)-
Extion prvided for:
· Laont Kee - Secty Ofshore InSWce Ltd.
· Richards Ri - Alled Utility Network
As pre expir Endorsnt No.8;
9. Amended Exclusion (K)(l) Ins VB. Ins Whtleblower (Form 66125/2007)-
SOX Whtleblower cae-bak, as pe expirg Endorsent No.9.
10. Inured VB. In Amnded Endorsment (Banptcy Examier, Crtor
Committe) (Form 668712008) - as per expir Endorment No. 10
i i. Amended Defition (A)(2) Application Endorsment (Form 6636 7I2oo8)-rech-back
amended to be one ye frm th yea las yea and five in the policy - as pe
expir Endorment No. i 1; but with a one ye look bak;12. Amded Pror Notce Excluion Endorsment (Manuspt), removes GPL claus, as
per expirg Endorent No. 12.;
13. Pulic Ofer Endorment (Form 6630 8100) - Clares covera under Secon
i i & 12 of the Secties Act of i 933, as pe expir Endorst No. 13.
i 4. Amnde Definition of Clai Endment (Manuspt)-amds defition of Claim
to provide coverge for "Wells Notice", as pe expir Endorsement No. 14
is. Amended Subrotion Endormet (Manus)-subrogation claue will be amnd
to be conist with the conduct exclusion, as per expirg Endorsement No. ISA;
16. Non-Cacellation Endorsment-Manuspt-Policy is non-ecellable by iner
excet for non-payment of premium and (b) cacellable by the in ona pr-rat
bais at any time-Replaces expir Endorsment No. 16
i 7. Amended Exclusion (E)(6) (Form 6654) - delete exclusion E(6) peg to injur
aring out of piry, plagiar, et.- as pe expig Endorsment No. 17
18 Amended Acquisition, Merge and Dissolution Endorsement (20% Consideration
Thhold) Form 6586-New
EXniOlt l'O. "u~"SEE ATTACHED" IPC-E-ll-08
Reading, ICIP
Page 17
19. Member wi Voting Rights Endorsement (For 6583 112007), as per expirg
Endorsent No.1 8
20. Terrorim Limits and TRRA of 2007 Enorsnt (Form 6639 112008): AEGIS
hereby offers to provide the abve-naed applicat insuce coverge for an "insed
loss" reti frm an "ac of tesm " eah as defined by the Terrrim Risk
Inur Ac as amde (the "Federl Act"), on the sae ter and in the sa
amunts as loss ca by other events cover by your policy. (Eh of these bolded
te is defied by th Fedl Act those deftions contrl our grant of coverae
uner your policy). Plea re this off cafuly.
ElM ExceS Commenta -Bas on update quote of 4-2010
· Policy Following Form Exces Directrs & Offcers Inity Policy Form Rev. 01/0l/06, as expirng
· The ElM exces Policy For is bein renewed as per the expinng te at the preum noted above, including the below
endorsment.
1. Prior & Pending Litigation-as per exping Endorsment NO.5
2. Non-Canlale excet for Non-Payment -a pe expig Endorent No. 1
3. Terorism - Cefied Act-as pe expiring Endorsmet No.6
· Coverge for "Acts of Terrism" as defned in the Terrism Risk Insurnce Act of2002, includin subseuent acts of
Cogress puuat to the Act, is includ in your expring policy. You should know that, efftive November 26, 2002,
under your existig coverge, any losses cause by Cerfied Act of Terrism could be parly reiured by the
Unite States under a forla eslished by federl law. The additional anual prum to provide renewal coverge
for act ofterrrism is $10,510 which is includ in the preium stte above. You may elect to have coverage
excluded for losss arg fr acts of terorism in acrdance with the Terrrism Risk Insure Act of2002 and
suseuent extions. Atthed is a lett which you are requied to sign eith accepti or rejecti the coverge for
"Acts of Terrrism" (specimen atched). Th decision to acept or reject "Acts of Terrorim" coverage must be mae
by April 21, 2010.
4. Policies Followe-Per wordig in expirg Enorsemen No. 4-
· ElM will ag to follow form AEGIS's Quote lett dated April 8, 20 i 0 including only endorsement num: i, 2
(except pargrph 6),3,4,5,6,7,8 (except pagrh 6), 9, 10, 11, 12, 13, 14, 15, 16, 17 & 18.
· ElM will not follow endorsemet num: 19 & 20.
· With repe to underlying sub lits, ElM only follows form to the extt it afects the ElM attchmnt point.
5. Amend Defition of Clai - as per expiring Enorst NO.2
6. Amend Notce of Cla - as pe exirig Endrsemet NO.3
7. Treant of Payments Side A - as pe exrig Endorsement No.7
8. Have ag to follow the AEGIS 20010 acquition theshold & 12 month look back for definition of application (nee
amnde ElM quote con ths) Received
Traveler Side-A DIC Coverage only
· Ida Cancellation for Nonpayment of Preum
· Identity Fraud Expense Remburt Endrsent ($25k sublimit)
· Addition of Orer of Paymts
. Amnd Severabilty of Exclusions
· Amend Defition of Loss and Fraud and Pernal Profit Exclusion for Setion 15 Claims
· How to Report Losse, Claims, or Potetial Claims to Traveler
· Importt Notice Indepndent Agent and Broker Compensation
· Terrorism Policy Disclosur NotIce- Teror Rik Inurce Act of 2002
. Cap on Losses From Cefied Acts of Terrorism
Subjecdvities:
. AEGIS: None
. ElM:
1. Copy of underlyig binder
2. Prmium payment due by intion (4/21/2010)
. Traveler:
1. Underlying policy binde
"SEE ATTACHED"
Exhibit No. 305
IPC-E-ll-08
Reading, ICIP
Page 18
G-
caliia Brnc
m S. Figer, 14th Flor
Los Ang. CA 9017
Pho: [phone]
Fax [phone]
Date: August 17. 2010
From: Kate Rooker
To: Steve Mikhlin
Copany: MASH AVIATION
Fax Number: programmedCHARTIS
GOLD MEDALLION AIRCRAT INSURACE BINDER
The Coerges are bond pe the ters. conditns. and enrsen of our quot of 08112110
Named Insure: Idaho Powr Company And Idacorp. Inc.
Addre:
Polic#:
Polic Peri:
Coge A:CovgeB:
CovgeC:
CovgeD:CovgeE:
CoF:
CovG:CovH:
Cov I:covJ:
CovergeK:
CovergeL:Cov..:
Co
P.O. Box 70
Bo. 10 83707
G.. 004- a renewal of policY: GM 5393274-8
Fro: Augu 26, 2010 Untl: Augus 26, 2011
bo at 12:01 AM stndar time. at the addre show aboe.
$ 30,00.00 Each Occe$ 30,00,00 Each Oc Mamum se:
Repor Gra Peri: 0 Gra Da
$ 10,00,00 Each OCcurr
Reng Gra Pen: 0 Gra Da$ 10,00,00 Ea OCurrce
$ 300,00,000 Each OCrrce
$ 100,00 An 1 Fire
$ 25,00,00 Ea Aircft - Au$ 25000,00 Each Oc$ NlA Deucle
$ 2.50,00 Each OCurrce$ 30,00,000 Ea Oc$ 30,000,000 Ea Oc
$ 25,00.00 Ea Ofe/Aggrega$ 50,00 Eac Ocnc$ NlA Deuctle$ 25,00 Ea PaxA. $ 500,00 Each Occe (Sculed: Each Non-re Membe)
A. $ 50,000 Eac OCrrce (Sculed: Eac Cre Mem)
B. $ 50,00 Eac OCrrnce (NOlTemp.: Eac Nore Memer)
B. $ 50,00 Eac Oc (NOlTemp.: Eac Cr Membe)
5,00,00 Tot Non-Ow Aira1,250 Each Pas
104 constie weks
45
Wee Indam
Indem Peri
aaeN:
DeuctleFAACe.Year Sets Notin In Motin! Numbe Buil Mae & Mod Cr I Pas Insu Value Mot InaeN521TM199Cess Ci 55 2 I 8 $1750,000 NIL INIL
Co 0:
CovP:
CovQ:CovR:CogeS:
CovgeT:CogeU:
Cov V:CovW:
Coge X:
$ 5,000,00 Eac OCurr$ NlA Deuce$ 10,00,00 Ea OCurce Maum Se: 30Re Grace Peri: 30 Gra Da
$ 5,00,00 An One Aira
$ 50,00 Eac Los Minimum reuir repair peri: 0
$ 50,00 Ea da, no mo thn 60 coecve days, no exceing:$ 60,00 Ea Lo Minimum reuir repa pe: 0
$ 2,00,00 Eac Los
$ 2,00,00 Ea Los
$ 25000 Each Pang and Cre65 % if th air 15 or more cosee days
S 50,000 Eac Occumi (Schedule: Eac PAX)$ 50,00 Eac OCrr (Scule: Eac Cr)$ 50,00 Ea OCrr (Nonned: Each PAX
S 50,000 Each OCurrce (Non-Q: Eac Cr)$ 50,000 Ea Pers (Premis)
$ 50,000 Eac OCrrnc (Preis)
.SEE ATIACHEO"
Exhibit No. 305
IPC-E-1l-08
Reading, ICIP
Page 19
Pilo Warnt:
As Repe All Dual Cre A1rc
Name Pilot: Ric Johnson, Ian Bo, Jef Ple or:
Al tw-p..on cn as ap b( th .. in.
It is fw ni th 81 pi_ .... or ii .... pllo..1I i- SU CO a môonø1mullr __ sp ii fo'" _.. iilI .,wIn'" fI ~ (12) mc of an an
all f11g .- b( lh poic, .. .. th.
1=1 AI Pr
Hun Pr;t LIli PNiull$7, š4 Tot A1rcra Pr::
$5,1
Mexian C8ea: Incud at no Cha
War Hull:
N521TM - $29,
War Liailit
N521TM - $2423,
TRI:
N521TM: HuB. $0, UabiUty - $159.
Producer Comissio is 0.00%
Issuing Compa: National Unio Fir Insrace Company of Pitburgh, PA
Policy For: GLD-2Endorem:
UE86 MEX Waring, UE1013 Policylder Noli,UE200A Dat Recnit Exclusion Clause, UE2001A Date
Recgniton Lim Covere Cl, UE857 Tña Hull, UE858 Tña LlabUlt. GLD426 War HuB (Stae Spe whre
reuire). GLD5E War LibDit (St Spe wh reire), GLD881 - Incidentl Medicl Malprctce LiaililEndorent, GLD937 - Charter Reer libi, GLD83 - Knledge of Ocrrce and FaHure to Repo, , . . . , ,
An Aplible Sta. Pral, or Teral Enrsents and/or No, UE1066 Terrri Excsio - Certed
Acts, UE38B Nuclar Ex (St Sp wher reuired), UE46B No Exusion. UE48B War Exclio (Stae
Specic where reuire), UE88 Ass Exusi
o
ClM:
This binde colain a br oune of cora and do no inud aU th te, codits and exlus of !h polic (or
poli) th may be is to yo. The po (or po) co th full an comple agreen wi reard to coge.Ple review th poficy (or policie) thhl wi your bro upo rept and no us prompty in wñtng if yo ha any
quns. In th ev of any in be th bind an !h po. !h poic languag shll contr unle lh partes
agre to an amment Th Eimn Union is dene by th contes wh are bound by Regula (EC) 7851200 of lhEuro Pant an oflh concl of 21 Apl 200. T oi Preium do not Ince any aplicbl stte anr municipalta.
TR Co ha ben Acpl , pe yor Instcton.
Total Annual Premium:$50,164 /ÍA~Sigre of Au Re:
I~-
"SEE ATTACHED"
Exhibit No. 305
IPC-E-ll-08
Reading, ICIP
Page 20
+ AEGISo
Insurance service
BINDER
June 20, 2011
NAMEDINSURED:
ADDRESS:
Western Intercnneced 8ecc Systems (WIES)
CLO Marsh USA, Inc.
111 Southwest Columbia
Suite 500
Portland, OR 97201
Re: Exces Liability Insurance
CLAIMS-FIRST -MADE Policy
Assoated Elec & Gas Insuranc service Limited hereby agree to provide coverage under Policy
No.
X0676A 1A 11 for the POLICY PERIOD frm the 1 st day of June, 2011 until the 1 st day of June. 2012,
both
days at 12:01 A.M.. Standard Time. at th address of the NAMED INSURED.
1) Preium $415,052
Terrrism $37 ,94
Commission $40,000
Policy Premium $493,000
2)
3)
RETROACTIVE DATE: The 1st day of June, 1998 at 12:01 A.M. Standard Time at the addres of
the NAMED INSURED.
A.
B.c.
D.
E.
F.
G.
LIMIT OF LIABILITY EACH OCCURRENCE:
1. $9,000.000*
2. $18.000,000 GENERAL AGGREGATE
JOINTVENTURE LIMIT OF LIABILITY:
Per Limit of Liabilty Section I.(B)(9)*
COMBINED PRODUCTS LIABILITY AND COMPLETED OPERATIONS LIABILITY
AGGREGATE
LIMIT OF LIABILITY FOR THE POLICY PERIOD:
$9,000,000"
FAILURE TO SUPPLY LIABILITY AGGREGATE LIMIT OF LIABILITY FOR THE POLICY
PERIOD:
$9,000,000.
POLLUTION LIABILITY AGGREGATE LIMIT OF LIABILITY FOR THE POLICY PERIOD:
$9,00,00
MEDICAL MALPRACTICE INJURY LIMIT OF LIABILITY EACH OCCURENCE:
$9,00,000.
WILD FIRE LIABILITY AGGREGATE LIMIT OF LIABILITY FOR THE POLICY PERIOD:
$9,000,00 *
* SUBJECT TO THE $18,000,000 GENERA AGGREGATE OF THE POLICY
4) EXCLUSIONS: As per AEGIS POLICY form.
'SEE ATTACHED'
Exhibit No. 305
IPC-E-ll-08
Reading, ICIP
Page 21
1 Medowands Plaz East Ruthrfrd, NJ 07073 TeI 201 5026 Facile 201 8969
AEGIS and th AEGIS log are Registe Ser Mar of As Elec & Gas Insurace Sers Limit
800 BIND11 (01/2011)
BINDER
5) UNDERLYING LIMITS:
A. See Underlying Limit SCedule.
B. $1,000,000 anyone occurrnce not covered by underlying insurance.
C. In the event of any CLAIM (s) arising fr any single OCCURRENCE which involve(s) two or
more UNDERLYING LIMITS, the UNDERLYING LIMITS shall apply in Combination.
6) Endorsements:
The follog endorment andor excluson will also be ated to the policy.
1. Nuclear Energy Liabilit Exclusion (Broad Fonn), Fonn No. 10o-E8202 (1/88)
2. Employment Prctce Liabilit Endorent, Fonn No. 1ODE8262 (3/11)
3. Employment Prct Liabilit Exusion, Fonn No. 1ODE826 (6/06)
4. Autmobile Liability Exclusion, Fonn No. 1ODE8231 (1/92)
5. Definition (S) Amendatory Endorent, Fonn No. 10o-Moo01 (10/00) as per expiring Endt. No.
5
6. Secon II Definitions Endorsement Fonn No. 100-Moo01 (10/00)
7. Failure to Supply Exclusion Amendatry Endorsement, Fonn No. 10o-M0001 (10/00) as per
expiring Endt. No. 7
8. Additional Exclusion Endorsment, Form No. 1ODM0001 (10/00)
9. Condition (P) Endorsement, Fonn No. 10o-M0001 (10100) as per expiring Endt. No.9
10. Definition (l) Endorsement, Fonn No. 10o-M0001 (10/00) as per expiring Endt. No. 10B
11. Shared Limit Endorsent, Form No. 100MO001 (10/00)
12. Limitation of Liabilit Endorment, Form No. 10o-MOO01 (10100)
13. Membe wit Voting Rig Endoment, Fonn No. 10o-E8402 (1/07)
14. Tersm Limit and TRIPR of 2007 Enorment, Fonn No. 1ODE8409 (1/11)
7) Membership and Votinq Sttus:
This POLICY will entite the NAED INSURED to be a membe in the COMPANY unless that
membership Is supeeded, at any point in time. by a parent or affliated company, which is also a
member in the COMPANY.
This POLICY will also entie the NAMED INSURED to a vote on any matter submitted to the
members of the COMPAN unles that voting riht is superseded, at any point in time, by the voting
right of a parent or affliated company.
8) Terrrism Coverage:
TRIPRA of 2007 (U.S. locations Only)
Terrrism Risk Insurance Proram Reautortion Act of 2007 (TRIPRA) exends the program for
seven years. It eliminates the distinction between forgn and domestic act of terrism while
maintaining the current federal share (85%) and the insurer copay (15%) above the insurer's retention.
It hardens the cap on all insurers' aggregate liabilit at $100 billon. Currnty, it doe not require
insurers to ofer coverage for nuclear, biological, chmical and radiological risks (NBCR). In addition,
the bil maintains th currnt proram triger of $100 millon and the mandatory recoupment layer of
$27.5 billon for federl paymen, specfyng recoupmen timefmes. The Act requires that 133% of
federal outlays be recovered through policyolder surcharges. Finally, it provides for several studies of
insurance availabilit/aforability for NBCR risks and for terrrim market capaciy. AEGIS will
continue to provide terrorim coverage for the policyholder as it has since the original bil was enacted
Page 2 of3
BINDER
in 2002. Further note that any terrrism coverae provided under th AEGIS Excess Liabilty Policy is
subject to the $18,000,000 General Aggreate of th POLICY.
Attched is an invoice for the PREMIUM listed above, whic is payable within 15 days of the date heref,
or 20 days from the inception date abve, whichver is later.
A POLICY reflecing th above terms will be prepared and sent to you shorly. The policy provides
coverage
which is diferent frm that provided by most other poicies.
"SEE ATTACHED"
Exhibit No. 305
IPC-E-ll-08
Reading, ICIP
Page 22
THIS BINDER SUPERSEDES ANY PREVIOUSLY ISSUED BINDER.
AEGIS Insurace Servce, Inc.
l)'prsentative
Page 30f3
&AEGIS'O
Assocated Electrc
& Gas Insurance
Servces Limited
Hamiltn, Beruda
June 20, 2011
WRITTEN STATEMENT FROM FOREIGN INSURER
REQUIRED BY REVENUE PROCEDURE 81-21
Insurer. Asocat Electric & Gas Insurance Servce Limited
Maxwll Robert Building
4th Floor
One Church Strt
P.O. Box HM2455
Hamiltn, HMJX
BERMUDA
Premium Period: June 1, 2011 to June 1, 2012
The Internal Revenue Servce (AIRS") has issue Revenue Prure 81-21, which state that direct
insureds
and U.S. brokers will be exempt fr liabilit for any unpaid Federal Insurance Excise Tax (AFET")
imposed by
secon 4371 of the Internal Revenue Code on underng premiums if they receve a stateent from a
foreign insurer to the eff that the preiums thy pay are subjec to U.S. income tax and concoitantly
exempt fr FET. This sttement will serve as the statement prscbe by the IRS to esblish the FET
exemption.
AEGIS has received a prvate ruling frm th Internal Revenue Service to the effec that it is engaged in a
U.S.
trde or businèS and underwng profi atbutable to preiums paid to it will be subject to incme ta.
The
ruling also provides that such premiums are exempt frm the FET.
This is to advise you that all preiums paid by you to AEGIS wih respect to the captioned premium
perid will
constite an item of effectely conneced incme to AEGIS and thus are exempt from FET.
ASSOCIATED ELECTRIC & GAS INSURANCE SERVICES LIMITED
John J. Denman Jr.
Treurer and Contrller
Mal Robert Building, 4t floor, On Churc St P.O. Box HM2455, Hamiltn HM JX, Bermud 441 2962131
AEGIS and th AEGIS Logo ar Registre Sece Mark of As Elecc & Gas Insrance Serce Umied
8000 FETL (0312007)
-yAEGIS
ASSOCIATED ELECTRIC & GAS INSURANCE SERVICES
LIMITED
UNDERLYING LIMITS SCHEDULE
This schule is atched to and forms a part of Item 6 of the Declarations of POLICY No. X0676A 1 A 11
and lists all underying insuranc or sel-insured retentions maintine by th NAMED INSURED effecve
this 1st day of June, 2011 at 12:01 A.M. Standard Time at the addres of the NAMED INSURED.
Insure or Uninsure
$1,000,000 anyone OCCURRENCE - General Liabilit
'SEE ATTACHED"
Exhibit No. 305
IPC-E-ll-08
Reading, ICIP
Page 23
.. MARSH & McLENNAN~COMPANIES
IDACORP, INc.
FIuCIY Lln.lT
JULY 15,1811 TO JULY 15,2012 PoICY TERM
INSURER AEGIS EXIRG AEGIS RENEWAL
POLlCYFORM AEIS POLICY FORM 2100 AEGIS POLICY FORM 2100
(91200)(9/200)PRy LIM $25.00,00 $25,00,000 INCRICR
RETENTION:
-EA NATUL PERSON $0 $0
-AOOREA TE FOR ALL NATURA PERONS $0 $0
-AGGREGATE FOR SPONSOR ORG AND ALL EMpLOYEE $200,00 $200,000BEN PROGRAS wI RESPECT TO EA WRONGFU
ACT $500,00 $500,000
-$1,000,00 AOOREATE FOR AN CLA IN WHLE
OR IN PART RETED TO CoMPAN'S SECS
PRMIUM
-PRMI INeL TR $139,650*$136,159*-2.5%
(INCLUDES 2% FOR TRIA)(INLUDES2% FOR TRIA)'FJLAmto,in~;,lÔ~_ExCESs'()F$2.tJ~. '.'." .'. ..' ..':.".(.,. '::,.,.' .':..-:d:.'',d'X
FEDERlNs Co (CHUB)$32,250 I $31,445 -2.5%'tótAL~'.... .....'....'.... .... ......'.. ...d"'ò':.:::".......d.
.
$35.00.00 5171.9 I 5167,604 -2.5%
ENRSEMES:1.Exclusion (C) is amended to provide a care back for certai fies an
penalties.Coverge is prvided at a Sub Limt of $5 Million which is
par of the over policy aggregate-as per expirg ent # I;
2.Exclusion (B) is am to provide a cae back to the BIIPD and PI
exclusion for claim resultig frin the selection of any Mange Ca
Serice Prvide or den or delay of any benefit unde a healthcar
plan as per expirg endt # 2;
3.Amend defition of clam to include investigations by the DOL and
PBGe-as per expir endt #3;
4.Amend deition of ined enorment, Trutee to include only
"natu persn" trs.Th eliminates issue ofIdacorp's limt being
eroded to outide corporate trs-as per expirg endt #4 & #14
5.Discover penod enrsement at 125% of th anua premium. Electon
res bilatera, as pe expirng endt #5, but with chage to stadard
form
6.Securties Deuctible Endorsent - $500,000 in the agate for any
Clai in whole or in pa related to the IDACORP's Seurties, as pe
expirg endt #6;
7.HIPA extion endrsent provides coverge for violations of
HIPA-as per exirg endt #7;
8.Deletion of reerion of asets exclusion-as pe expirg endt #8;
9.Notice of Claim or Circustaces Endorsent to "notice of ri
ma or genera counl", as per expirg endorsment No.9;
10.Puntive Daags-Most Favorble Venue Endt-as per expirg endt #10
11.FEB Exclusion (G) Endt-adsses benefits due exclusion, as per
expirg endt # i i
12.Acquiition, Merger and Teron Endt-amended to provide (a) 25%
ast thshold an (b) pre-acquisition coverage for creted and acquire
subsidiaes (c) automatic coverage for crte plas, as per expirg
endt#12
13.Order of Payments Endt ,as per expir endt #13
14.Amnded Cancellation Endt-cancellation amended to be non-ecellable
by the Compay except for non-paymen of prum / cacellble by the
Insur on a pro-rata basis, as per expir endt # 1 5
15.Amded Defition of Sponsor Orgaon-Defiition (P) Sponsr
Orl!ation Amend to include the ''rultI debtor in possession or
'SEE ATTACHED"
Exhibit No. 305
IPC-E-ll-08
Reading, ICIP
Page 24
equialent statu outside the United State", as per expig endt # 16
16. Amended Exclusion (D)(I) - Prior notice exclusion wil only apply with
repect to a Fiduciar policy, as pe expirg ent #17
17. Amende Condition (A) Endt-Acts, Omissions or Wainties is amnded
to indicate the Policy is non-rescdale with repe to Natu Pern
Insur only, as per expirng endt #18
18. Deleton of Exclusion J, deletes known cirumtance likly to give rise
to a Claim not dilosed or misrerete in the Log Form Aplication
(exclusion does not apply to Renewal Application), as per expirg endt
#19.
19. Amende Non-Duplicaon of Limits Endorsement (mauscript) to not
allow wordi to aply to the AEIS D&O limits, as pe expirg endt
#20.
20. Memr 1 Votig Rights Endorsemt-as per expirgendt #21 Policy
alo entitles the Sponsor Orgon to a vote on any matt submitt
to the membrs of the Insur as per expirg endt #12
21. Opona: Terrm Limits and TRIA Endrsement AEGIS herby
offer to provid the above-na aplicat insurnce coverge for an
"inur loss" resultig frm an "act of terrrim," eah as defied by
the Terrim Rik Insurce Act, as amende (the "Fede Act, 011
the same term and in the sae amoun as loss causd by other events
covere by your policy. (Eah of thes bolde te is defied by the
Feder Act those definitions contrl our grt of covege under your
policy). Plea rea th offer cafuy (se AEGIS quoe for ful term)
Endorsementsorm Attched To The Chubb L.1()2-l295-Imprtt Notice To Policyholders (6/07 ed.)- expiring
Exces Policy:2.14-2-1304Penng Or Prior Matts Follow Form (4/07 ed.) -a per
Expirg endt #1
3.14-2-13045-Termon Follow Form (4/07 ed.) as per expirig endt#2
4.14-o2-13438-Amd Insurng Claus & Deletion of Underlyig Limts
Secon Endt (9/08 ed.) as pe expirng endt #3
5.14-2-8034- Not Follow Form ofTerrrism Exclusion (05103 ed) as per
expirg Ent #4
6.14-2-9228-Cmpliance With Applicable Trae Sanon Laws(4/04 ed.),
as pe expirg endt #5
7.14-o2-9963-Reliace Endorsemet (12/05 ed) as per expirg ent #6
*NON-ADMI CARERSAN ADDITIONAL 1.75%% IDAHO STATE SURLUS LINS TAXE APPLIES
Comments regarg key changes to the AEGIS primary fiuciry coverage:
· Al covera under the AEIS policy is in acce with the expirg policy form
Chubb Excess Fiduciary Coverage Commnts:
· All coverge under the Chbb policy is in acrdace wi the expir policy form
Subleeties:
. AEGIS: None
. Chubb:
. Underlying binder, prior to bin
. Underlyig policy, when available
.SEE ATTACHED"
Exhibit No. 305
IPC-E-ll-08
Reading, ICIP
Page 25
.. MARSH & MclENNAN~COMPANIES
IDACORP, INc.COMCI CR
JULY IS 2O11 TOJULY IS,20t: POLICY TERM
INSURER INCREIECR
PRARY LIM
-EMPLOYJE THEF-PREES
-INTRNSlT
-FORGERY
-COMPUT FRUD
-Fu TRFER FRUD
-MONEY ORER & COVlT
FRUD
-CRIT CAR FRUD
-CIE COVERAGE
-EXPNSE COVRAGE
RETENTON:
FEER IN Co (CH)EXIRG FEER IN Co (CHB)
RENEAL
$25,00,00
$25,00,00
$25,00,00
$25,00,00
$25,00,00
$ I 00,00
$ I 00,00
$25,00,00
$25,00,000
$250,00
$ 1 00,00
$5,00 FOR Fus
TRSFER & CREDIT CAR
FRAUD
S25,OO,OO
$25,00,00
S25,OO,00
$25,00,000
$25,00,00
$100,00
$100,00
$25,00,00
$25,00,00
$25000
$100,000
$ 1,00 FOR Fus
TRNSFER & CREIT CARD
FRAUD
N/A
N/A
PRIU -4%
SAVIGS
ENRSEMEN/FORS:
S6Z,s S600
SZ,s
Geer Tem & Conditions
1. 14-02-7302 (Ed 11/200) Policy Form Geer Tem & Conditin&as exp
2. 10-02-1295 (Ed 612(07) Importt Notice to Policyolder exp
3. 14--14672 (09/2008)-Terinaton of Policy Endorsmet as per exp #1
4. 14--746 (1 112002) Ida Amendatory Endt Wording is as per exp endt #!
5. 14-02-7993- i 112007) Notice of Loss Contrl Serce as pe exp
6. 14-2-9228-(212010) Compliace with Aplicable Trae Sacton Laws.
Crime Covere Secon
i. 14-2-7307 (Ed. 1 1/200)Policy Form Crme Setion-As Exp
2. 14-2- lO243-Amen Retion for Specific Insug Clauas pe exp endt # I.
3. 14-2- I 0685 (Ed 312005) Amd Definition of Employee as per exp endt #2
4. 14-2- I 0894 (04/2008) Amend Defiition of Exective Endt-as per exp endt #3
5. 14-2-13658 (04/200S) Pension Protecon Act Enhancent Endt-as per exp endt #4
6. 14-02-7402-(1012002) Ame Definition of Employee Endt-as pe exp endt #5
7. 14-2-8592 (7125) Converion to Lo Discover Endt-as per exp endt #6
8. 14-2..754 (812003)Delet Exclusion 17 End-as pe expirg endt #7
9. 14-2-8850 (1012003) Joint Ventu Endt-as pe exp endorsent #8
10. 14-2-8907 (101200) -Amd Exclusion 19 Endt - Coverge doe not apply if such loss is cove
under a reewal or relamet policy off by Chubb as per exp endt #9.
i i. 14-0-8923- (412007) Amend Subseon 23 Changes in Exposure Endt - to increase the rertg
time frme frm 60 days to 90 daysas pe exp endt #10
12. 14-2-8924 (1112003) Amend Subseon 25 Limi of Liability and Retetion Endt-as pe exp endt
#11
13. 14-0-8925 (1 112(03) Amd Valuation of Securities Endt-as pe exp endt #12
14. 14-0-8926 (i 112003) Amed Exclusions Endt-as per exp en #13
15. 14-2-8927(1112003) Amd Exclusion Endt-as pe exp endt #14
16. 14--8928 (i 112(03) Amd Exclusn Endt-as per exp en #15
17. 14--8931A (4!2008)-Amd Defiition of Employee Endt- as peexp endt#16
18. 14-0-8932 (1 112(03) Amd Denition of Secties Endt-as pe ex endt #17
19. 14-2-8933 (i 112(03)-Am Money Or an Counteit Currcy Fraud Endt as perexp ent
#IS
20. 14-02-9146 (21200) Amend Exclusion 12(h)(ii) Endorsent - as pe exp endt #19
21. 14-02-9261 (412004) Amend Definition of Compter Syste Endt-as per exp endt 20
22. 14-2-9461 (71200) Amend Definition of Dicovery and Exclusion 13b as per expiring endt21
Crime Coverage Summar:
Th Chubb policy form is as expirng
· The 201 i strte was to reew at a flat or bettr premum given tht thir reention and pricing re below maet. Chubb ha
agr to a 4% reduction.
Subjecties: None
'SEE ATTACHED"
Exhibit No. 305
IPC-E-II-08
Reading, ICIP
Page 26
.~!
IDAHO POWER COMPANY
Premium estimate for Guarantee Cost Plan
Period: 04/01/2011 - 04/01/2012 Policy: 2598
Plan: 1
Class Description Payroll Rate Premium
'7539.8810
flee Power Co-Noc-AIl Emps & Dr
Offce Clerical
. $3,755,195 - 2.73
$46,422 - .15
$102,517
$70
Total Payroll.... $3,801,617
Manual Premium
Expenence Rating Modification
Standard Premium
- $102,586
.92
$94,380
x
Premium Discount
Discounted Premium
$12,907
$81,473
Terrorism Premium
Catastrophe Premium
DCBS Premium Assessment (§ 6.4%-'Total Premiums and Asesments
$380
$380
-$5,263
$87,496
+
+
+
..
Premium discount
schedule
Firs $3,500 0.0%
Next $14,500 10.0%
Next $82,000 15.0%
Over $100,000 16.5%
Terrorism premium = total payroll /100 x .01
Catastrophe premium = total payroll /100 x .01
Premium and rating factors wil change on your anniversary rating date to those in effect at that time.
Your policy premium is based on your current estimated premium and may be prorated for polides issued for less than a full year
ot adjUst based on actual payroll by classification.
POlicy _PrpoLPackeU'remEst clmit~tl~IPC-E-ll..08
Reading, ICIP
Page 27
.SEEATTACHED"
ui
CO
:¿n
COtt
REQUEST FOR PRODUCTION NO. 18: Reference Direct Testimony of Scott
Spark, p. 39, lines 15-20. Please provi the insurance claims for Company-owned
equipment associated wi the facilities charge file by the Company for each year for
the years 1987 through 2010, organiz by rae Schedule.
RESPONSE TO REQUEST FOR PRODUCTION NO. 18: There are technicall
no "insurance" claims rearding this equipment as any loss during that time frame fell
within the. self-insure deductble range. However, Idaho Power pays for any such
losses direc (wiut any insurance revery). Idaho Power's currnt standard
propert insurance deductible (i.e., self-insure) is one milion dollars per loss.
The respnse to this Request was prepared by Tim Tucker, Propert and
Casualt Administrr, Idaho Power Company, at the direction of Scott D. Sparks,
Senior Regulatory Analyst, Idaho Power Company, in consulttin with Jasn B.
Wiliams, Corporae Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPOSE TO THE SECOND REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER -19 Exhibit No. 305
IPC-E-U-08
Reading, ICIP
Page 28
REQUEST FOR PRODUCTION NO. 53: Refernce the Copany's Respose
to ICIP Request No. 15 (stating "virtally all 'insure' propert losses occrrng beyond
the Company's point of delivery would fall under Idaho Power's self-insured propert
retention (deductible) and would be an expense incurred directly by the Company").
Please explain how the Company recovers costs associated with its "self-insured
propert retention. H
(a) Does the Company recover such self-insure amounts through rates?
(b) How would the Company pass on its uninsure losses to customers? For
example, please descrbe the ratemaking trtment of an uninsured failure of a piece of
distributon equipment on the Company's side of the meter that fails prior to expiration of
it depreiation schedule.
(c) Has the Company ever implemented similar treatment for a piece of
distribution equipment beyond the point of delivery. Please explain what prevents the
Company from trating uninsure facilities charge distribution equipment diferent from
uninsure distribution equipmen not subject to the facilites charge.
RESPONSE TO REQUEST FOR PRODUCTION NO. 53:
(a) Yes. The Company revers costs assciated wih self-insured amounts
. through Commission-apprved ratemaking process. Self-insure amounts (costs
falling below the Company's self-insured minimums) paid by the Company are booked
as expenses and included in custmer rates in th same manner that other Company
expenses are recovere.
(b) When distribution equipment fails on th Company's side ofthe meter, it is
retire and a new piece of equipment is installed and beins depreciating. Any
IDAHO POWER COMPANY'S RESPONSE TO THE SIXH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER -15 Exhibit No. 305
IPC-E-II-08
Reading, ICIP
Page 29
adjustment in deprecion raes resulting frm early failure or rerements is reflected
in the Company's next depreciation study. Depreciation studies are done on five-year
cycles. Depreciation expenses are revere through customers' rates because this
equipmen is used to serve multiple customers and is not solely dedicated to one
customer, which is the case for equipment subject to the facilities charge. Notably, the
example provided for in this Request doe not represent a loss for insurance purposes.
(c) Yes. The Company trets replacement of equipment failure for
distribution equipment beyond the Company's point of deliver in a similar manner by
adjusting customers' facilities charges to reflect the cost of replacing failed equipment.
The Company has not and does not intend to trat self-insured facilites charge
equipment diferently from self-insured distbution equipment not subjec to the facilites
charge.
Th response to this Request was prepare by Scott D. Sparks, Senior
Regulatory Analyst, Idaho Power Company, in consultation wih Jason B. Willams,
COrprate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 16 Exhibit No. 305
IPC-E-ll-08
Reading, ICIP
Page 30
REQUEST FOR PRODUcnONNO. 58: Reference the Company's Response
to ICIP Request No. 24(c). Does the Company's investment in distrbution facilities
installed beyond the pOint of delivery (or the depreiated value theref) remain
anywre in the Company's revenue reuirement if the equipment expires prior to its
31-year depreatin schedule?
RESPONSE TO REQUEST FOR PRODUCTION NO. 58: No.
The response to this Request was prepare by Scott D. Sparks, Senior
Regulatory Analyst, Idaho Power Company, in consultation wi Jason B. Williams,
Corprate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SIXT REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 25 Exhibit No. 305
IPC-E-ll-08
Reading, ICIP
Page 31
REQUEST FOR PRODUCTN NO. 70: Plse admit or deny that in meengs
wih representatives of the ICIP in the fall and winter of 2010 rearding the facilities
charge, Idaho Power reprentatives stated that th reason the Company does not
apply a depreiation schedule to the initial investent in facilities charge equipment is
that Idaho Power take on the risk that it will have to replace a piec of failed equipment
prior to expiration of it deprecation scheule. Please also admit or deny that Idaho
Power stted that its insurance policy would not cover replacement of such equipment.
RESPONSE TO REQUEST FOR PRODUCTION NO. 70: The Company objecs
to the form of the question as it is not a proper form of producton reuest per the
CommiSSon's rules. Notwthstanding, Idaho Power asserts that it uses a levelized 31-
year stright-tine depreciation schedule for the Company's inital investent in facilties
charge equipment. Idaho Power further asserts that under th Commission-approved
facilities charge provisions, the Company will replace a failed piece of equipment prior
to expiration of its depreciation scedule without fully revering the cost of the failed
piece of equipment. Morever, the Company's insurance policy does not apply to
replacement of piece of equipment that fail prior to expiration of their expeted useful
life as these are not considered insurable losses. This was furter discusse in the
Company's responses to ICIP's Request Nos. 15 and 16.
The reponse to this Request was prpare by Scott D. Sparks, Senior
Regulatory Analyst, Idaho Power Company, in consulttion wih Jason B. Willams,
Corprate Counsel, Idaho Power Company.
IDAHO POER COMPANS RESPONSE TO THE SEVENTH REQUESTS
FOR PRODUCTION OF THE INDUSTRiAl CUSTOMERS OF IDAHO POWER - 11 Exhibit No. 305
IPC-E-ll-08
Reading, ICIP
Page 32
REQUEST FOR PRODUCTION NO. 73: Reference the Company's Response
to ICIP Request No. 58. Please confinn that the Company would recover the uninsured
costs of such equipment failing prior to expiration of its 31-year depreiation schedule in
the manner discussed in the Company's Response to ICIP Request No. 53.
RESPONSE TO REQUEST FOR PRODUCTION NO. 73: If a piece of
equipment under a facilites charge faile prior to expiration of its 31-year depreciation
schedule and was included in the Company's test year base rates, then recovery of the
uninsured costs of the failed equipment would occur through customets rates as
described in the Company's Response to ICIP's Request No. 53. However, if the piec
of equipment failed outside of a test yer, then the Company would not recover the full
cost of the equipment, as is the case for all of the Company's distribution equipment.
The response to this Request was prepare by Scott D. Sparks, Senior
Regulatory Analys, Idaho Power Company, in consultation wi Jason B. Willams,
Corporate Counsel, Idaho Power Company.
DATED at Boise, Idaho, this 28th day of September 2011.
~~c; CO '
~y~~~~~~~~~wer Company
IDAHO POWER COMPANY'S RESPONSE TO THE SEVENTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIA CUSTOMERS OF IDAHO POWER - 14 Exhibit No. 305
IPC-E-II-oS
Reading, ICIP
Page 33
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-II-08
INDUSTRIL CUSTOMERS OF IDAHO POWER
READING,DI
TESTIMONY
EXHIBIT NO. 306
Idaho Power's Responses to Production Request Nos. 19, 20, 57, and
72 Regarding Customer Consent to the Facilities Charge
REQUEST FOR PRODUCTION NO. 19: Reference Direct Testimony of Scott
Sparks, p. 35, line 7 (stating, "At the option of the Company, facilities charges may be
offre . . . .). Is the facilities charge optional for Schedule 19 customers, or does th
Company choose whether any facilities beyond the point of delivry will be ownd by
th Company?
RESPONSE TO REQUEST FOR PRODUCTION NO. 19: As stated in the
Company's tari, facilit charges provisios are offred at th option of the Company.
When servce is firs estblishe, Schedule 19 customers are expected to provie
facilities beyond the point of delivry. However, if reuested by the customer, Idaho
Power may offer to own, operate. and maintain such facilites wtich, if offered and
accepted, reuire a facilties charge that is no opiol to the customer.
The response to this Request was prepared by Scott D. Sparks, Senior
Regulatory Analyst. Idaho Power Company, in consultation wi Jason B. Willams,
Corporate Counsel, Idaho Power Company.
IDAHO POER COMPANY'S RESPNSE TO THE SECOND REQUESTS
FOR PRODUCTION OF THE INDUSTRIA CUSTOMERS OF IDAHO POER - 20
Exhibit No. 306
IPC-E-II-08
Reading, ICIP
Page 1
REqUEST FOR PRODUCTIN NO. 20: Reference the Schedule 19 Tari.
(a) Please admit or deny that the Schule 19 Tariff sttes:
At the opton of the Compny. transfrs and othr
facilties instlled beyond the Point of Delivery to
provided Primary or Transmission Servce may be
ow, operated. and maintained by the Company in
consideration of the Customer paying a Facilites
Charge to the Company.
(b) Please admit or deny that th Schedule 19 tari provides no statement
that customers have the optin to own and operate all facilties beyond the point of
delivery. If deny, please explain.
(c) Please provide the legal basis for the Company to require that it own
facilities on the prpert of Schedule 19 customers. Ifthe customer doe not consent to
the Company placing and maintaining such equipment on the customer's propert. does
the Company believe that the tari give it the legal right to do so? Does the Company
obtain wrtten consent frm customers to place facilities on the customers' propert
What tye of consent does the Company obtain?
RESPONSE TO REqUEST FOR PRODUCTION NO. 20:
(a) The first paragraph of the facilites charge provisions in Schedule 19
sttes, a At the option of the Company. transformers and other facilites installed beyond
the Point of Delivery to provide Primary or Transmission service may be owned,
operate. and maintained by the Company in consideration of the Customer paying a
Facilities Charge to the Company."
(b) Schedule 19 states what Idaho Power wil possibly do beyond the point of
delivery, but is not intended to addre what customers mayor may no do with their
propert.
IDAHO POWER COPANY'S RESPONSE TO THE SECOND REQUESTS
FOR PRODUCTION OF THE INDUSTRIA CUSTOMERS OF IDAHO POWER - 21 Exhibit No. 306
IPC-E-ll-08
Reading, ICIP
Page 2
(e) There is no legal reuirement that the Company own facilities on the
propert of Scedule 19 customers. At the eustomets request, the Company, at its
option, may install Company-owned facilties on the customer side of the point of
delivery. Schedule 19, on file and approve by the Commissio, gives the Compny
this option and the legal autority to do so.
The response to this Request was prepared by Scott D. Sparks; Senior
Regulatory Analy, Idaho Power Company, in consulttion with Jason B. Wiliams,
Corprate Counsel, Idaho Power Company.
IDAHO POER COMPANS RESPONSE TO THE SECOND REQUESTS
FOR PRODUCTION OF THE INDUSTRIA CUSTOMERS OF IDAHO POWER - 22 Exhibit No. 306
IPC-E-II-08
Reading, ICIP
Page 3
REQUEST FOR PRODUCnON NO. 57: Reference the Company's Response
to ICIP Request No. 20(c). Please confirm that the Company does not obtain wrtten
consent - through unifonn contrct or otse - frm customers pnor to placing
facilities beyod the point of delivry and signing the customer up for the facilities
charge. If not, please explain how the Company obtains informed wrien consent.
RESPONSE TO REQUEST FOR PRODUCTION NO. 57: Beginning in 2010,
prior to placing facilties installed beyond the Company's point of delivery on a facilities
charge, customers sign a Servce Request form indicating that the facilities charge wil
be added or adjusted on their monthly power bil. Specifically, the language on the
Service Request form states, "I understand that the Facilites Charges billng will be
added or adjusted on the monthly power bil after the work order construction and
reconcilation proces is complete."
The response to this Request was prepare by Scott D. Sparks, Senior
Regulatory Analyst, Idaho Power Copany, in consultation wih Jason B. Willams,
Corporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SIXTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 24 Exhibit No. 306
IPC-E-II-08
Reading, ICIP
Page 4
REQUEST FOR PRODUCTION NO. 72: Reference th Company's Response
to ICIP Request No. 57. Please provide the "Servce Request Form." Please confirm
that the form is not provided to or signed by existing facilties charge customers, except
with reard to new equipment instlled at their premises.
RESPONSE TO REQUEST FOR PRODUCTION NO. 72: Please see th
attched PDF file for a copy of the Serve Request Form. The Servce Request fomi
for facilities charge custome is signed by new customers going on a facilities charge
and by existng customers reuestng alterations to equipment installed under the
facilities charge provisions.
The rense to this Request was prepare by Scott D. Sparks, senior
Regulatory Analyst. Idaho Power Company, in consulttion with Jason B. Williams,
COrporate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPOSE TO THE SEVENTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POWER - 13 Exhibit No. 306
IPC-E-II-08
Reading, ICIP
PageS
'_.'~ "¡ i~'":"Rj.: -j/~":'~;:. :...
Idao Power Company
Serce Request
Pa; I
Da: l!011
~.~f'')l1ëZ~.Pr
Servce Request Number. 003lil58
Work Orer Numbe:
Reques TYpe:
Ra Sch.:
Rely By'
Contact Deail:
FC
SPF Loion
Sërvice Locon.
Requir m Seice Da:
Plamg Centeifea.
GRAMAPP
81312011
CCANYON
CUST 465111
lPCO 465-85
Attibute Information
Faciliti .charg
Serce Volte
Numbe of Phas
KW Motr Load:
Lares Motor
I Phae KW Demand
3 Phase KW Demand
Commerial KW Loa
Commercial Deit Amount
No. Of Met
Metr Locion
CtLo
Pnar OHlG
seice OHlG
SrvOwner
Pael Amp Siz
Note
install priar met underound to pme swh and raal fe to mulpl
pa mounted xfrr.
I ~ that the Facilites Chges billi will be ad or atstd on the montly power bil afer the work order constron
and recilion proc is coplet
I understad that reeste cos esat for reovas or tn ar biled ba on esated cos Requesed estiat for
instals are ba on an esate, and the acal month Facilties Chare is biled based on actu renciled work order cost for in1s
I verifY that the information I have provied is ac to the be of my knowledge
I undersd th any chanes to the projec includig bu not limit to; loa locon, voltae, et, may relt m addional ches
Client Signat Date Major Cutomer Rep. Signatu Date
Exhibit No. 306
IPC-E-ll-08
Reading, ICIP
Page 6
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-II-08
INDUSTRI CUSTOMERS OF IDAHO POWER
READING,DI
TESTIMONY
EXHIBIT NO. 307
Idaho Power's Responses to Production Request Nos. 9, 10, 11, and
68, and Correspondence Regarding Idaho Power's Position on
Selling Facilities Charge Equipment
REQUEST FOR PROI2U~TIN NO.9: Is th Company willng to sell the
Company-owned facilites beyond the point of delivery to it customers at the
depreciated bok value? If ye, please explain why this option is not provied for in the
Schedule 19 tari. If no, please explain why.
RESPONSE TO REQUEST FOR PRODUCTioN NO.9: No. It Is th
Company's polley not to sell Compny-oed faciltis instlled beyond the point of
delivry.
The response to ths Request was prepare by Scott D. Sparks, senior
Regulatory Analyst. Idaho Power Company, in consulttion wih Jason B. Wiliams,
Corporate Counsel, Idaho Power Compay.
IDA POER COMPANS RESPONSE TO THE SECOND REQUESTS
FOR PRODUCTION OF THE INDUSTRIA CUSTOMERS OF IDAHO POWER - 9 Exhibit No. 307
IPC-E-ll-08
Reading, ICIP
Page 1
REQUEST FOR PRODUCTION NO. 10: Is the Company willng to sell the
Company..wned faclltles beyond the point of delivry to it custome at the fair market
value? If yes, please explain why this opn is not prvied for in the Schedule 19
tari. If no, please expin why.
RESPONSE TO REQUEST FOR PRODUCTON NO. 10: No. It is the
Company's policy not to sell Company-owned facilities inslled beyond the point of
delivery.
The response to this Request was prepared by Scott D. Sparks. Senior
Reulatory Anlys, Idaho Powr Company, in conslton wi Jason B. Wiliams,
Corprate Counsel. Idaho Power Company.
IDAHO POER COMPANY'S RESPONSE TO THE SECOND REQUESTS
FOR PRODUCTION OF THE INDUSTRIA CUSTOMERS OF IDAHO POWER -10 Exhibit No. 307
IPC-E-II-08
Reading, ICIP
Page 2
REQUEST FOR PRODUCTION NO. 11: Referenc the emaH cotaine in .ICIP
Secnd Requests for Productn Attchment 1. Plea explain why the Company
determined it could not sell Company-owned facilites beyond the point of delivery to
J.R. Simplot Company. Please include explanation of both bases assrted for the
decision not to sell facilltes - (1) I.C. § 61-328 and (2) the way Idaho Power wants to
run it business as a reulated public utilit.
RESPONSE TO REQUEST FOR PRODUCTION NO. 11:Company
reprentatives met with Don Strtevant, Energ Manager, Conservation, Alteratives,
& Prourement, for the J.R. SimpJt Company ("Simplot"); Simplofs atrney, Mr. Gre
.
Adams; and Simplots consultant, Mr. Don Reading, Vice Preident and Consulting
Economist, wi Ben Johnson Assciates, Inc., at their request on Dember 28, 2010,
and again on April 11. 2011. to discuss the Companys position related to the sale of
Company-owned facilities to Simplot. At the April 11, 2011, meting, Idaho Power
representatives explained that it had made a business decision that it was not going to
sell Company-owned facilities to Simplot. As a regulated public utlity, the Company
operates it business wihin the parameers of the law, its regulators, and its taris with
customers. The Company is fre to make any business decision so long as it does so
within those parametrs. Idaho Code § 61-328 requires the Idaho Public utilities
Commission ("Commission") to autrie the sale of any public utlity propert finding
that suc sale (a) is consistent with the public interest; (b) that the cost of and raes for
supplying servce will not be increased by reason of such transactn; and (c) that the
applicant for such acquisiton or trnsfer has the bona fide intent and fiancial capabilty
to operate and maintin the trnsferr propert in the public serce. In this instnce. if
IDAHO POWER COMPAN'S RESPONSE TO THE SECOND REQUESTS
FOR PRODUCTION OF THE INDUSTRIA CUSTOMERS OF IDAHO POWER - 11 Exhibit No. 307
IPC-E-U-8S
Reading, ICIP
Page 3
Idaho Powr were to elec to sell Company-own facilit to Simplot, it would need to
increse the revenue reuireent and rate to rever the revenue requirement for
Schedule 19 customers as a result of the trnsaction. At th conclusion of the April 11.
2011, meeting, Simplots attorney indicaed it was going to send a letter to Idaho Power
reuesting a formal price quote for the amount necessary for Simplot to pay for the
removal of Company-own facilit on it side of the point of delivery that included an
amount necssry that would hold all othe Scheule 19 customers hannless. To date,
Idaho Power has not received any such reque. Regrdless of whther the Company
doe receive such a request, Idaho Poer has determine that, at this time, it is not in
the busines of sellng these types of Company-owned facilites to third partes.
The response to this Request was prepared by Scott D. Sparks, Idaho Power
Company, and Greg Said, Vice President of Regulatry Affirs, Idaho Powe Copany,
in consulttion with Jason B. WiUiams, Corprate Counsl, Idaho Powr Company.
IDAHO POWER COMPANY'S RESPONSE TO THE SECOD REQUESTS
FOR PRODUCTION OF THE INDUSTRIA CUSTOMERS OF IDAHO POWER -12 Exhibit No. 307
IPC-E-ll-08
Reading, ICIP
Page 4
REEST FOR PRODUCTIN NO. 68: Refernce th Company's Response
to ICIP Request Nos. 9, 10, 11, and 51. Please confrm, despite th responses to these
questions that it is not the Company's policy to sel distrbution facilties to customers,
that in Case No. IPC-E-oS-16 the Company sold distribution facilities to the Sun Valley
CompanylSinclair Oil Co. at depreiated bok value. What is the Company's policy?
Please explain why the Company will sell facilities to one custmer at book value but
refuses to sell to other customers at bok value.
RESPONSE TO REQUEST FOR PRODUCnON NO. 68: The Company's
response to ICIP Request Nos. 9, 10, and 11 all clearly state the Company's policy that
it will not sell Company-owned facilits installed beyo the point of delivery. The
Company's repose to ICIP No. 51 sttes that in the last fie years, one custmer has
reuested reval of facilites instlled beyond the Company's point of delivery. IPUC
Case No. IPC-E-oS-16 involve a unique sitution whereby the Company and Sinclair
Oil Company d/b/a Sun Valley Compay caSun Valley") mutlly agree to submit a joint
application to IPUC to transfer certin distrbuton facilites frm the Company to Sun
Valley. ¡PUC approve the transf, concluding that the transfer would "not cause any
increase in raes and Sun Valley will be able to maintain the acuire distnbution
facilites necry to se its tenant. We find the improved operating effciencies
serve th public interes." IPUC Order No. 2964 at 3-.
Th respnse to this Reque was prepare by Jason B. Wiliams, Corprate
Counsel, Idaho Power Company.
IDAO POWER COMPANY'S RESPONSE TO THE SEVENTH REQUESTS
FOR PRODUCTION OF THE INDUSTRIA CUSTOMERS OF IDAHO POER - 8 Exhibit No. 307
IPC-E-II-08
Reading, ICIP
PageS
JlN" m.ATTORJl£YS AT LAW
Tcl: 208.938.7900 Fax: [phone]
P.O. Box nl8 Bois.1D 83707 . 515 N. 27th Sr. Boc. ID 83702
July 30. 2010
Via u.s Mll tU E-
Donovan E. Waler
Idao Power Comy
P.O. Box 70
Boise. Idah 83707-0070
dwalker(æidalopower.com
Re: Idao Power's Facilies Che for La Power an Speial Contrct Cuomers
De Dovan
I wrte on bef of my clien th Inusal Cuomer of Idao Powe ("ICIP''), rega Idao
Powe's Scheule 19 ta faty chae, whch is also inlud in sp contr for power
saes above the Scheule 19 talimt I left you a mese rega ths maer ths we bu am
sedig ths let to fty prt my client's co in ho of re a spy reluton toth ma.
Backgun
Ida Powe's Schedule 19 ta inlu a faes cha, whch stte as follows:
FACILITS BEYOND TH POIN OF DELIVERY
At the opton of the Compay, trformers an other
facties insted beyond the Point of Deliver to provided
Prar or Trassion Serce may be owned opeted, and
mainted by the Compay in consderation of the Custmer
payig a Facilties Che to the Compay.
Compy-own Facilties Beond the Point of Delivery
wil be se for in a Distbuton Facilites Investent Reprt
provide to the Cusmer. As the Compay's invesent in
Facilties Beyond th Point of Deliver changes in order to provide
the Cumer's sece reuients, th Compay sha noti the
Exhibit No. 307
IPC-E-II-08
Reading, ICIP
Page 6
Mr. Wal
July 30, 2010
Page 2
Cuomers of the additions and/or deletons of failties by
forwarg to the Cuomer a revised Distbuton Facilties
Invesent Reprt
In the event the Cusomer reuests the Company to remove
or rein or chae Compy-owned Faclities Beyond the Point
of Deliver, th Cusmer shl pay to the Compay th "non-
savable cost" of suh removal, reinaton or chage. Non-
savable cos as us he is comprise of the tota deiaed
cost of matal, lab and overhe of the faclites. less the
differce beee the savale cost of material removed an
reval labr co inludg apprate overhe cost.
The curly aurized monthy chage in the taff is "the Compay's invesen in Compay-
own Facilties Beyond the Point of Deliver times l. 7 pet" - which ads up to an anua
chage of 20.4 % ofIdaho Powe's intial investment Inusal cusmer do not rely payoff
th invesent in th facilties, and as wrtten in the taff they contiue payi 20.4 % anualy
on the intial investmen with no provision for a depiaton of the value of tht investent over
tie. In other word, for a $10,000 invest in a piece of equipment by Idao Power in 1977,
th chae pres th equipment at iss re its $10,000 value th-thee yea later in
201 0, an chges the sae $2,040 chae anualy in yea th-th as in yea one. One of
ICI's members, J.R Simplot Co., rey confed tht it was indee stll beng chaed 20.4
% anuay on the intial pripal for a piece of equipme initially ined in 1977.
Ou reh at the Commsson indicaes th ths facilty chae wa caculated way bak in the
mid-1980s, and approved in Cas No. U-I006298. We obtaed Idao Power's work papers
suprt the cacuaton in tht cas and I have athe the most usfu portons to ths let.
As you ca se frm the work pa, Idaho Powe caculatd an avere of its invesents in
thes facilties over the year 1985 an 1986 (on pae 5 of 27), and th (as shown on the
su pae) caculate out and sumed the peentaes of several facilty-related exp
for whch Idao Powe believed it was enttled to recver frm cusrs. Those ite includ
chas to th cusomer for depiation in taes propert taes, oth taes, opetion an
maten, adve an gener, wor capita. an insurce, as well as the
Compy's then-autori 9.90 % rate of retu Ultitely, Idao Power aived at the
anua peene of20.483 % of th inti facilty investent.
ICI's Positon
ieip believes th ths facilies chae of 1.7 % monthy is no longer a fai, just, and reasnable
cha, and reques that Ida Powe ag to reuc the monthy chge and provide cusmer
with the option of payig off the reai intial cost of Compay-owned failties.
Fir, our re indicate tht the 1.7 % monthy chare caculed in the mid-1980s is simply
to high becus the inut have chaed over tie. For example, Idao Power's auori rate
of re frm it 2008 genra rate ca is now only 8. i 8 % - 1.772 % less th included in the
Exhibit No. 307
IPC-E-II-08
Reading, ICIP
Page 7
Mr. Waler
July 30,2010
Page 3
facilities chage. An fr Ida Powe's 200 Fed Ener Regury Commssion Form
i, we ca tell tht anual petaes for opon and matece and for admsttive and
gener should decr by a tota of 2.0328 % fr those in th cut taff. These ite
alone ca for an an petae ch dec by 3.7548 %, to apxiately 16.728. %
anualy, or 1.394 % monty.
Addtionaly, ICIP believes th deiation chge is unasble. Regares of wh the caemay have be in the mid- i 9808, th Common cmently reuies Idao Power to reuce th
prpa of its invesen by a dereiaton far if the invesent is one for whch thCompany ea a re In oth word, the Common doe not tyicaly alow Idaho Powe
to chge th anua rae on th sae prpa amount over tie beus the value of the
invesent decrea over tie. The existg indusal fail chage mechansm includes a
0.560 % anua chae to the cuomer for depiaton, but it doe not re the prcipa frm
which the failties chage is cacuat over tie. To have cumers contiue payig inteest
on th intial capita invesent - suc as Simplot's facilties dag back to 1977 - long afr
expirtion of the depiaon schedule utlied (b it fien or twenty yea or some other
duron of stt li depon) is simply unjus and un.
Above all, however, the Compay shuld inorm customer upfrnt eah tie it inta
facilities subjec to ths chage such th cusmer ar awar thy ar sign onto what is ak
to an ongoin ines paymen for faclities mataed by Idao Powe, and should allow
customer to payoff the fu vaue to avoid mag such payments. In oth word, ICip
reue tht cuer be inored of th tes of the ch at the tie the facilty is placed on
thei side of the me. An the Compay should also provide, an inorm custmer of, a righ
to opt out of the fu failties chage by payi down remag intial co and paying the
Compy a reasnable fee for the tie an mateals to mata the failties. Thes optons
should be available for exst faclities on cumers' prmises and for faties tht may be
intaled in the fu.
ConusD
On beha of ICIP, I ho th th issu rase in ths le ca be resolved in a muty agle
faon and re in a fa an renable facilties chae. I apiat your coideon of thema an lok ford to me wi you re it in th ne fu.Verj;¡D~
Pet Richan
Atty for th Inus Cuser ofIda Powe
cc: Do Stuant, IR. Simplot Co.OonRe
Exhibit No. 307
IPC-E-ll-08
Reading, ICIP
Page 8
~.~
ATTORNEYS AT LAW
Tel: 208-9$8-7900 Fn: 201l-9J8-1904
P.O. 8m 1218 Bois. 10 8:107 - 515 N. 27th Sr. Bois. 10 83702
Debe 30,2010
YO. U.S. MailUd E-I
Donovan E. Waler
Idaho Powe Company
P.O. Box 70
Boise, Idao 83707-0070
dwalker(â)idaopower.com
Re: Idah Power's Faciti Char for Lae Power an Spec Contret Cuomer
De Dovan:
I wrte on bef of my fi's client, th hidusal Cuomer of Idao Power ("ICIP"), rega
Idao Powe's Schedule 19 ta faclity chae, which is also inlud in spial cont for
power saes abve the Scede 19 taff lit. Fir I would like to than you and th oth IdaPowe retaves fo mee with myslf, Don Sttevt, an Dr. Don Read rega the
ch on Debe 28, 2010. We apreiate Idao Powe's contue wiliness to attpt to
wo out th isses ra in our let to you date July 30, 2010. I will smthe st of ourdiscusons as I un them.
J.R Simplot Comp Request
As we discse at th tie, one ICIP mebe - th IR. Simplot Co. - is inter in exerisin
th opton of own al fàilties beon the point of deliver for so or al of it Scheule 19 or
Speial Cont plants ta electrcit sece from Ida Power. Plea consider ths let a
fonn reue for the de bo vaue Idah Powe would chae for Simplot to tae
ownerp of failes beyond the pot of deliver at ea of the Simplot pr cury
suec to Ida Powe's facilties che, and plea or the co by Simlot locon.Simlot will be making fi deions for th ne yea in the comi mon so recvíng
Idao Powe's oost inoron by th en of Janua 2011 is crtica to its ab to mae a
deision for the comi yea. hi orde to mae th decsion, Simlot would al lie a copy of th
Compay's ince poicy tht cover th Compay-owned falities beond the poin of deliver.
Additionaly, I unerd th Mr. Stut reue th Ida Power offci conduc an aut
of th falies included on the facti.che for eah Simplot locon, an thby idenfy th
Exhibit No. 307
IPC-E-ll-08
Reading, ICIP
Page 9
Mr. Donovan Walr
Decbe 30, 2010
Page 2
pacular piecs of equipment for whch Ida Powe is asssg the faclities chae. Simplotwould like to know whe it ca ex th completon of th au to en that all of the facilties
inlud on the Distrbution Facilities Invesent Rert for Simplot prmises are stll in fact in
use at Simplot premise. Once reived Simplot would like to wa thug eah facilit. in
ealy spg, identifyg eah piece of eqpment with an Idao Power resetative.
Provo diange to Tan langge
In respns to our dion Ida Powe is cutly enag in recu th 1.?O/ó monthy
faclies cha with up inormon fr th us in 1986 to intiy caculat that
perctae. We exte to knw Idao Powe's new perce by the end of201 0, bu you stte
we may not have th caculaton for anoth month. We look forw to seing th realcul
pentae.
Al, at our meeg on Ocbe i 1, 2010, we disc th possbility of intug two alteratve
argements to th Copay-ownp mol emboed in the cur Schedule 19 ta. Ida
Powe ex conce with a mied ownership model for failiûes beond the point of deliver.
Thus, the send alve we discus wa a eusomer-ownerp modl wherby th cusomer
would pay Idao Pow for the depat bok vaue of th exist equipmen on the cumer's
prse. Ther, th cumer woud be rensble for al opon and maence offailes beond th point of delivei, an for acuisition and maen of any equipmen
nee in th futu. Idao Powe would no longer chae su cusomer a falies chae.
The th alteve we discus wa a hybd altetive whereby th cuser would mae a
payment for th caita value of th eqen but the Compay would stll own the eqpment andcoduc opons an ma. Th Compy would asss only a limte faciles che
which would not inlud the top th componen of th cha - ra of re depiaon and
income taes. Cumer selec th opton woul therfo pay a reuce falites char.
At our meg ths we Idao Pow st it is no longer intested in offerg the th option
but we disc cha th lae in the ta to adequaly reflect the send opon. The
curt ta lan st "At the option gf the Compa "the Company may own the
equipment and assess the facilties chage, and the ta conta no exprss right for the
customer to elect to own and mata all such facilties or to purchae Company-owned
facilies at depciate bok value. We appreiate Idao Power's position tht it offer a
cuomer-ownership option to al Schede 19 customers as a mater of Compy policy, but we
believe th taff should reec ths option. ICIP prposes Ida Power include the modfications
below in its ne ra ca filig (chages in bold):
FACILITIES BEYOND TI POIN OF DELIVERY
The Customer ha the rit to own and maitain al
facilties Beyond the Point of Deliery. l.t tlie O,âeB ., lle
C8IBPøy Wit wrien consent of the Customer, trfonner
Exhibit No. 307
IPC-E-ll-08
Reading, ICIP
Page 10
Mr. Donovan Walker
Dembe 30,2010
Pag 3
and oth facilties inled beyond Ule Point of Deliver to
prvided Prima or Trasmission Serice may be owned
opete, and maitaed by Ule Compay in considetion of the
Customer pag a Facilties Chage to th Compay.
Compy-owned Facilties Beyond the Point of Deliver
will be se fort in a Distbution Facilties Investment Reprt
provided to the Customer. As the Compa's investent in
Facilties Beyond the Point of Deliver chages in order to provide
the Cusomer's sece reuien, the Compay shl notify the
Customers of the additions anor deletions of facilties by
forwng to th Cusme a revi Distbution Facilties
Investent Reprt
In the Dibuôon Facities Investment Report, the
Compuy wil indude the depreiated book value of Company-
owned fadlies and include notice of the opportnity for the
Customer to purcas al Company-owned facßiti Beond
the Point of Delivery at the depreiated bok value. The
Company wil not asse the Facities Charge to the Customer
afer ownership trnsfer
In Ule event th Cusomer re the Compay to reove
or reinl or chage Compay-owned Facilities Beyond the Point
of Deliver witout the Cuomer ta ownenliip of the
Facilties, the Cuome shal pay to the Compay the "non-
savable cost" of suc reoval, reinon or charge. Non-
savable cost as us herin is comprse of th tota depreiated
cost of mateals, labr an overea of the facilties less the
difference betwee Ule savable cost of maeral removed and
reoval labr cos includng apprate overead cost.
We also believe th Ida Powe should sed a let to Ule maner of eah lare power and
spal contt cusmer locon cuy bein billed for failties chages, whin Idao Power
fuly exla the chae, includ a desripton of th ch's componets an the tot anua
payment frm the cus.
Condusi
Th you ag for Idao Powe's contue effor to work towar a mutuly beeficial
reluton of ths ma. If you ha any queons plea contat me.
Exhibit No. 307
IPC-E-II-08
Reading, ICIP
Page 11
Mr. Donovan Waler
Dembe 30,2010
Page 4
l:~
Grory AdasAtor for th Inus Cuser ofIda Pow
cc: In Cuom ofIda Power Membe Copaes
Dr. Don Rea
Exhibit No. 307
IPC-E-II-08
Reading, ICIP
Page 12
I€ID""PO~
An IOACORP Cominy
DOVAN E. WALKERSeio Codwaike.co
r5)'..~~1
i fì'l F'-r'O '. .. . ¡ I ,
l ! i . ~'. , . , IoJ L .-..i," ~ I I J.. ~..di-IBY__ I--_==- ---
January 31,2011
Grery M. Adams
RICHARDSON & O'LEAY, PLLC
515 Nort 2"f Str
P.O. Box 7218
Boise, Idaho 83702
Re: J.R. Simplot Companys Request to Purcse Idaho Power Company
Facilites
Dear Mr. Adams:
This letter rends to the Deber 30,2010, letter sent by you on behalf of the
Industal Customers of Idaho Power ("ICIP"), and more specally, J.R. Simplot
Company ("Simplot"), as well as the facetoface meeting we had on Decmber 27,
2010. As wi all of the ICIP customers. Idaho Power values its business relationship
wi Simplot and want to work wih it on resoMng any concern or issues related to the
servce Idaho Power provies. That said, this reponse is necssry to. darl Idaho
Power Company's ("Idaho Powet') position on certain matters tht we discussed wi
you at the Dember 27,2010, meeng so that you have clear expetions as to what
Idaho Power will agre to do in reards to your reuests.
Firs, as reue by you in your December 30. 2010, letter, Idaho Power will
provie Simplot propose "buy-ul pncs, by Simplot plant lotions reivng primary
servce, for all facilites owned and opeed by Idaho Power that are located on the
Simplot side of th Point of Delivry. As we discssd, Idaho Power will be prepare. to
offer a fair market value price of thse facilities as detennined by Idaho Power, not the
depreiaed book value pr. Bot Idaho Power's regulatory and finance departents
are busy preparing this informtion, and Idaho Power will prvide it to yo~ once it is
ready. At this time, Idaho Power anticpaes that it will have something available to you
by mid-Maroh.
In additon, in th event Idaho Power agrees to sell these faciites to Simplot,
Idaho Powe will most likely ne to install additional protecon equipment on the
facilites on th Idaho Power sid of th meter that fees th Simplot locatins. This
additl equipment will be neæry for system integri and reliabilit purpses.
122 w l'Ei1ibífN': 307
P.~ Box 7ilr_E_ll_08
Boise. 10 iH0'Reading,ICIP
Page 13
Greory M. Adams
January 31.2011
Page2of3
Currnty, Idaho Pow antpaes th it will provi your cliet wih a more speif list
of the nery sysem equipmen upraes by mid-Mrch as well. Idaho Power will
let you know if it is going to be unable to prvie you wi eiter this infonnion or th
pring infonnatin by mid-Mrch.
Secnd. Idaho Power doe not have spec insurance policies which cover
"Company-owned facilities beyo th point of delivery." Like most businesss, Idaho
Power has brod. general liabilit policis which cover varius aspct of it business.
insunng Idaho Powr against propert damag, accens. and othr LO. Aswe
explaine when we met wi you in Deber, such policies do not cover against
equipment that must be relace afer it has reche the end of it useul life, or for the
replacment of equipment that fails afer the expiratin of the manufurer's warrnty.
Third. Idaho Powr has completed facilities assssment for eight of th nine
Simplot locations currntly openg under Idaho Power's facilits charge tanf
provisions_ The assment methodolo, which includes facilites invesment reportsand mapping by plant locio. were recentl revi and apprved by Don
Sturdevant at Simplo (see enclosure). Idaho Power anticipates completing the facilites
assment for th final lotion, the Simplt Pocaello Donn locatin. by the end of
February. Once Idaho Powr completes all the facilites assessments. it will meet with
Simplot to discss, as well as esblish. a schule to conduct physicl, on-site
assements at the Simplt locations.
Fourt, as a business mater and as discussed, Idaho Powe will not maintainfaciliti beyond Idaho Power's Point of Deivry that are own by third partes.
Morever, if Idaho Powr facilites are trnsferr to third parties and remove from
Idaho Power's ownrship, thre will be no opportunit for those facilites to be returned
to Idaho Powr's sysm for Idaho Por to operate and maintain. Put diferently, once
Simplot or any other customer purchases Idaho Power facilities. tht customer will be
whlly reponsible for operating and maintining those failities on a going-forwrd
basis. An custme that elecs to purchase such faclites will not have the abilit at a
later date to trnsfer thse facilit back to Idaho Powr to maintin and operate. Oncetrnsferr, Idaho Power will have no responsibilit. or liabilit. associated wih
maintining inventones of those faclities or failure or other opetional or maintenance
issues asscited wih those faclitie, nor will Idaho Power be responsible or liable for
any conseuentl, spial, or othr damages, including loss of prducton and lost
profi, tht cold reult In additon, in the eve Idaho Powe agrees to sell any
faCilites locted on the Simplot side of the Point of Delivery, it will need approval fr
th Idaho Public Utits Commisn ("I PUC") pursant to Idaho Coe § 61-328 pnor to
transferrng the facilities. Idaho Por will likely nee your supprt and. coperaion in
making tht filing wi the IPUC.
Fif, as we discss at leng, the existing tanf language addressng. faCilitis
charg provisions is sufent and adequately desbes the Facilities Charge. As wi
Exhibit No. 307
IPC-E-ll-08
Reading, ICIP
Page 14
Greory M. Adams
January 31, 2011
Page30f3
any reulate public utlit, owership and responsibilit for equipment and facilities
beyond th utlits Point of Delivry is, by default, wih th customer. Amending th
tari languag, as propose in yor letter, may potentially cause more problems and
ambiguit than it would relv, and is not necssry. Morever, as the attrney
reprsentng th ICIP cusmers, you are very well aware of Idaho Powes
interretatn of Schedule 19 as wel as Idaho Powers policy allowing Schedule 19
customers to purcase, own, and operae Idaho Power facilites located on th
customets side of the Point of Delivery. Threore, sending out letters to all ICIP
cuomers informing them of this interpretatin and polic would be reundant and
unnecary.
Sincerely,~ZúJ~
Donovan E. Walker
DEW:csb
Enclosure
Exhibit No. 307
IPC-E-II-08
Reading, ICIP
Page 15
!!Adams
From:
Sent:
To:
Cc:
Subjec:
Wiliams, Jason (JWiliamSOdahopo.comJ
Wednesday, April 06, 2011 3:51 PM
Greg Adams
Don Reading
RE: Simplot facilities discussion
Greg,
After internal discussion, we have decided that we would rather discuss the entire issue wih your
client, as, from our perspecive, this is not about price. As i share with you yesterday, as a policy
matter, Idaho Power has decided it is not going to sell the facilities to Simplot. The factors that went
into that decision are: 1) our statutory obligation (61-328) to hold other customers harmless in sellng
utilty owned assets; and 2) the way we run our business as a regulated public utilit. So while we can
go over the buy-out price methodology we ran in analyzing Simplots reuest, that methodology and
the reultant price ultimately had litle bearing on Idaho Powets decision to not sell those facilties. At
this point, debating the price methodology we use as part of this analysis would not be productve as
it will not impact the decision we have already made.
Thanks,
Jason
Jason Williams
Idaho Power Company
8(208) 388 5104
From: Greg Adams rmailto:Gre(§richardsnandoleary.coJ
sent: Wedneay, April 06, 2011 9:16 AM
To: Williams, Jason
Cc: Don Reding
SUbjec: RE: Simplot facilitie dissson
Jason,
Thanks for letting us know about the problem Idaho Power encountered in calculating the amount that Idaho Power
would need to charge Simplot for existing facilties beyond the point of the meter to (1) cover the book value of the
facilties, or (2) keep the other Schedule 19 customers whole.
After discussing the issue with our consultant, Don Reading, we were wondering if you could please send us the work
papers associated with your investigation in advance of our meeting Monday? That would enable us to have a more
substantive discussion.
Thanks again.
GrgAda
Richarson & O'Lear PLLC
515 N. 27th Street, 83702
P.O~ Box: 7218, 83707
Boise, Idao
Voice: 208.938.2236
1
Exhibit No. 307
IPC-E-ll-08
Reading, ICIP
Page 16
Facsime: 208.938.7904
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Than you.
From: Willams, Jason (majlt:JWiliams(âidahopor.coml
sent: Tueay, April OS, 2011 12:25 PM
To: Gre Adams
SUbjec: Simplot facilites discussion
Greg,
As a follow-up to our discussion of last week, Idaho Power has made a determinaton relating to the
sale of Schedule 19 facilities for Simplot. We would like to invite you and representatives of Simplot to
meet with our folks to discuss. We could be available at Idaho Power's downtown offces on either
Monday, April 11 at 11 am or Friday, April 15 at 11 am.
Please Jet me know if either of these times work for you and Simplot. If so; i can give you a call and
we can discuss an agenda to make sure we cover everyhing that Simplot has asked.
Thanks,
Jason
Jason Williams I Corporate Counsel I Idaho Power Company
1221 w. Idaho, Boise, 1083702 I .[phone] 112 lwillams(lidahooower.com
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2
Exhibit No. 307
IPC-E-ll-08
Reading, ICIP
Page 17
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-I1-08
INDUSTRI CUSTOMERS OF IDAHO POWER
READING,DI
TESTIMONY
EXIDBIT NO. 308
Idaho Power's Responses to Production Request Nos. 12 and 51, and
Correspondence Regarding "Removal" of FacUities Charge
Equipment
REQUEST FOR PRODUCTION NO. 12: Does the Company provide custmers
paying the facilities charge with any option to ever stop paying th facilitie charge, and
acquire and control their ow equipment on their own propert If so, please identif
the language in the existng or proposed tari highlighting this option for custmers, and
explain how this proce work. Please include explanation of the leng of time it
would take Idaho Powr to provide customers wih a calculation of the cost for the
customer to pay Idaho Power to remove the facilties and stop paying the facilities
charge. Since 1987, how many customers have (1) Inquire into this option, (2)
exercise this option?
RESPONSE TO REQUEST FOR PRODUCTION NO. 12: Customers paying a
facilities charge can reuest that the Company remove all of it facilities located on the
customets prope. In this case, the customer would no longer pay a monthly failties
charge afer all facilites were remove and all removal fees were paid. All custmers
can reuest removals, relocations, upgrades, or conversions wiout specc tari
language indicang that they can make such a reuest.
The length of time it would take Idaho Power to provie customers wi a
calculation of the cost for the custmer to pay Idaho Power to remve the facilities and
stop paying the facilities charge will vary base on the site confguratin and the number
of facilities being removed. The Company does not trck the number of customers that
have inquire int this option or exercse this opon.
The rense to this Request was prepared by Scott D. Sparks, Senior
Regulatory Analy, Idaho Poer Company, in consulttion wi Jason B. Willams,
Corporate Counsel, Idaho Power Company.
IDAHO POER COMPAN'S RESPONSE TO THE SECOND REQUESTS
FOR PRODUCTION OF THE INDUSTR CUSTOMERS OF IDAHO POWER -13 Exhibit No. 308
IPC-E-ll-08
Reading, ICIP
Page 1
REQUEST FOR PRODUCTION NO. 51: Reference the Company's Response
to ICIP Reques No. 12 (statng that "Cumer paying a facilities charge can reuest
that the Company remove all of its falities locted on the customer's property"). Has
any custome ever rested reval of th facilities beyond the point of delivery If
yes, please explain how. the Company increase other customers' ra in that
circmstnce. If no, has the Company ever offere to allow a custmer exercise the
removal option in response to a custmer's complaint rearding the facilities charge?
Please explain.
RESPONSE TO REQUEST FOR PRODUCTION NO. 51: One customer has
recently (wihin the last five years) requested removal of facilities installed beyond the
Company's point of delivery. The requet was for removal of tw transformers. If
removed, the customer was going to install, own, operae, and maintain it own
transformation. In response to the customer's reuest, the Company provided the
customer a cost quote for the removaL. Ultimately, the customer did not pursue the
removal and there was no impact on custmer classes' revenue requirement or rates.
The response to this Request was prepared by Scott D. Sparks, Senior
Regulatory Analyst, Idaho Powr Company, in consultation wi Jason B. Willams,
Corprate Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPOSE TO THE SIXH REQUESTS
FOR PRODUCTION OF THE INDUSTRIAL CUSTOMERS OF IDAHO POER -12 Exhibit No. 308
IPC-E-ll-08
Reading, ICIP
Page 2
~.0IATTOaNEYS AT I.AW
T.d: 208.118-7900 Fax: 208.\18-7904
P.O. 80 7218 Bo. ID 8307 . 515 N. 27th Si. Bois. 10 83702
Aug 25, 201 1
V"UI u.s. Mai IUd E-
Donova Waler
Lisa Nordstm
Jasn Wiliam
Idao Powe Compay
P.O. Box 10
Boise, Idaho 83107-0010
Re: Form Reque for co of re offaeiti chare equiment frm J.R SimplotCo.pmu
De Mr. Doova Waler, Ms. Lisa Nor an Mr. Jas Willias:
I wrte on be of my fi's clien J.R Simlot Compay, to formy reuest tht Ida Power
prvide cost figus for Simplot to exerse its right uner the applicale taffs and SpeiaContrt to have Idaho Power reove the distbution failties subjec to Idao Powe's
failties chae at its Schedules 9.19 and Speial Contrt locons. Speificaly, the taffs
an Speial Contrct allow Simplot to pa Ida Power th "non-savable co" of remova of thefailties beyond the point of deliver. Th "Non-savable cost" is "te tota depreiated cost of
maals, labr and overheas of the facties, less the differce betwen th savable cost of
materal removed and remova labr cost includ appiopate over costs."
Pleas also.include with the reova cost the intial invesen in the failties to be reoved for
eah locon. Plea prvide all work pa surt the reova costs.
Simplot also reue th Idao Power explai wheter Simplot's payment of remova cost, as
caed for in the taff and Spe Contr will have a rae impat on oth cusomer in the
aplicale ra clas.
Finy, if Idao Power includes adona proection equipmt ined on th Idao Power
side of the meter as par of the remova co, plea septely it such equipmen frm
ot cost for eah locon, and plea exla how the tas and Special Contr, as quote
Exhibit No. 308
IPC-E-1l-08
Reading, ICIP
Page 3
Mr. Waler, Mr. Nordm, an Mr. Williams
Augu 25, 2011
Page 2
above, allow for inclusion of suc co to be pad by Simplot.
gAda
Att for IR. SiilotCo.
cc: Do Stu lR. Símlot Co.
Dr. Don Rea, Be Johnn Assiates
Exhibit No. 308
IPC-E-ll-08
Reading, ICIP
Page 4
*SID..POQÐ
An IDACORP compay
JASON B. WlWAMS
Coat Conseliwilliamsahopor.co
(208) 388-104
September 13, 2011
VI U.S. MAIL AND E-MAIL
Gregory M. Adams
RICHARDSON & O'LEARY, PlLC
515 North 27th Street
P.O. Box 7218
Boise, Idaho 83707
Re: J.R. Simplots Request for Facilitis Removal
Dear Mr. Adams:
Thank you for your letter dated August 25, 2011, on bealf of J.R. Simplot
Company ("Simplot") and your reuest for Idaho Power Company ("Idaho Powet' or
"Company") to provie cot figures to remove Idaho Power facilities on the Simplot "side
of the meter." As you are aware, we have met with you and Simplot representatives
multiple times over the last year to discus the Company's Idaho Public utilities
Commission- ("Commission") approved facilties charges and have provided you wih
detailed information related to thse facilities and charges. In fact, Idaho Power spent
hundreds of man-hours conducting facilities audits of Simplots loctions and provided
reports of those audit findings to Simplot Idaho Power has also provided you wih
voluminous information related to the facilites charge in the form of responses to
requests for producton that you have submited in Idaho Powets pending general rate
case at the Commission, Case No. IPC-E-11-08. Idaho Power will continue to provide
Simplot wih all relevant information it needs so it can evaluate and plan for it electnc
facilties and servce needs.
Your most recent request seeking "cost figures" for the removal of Idaho Power-
owned distnbution facilities subject to the facilities charge is in itself a substantial
undertaking. As you may be aware, there are approximately 1,800 diferent pieces of
equipment spread acrss nine Simplot locations that are currntly subje to the
facilities charge. In order to be able to provide the reuested cost estmate for the
removal of facilites, a specifc removal plan will need to be developed for each Simplot
location. The larer Simplot lotions may require multiple projec plans that reflct
phased work effrts. In order to maintain servce to Simplot dunng the removal of
facilities, Idaho Power and Simplot will need to have extensive cordinatin to ensure
1221 w. lØ"ahp S.t..t1l102)308
P.O. Box ì¥xnibit No.
Bois. fD ~E-II-08
Reading, ieip
PageS
Gregory M. Adams
September 13, 2011
Page 2 of2
that the removal of Company facilitiesequipment has as minimal an impact as possible
on Simplots business operatins.
Accrdingly, a threstep approach is required to provide Simplot with an
accurate cost quote to remove Company-owned facilites from Simplots "side of the
meter. ø First, Idaho Power operatins persnnel will need to meet wih Simplot
operatins persnnel to discss Simplots priries assciated wi each facilit and to
develop plans for removal. For example, removal of Company facilities and
replacement wi Simplot-owned facilit will require partal or full outages of some
Simplot locations. Secnd, Idaho Power engineering persnnel wil nee to design and
engineer the removal of facilities in a manner consistent wih Simplots business
operations nees. Consistent with the Company's Rule H tari, Simplot wil be
responsible for prepaying all engineering charges associated wi designing plans for
removal of and changes to the facilities. Finally, once the Company completes the
engineering work necessry to develop plans for removal, it will be able to provide
Simplot with a cost quote.
Please have Simplot operaions persnnel contact Jim Hovda, an Idaho Power
Major Customer Repreentative, to cordinate a time to meet to have the initial
discussion related to developing facilites removal plans. As you may recall, Mr. Hovda
has participated in our meetings over the last year and is familar with Simplots
operations. After this inital meeting, Idaho Power will be able to provide Simplot with an
estimate for th reuired prepayment of the engineering charge assciated with the
facilties removal plans and cost quotes. Once the engineering charges are paid, the
Company will procee with the engineering work required to develop the requested cost
quote for removal of the facilites.
Sincerely, \C~
JBW:csb
cc: Jim Hovda, Major Customer Representative, Idaho Power (via e-mail)
Donovan Walker, Lead Counsel, Idaho Power (vi e-mail)
Don Sturtevant, J~R. Simplot Company (via U.S. Mail)
Dr. Don Reading, Ben Johnson Assciates (via U.S. Mail)
Exhibit No. 308
IPC-E-ll-08
Reading, ICIP
Page 6