20130510Woods DIRECT.pdf

R. Stephen Rutherford - ISB No. 5410
Chief Deputy City Attorney
BOISE CITY ATTORNEY'S OFFICE
150 N. Capitol Blvd.
P.O. Box 500
Boise, ID 83701-0500
Telephone: [phone]
Facsimile: 208.384.4454
E-mail: BoiseCityAttorneycityofboise.org
John R. Hammond, Jr. - ISB No. 5470
FISHER PUSCH & ALDERMAN, LLP
U.S. BANK PLAZA - 7 " Floor
101 S. Capitol Blvd., Suite 701
P.O. Box 1308
Boise, ID 83701
Telephone: [phone]
Facsimile: 208.331.2400
E-mail: jrhfpa-law.com
Attorneys for City of Boise
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Before the
IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE ) Case No. IPC-E-12-27
APPLICATION OF IDAHO POWER )
COMPANY FOR AUTHORITY TO )
MODIFY ITS NET METERING )
SERVICE AND TO INCREASE THE )
GENERATION CAPACITY LIMIT )
DIRECT TESTIMONY OF PAUL R. WOODS
ON BEHALF OF
THE CITY OF BOISE
May 10, 2013
ORIGINAL

1 Q. Please state your name and business address.

2 A. Paul R. Woods. My business address is 150 North Capitol Blvd., 4th Floor,

3 Boise, Idaho 83702.

4 Q. Who are you employed by and in what capacity?

5 A. I am employed as the Environmental Manager in the Boise City Public Works
6 Department.

7 Q. What are your responsibilities in this position at the City of Boise?

8 A. As the Environmental Manager for the City of Boise, I oversee the City's
9 environmental programs, including wastewater treatment services, solid waste
10 management and recycling service, household hazardous waste recycling services, air

11 quality and climate protection services, and assistance with energy efficiency
12 improvements.

13 Q. What professional experience do you have that you use in this position?

14 A. Over the past 25 years, my experience includes engineering, project
15 management and financial assistance on unique and complex civil and environmental

16 projects in both public and private organizations.

17 Q. What is your educational background?

18 A. I have a Bachelor of Science Degree in Civil and Environmental Engineering
19 from the University of Wisconsin - Madison. I also have a Master of Science Degree in

20 Public Administration from Boise State University. I am a licensed professional civil

21 engineer in the state of Idaho.

22 Q. What is the purpose of your Direct Testimony in this proceeding?
Woods, Di I
City of Boise
I A. To convey the City's opposition to the Application of Idaho Power Company
2 ("IPC0") in Case No. IPC-E-12-27. The City has retained other outside technical experts
3 who will testify on the details of the proposed rate changes. My testimony is to provide
4 the more generalized opposition to the proposed rate filing because it is contrary to the
5 City's efforts to respond to community interest in sustainable development and re-
6 development as a vital component of future economic vitality.
7 Q. What is the City's interest in providing sustainable development and re-
8 development opportunities?
9 A. A primary example is the City's Comprehensive Land-Use Plan, developed
10 with significant public input, which provides in pertinent part that:
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Boise's growth will happen in a sustainable, efficient, and
responsible manner that maintains and enhances its
treasured quality of life, while meeting the challenges of
the future. Boise is committed to becoming a more
sustainable community by taking steps to enhance the
local, regional, and global environment. A sustainable
community is one where the integrated economic, social
and environmental systems are structured to support
healthy, production, and meaningful lives for its residents,
while laying the foundation for a high quality of life
without compromising the ability of future generations to
meet their own needs.'
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Boise is committed to becoming a more sustainable
community by taking steps to reduce its impact on the
environment.. .the city will also strive to address many
other aspects of sustainability, such as climate
change. . . energy conservation and alternative energy
production 2
Blueprint Boise, Boise's Comprehensive Plan, at p. 1-1. http://pds.cityofboise.org!mediaIlI48óS/blueprintboisewoaoc.pdf.
2 Id. at p. 2-1.
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City of Boise
I Q. Are there other examples of efforts related to sustainable development
2 and re-development being led by the City?

3 A. The Mayor and Council approved a resolution committing the City to strive to
4 achieve the U.S. Mayor's Climate Initiative. A citizen committee appointed by the
5 Mayor developed specific recommendations for the City to achieve the goals by:

6 • Implementing an outreach program for residential developers and

7 builders that can demonstrate how to build energy efficient homes

8 and provide education on renewable energy sources including, but

9 not limited to: pre-wiring and pre-plumbing for potential solar

10 installations;

11 • initiating a program to achieve a net zero energy use in new

12 residential construction by 2030;

13 • Allowing sustainable practices through amendments to the Boise

14 City Code, including allowances for solar photovoltaic panels on all

15 existing and new homes; and

16 • Providing incentives for all development that include density

17 bonuses for sustainable practices above minimum code levels

18 including renewable energy resources.
19 The City is moving forward with phased implementation of these recommendations.

20 Q. Has the City of Boise and Idaho Power Company collaborated on efforts

21 to achieve the City's sustainability efforts?

22 A. Yes. The City of Boise and IPCo have long been partners in serving the

23 citizens and businesses of our community. As a recent example, the City provided close
Woods, Di 3
City of Boise
1 to $400,000.00 in funding to IPCo to provide home energy audits and installation of
2 energy efficiency measures in over 700 homes in an effort to pilot an improved energy

3 efficiency outreach program. IPCo also provided the City with $1,000.00 in funding to
4 conduct an energy efficiency workshop for the community last summer. The City's

5 intervention in opposition to IPCo's proposals in this case is not typical of our

6 organizations interaction; however, this case is far from typical, as implementation of

7 what the utility proposes in this case could significantly and negatively impact the City's

8 economic development and sustainability policies and goals. Accordingly, the City felt

9 that it was essential to participate in this case.

10 Q. You have stated that the City has retained expert testimony on the rate
11 design. Are there concerns that have been identified by City staff with the proposed
12 rate change?

13 A. The concern of staff is that if the proposed rate change is approved, the
14 changes would:

15 1. Create rate shock for existing net metering customers who have

16 already invested in net metering;

17 2. Create a rate-gaming opportunity for large residential customers,

18 which would harm non-participating customers;

19 3. Introduce a new rate methodology for recovering fixed costs that is

20 applied only to a small group of customers and eliminates the

21 existing rate design that promotes the efficient use of resources and

22 energy conservation;
Woods, Di 4
City of Boise

1 4. Impose inequitable rates for customers with similar consumption

2 patterns; and

3 5. Limit consumer choice and restrict economic development.

4 Q. Why does the City feel the new rate creates rate shock with existing net
5 metering customers?

6 A. For net metering customers who install electrical generation units where the
7 annual output closely matches their annual consumption, their annual costs just for the
8 monthly service charge under the existing tariff for residential and small general service
9 customers are approximately $60.00 per year. Under the proposed tariff, the monthly
10 service charge would increase to $251.04 per year for residential net metering customers
11 and $269.88 per year for small general service net metering customers. It is hard to
12 imagine any net metering customer who installed electrical generation units where the
13 annual output closely matches their annual consumption would have planned for a 318%

14 and 348% rate increase respectively for the rate class affected in one year under this

15 program. This doesn't even take into consideration the additional Basic Load Capacity

16 charge IPCo requests that it be allowed to impose on these customers.

17 Q. Can you describe what you see as the rate-gaming opportunity that would
18 be harmful to non-participating customers?

19 A. Yes. The proposed tariff creates an incentive for the installation of systems
20 that generate very small amounts of power in order to access the lower per KWh rate. If

21 a residential customer with high consumption were to install a very small net metering
22 system, then that customer would be able to access the lower per KWh consumption rate

23 contained in IPCo's proposed tariffs in this case, a rate that is 40% lower than the
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City of Boise
I existing residential rate. This outcome would reduce revenue to IPCo for consumption in
2 excess of net generation, but we fail to see how this is good public policy. The result
3 would be reduced revenue for consumption very similar to non-participants and therefore
4 a transfer of fixed cost. It appears that this rate design would in fact create a subsidy for a
5 subset of net metering customers.
6 Q. Why does the proposed rate structure introduce a new rate methodology
7 for recovering fixed costs that is applied only to a small group of customers and
8 eliminates the existing rate design that promotes the efficient use of resources and
9 energy conservation?
10 A. Under the existing residential rate structure for both net metering and non-net
11 metering customers, IPCo's fixed costs are reasonably recovered by a combination of the
12 fixed customer charge and per kilowatt hour consumption rate. In this rate design, IPCo
13 recovers its fixed cost in a manner that provides incentives for energy conservation and
14 promotes efficient use of resources. The proposed rate structure appears to recover fixed
15 cost through a dramatic increase in the customer fee that is unavoidable and therefore
16 removes incentives for energy conservation and efficient use of resources.
17 In addition, the targeting of net metering customers for fixed cost recovery in
18 the residential class seems odd. It would seem as though seasonal or other intermittent
19 users would create a much larger class of residential customers that create potential fixed
20 cost recovery inequities, and that IPCo would evaluate the equitable differences within
21 the class as a whole.
22 Q. Can you explain why the proposed rate structure imposes inequitable
23 rates for customers with similar consumption patterns?
Woods, Di 6
City of Boise

1 A. Yes. If an energy-efficient customer were to consume 300 KWhs in a month,
2 the cost for this service would be approximately $26.00 in customer and per KWh
3 charges. A net metering customer with a similar net consumption of 300 KWhs in a
4 month would incur customer and KWh charges of $34.00. In the rate filing, IPCo did not
5 provide any detailed cost of service study to detail why such a differential in the
6 residential class is warranted - other than generalized statements that the net metering

7 customer "uses" the distribution system. A detailed analysis on the difference in the cost

8 of service needs to be performed to justify the rate differential.

9 Q. Why does the proposed rate structure limit consumer choice and restrict
10 economic development?

11 A. The proposed rate structure serves to limit consumer choice by placing
12 economic burdens for fixed cost recovery on a small segment of the residential class that

13 is not applied to others. In this light, the proposed rate appears punitive and an attempt to

14 limit consumer choice. The dramatic increase in annual cost for these current and future

15 net metering customers serves as a barrier to the development of this generation resource.

16 Further, development of this industry in the absence of these barriers could bring new
17 business and jobs to our community. The Mayor and City Council place the highest
18 priority on fostering economic development and environmental protection in our
19 community, and the creation of a stable regulatory environment that promotes net

20 metering is consistent with their priorities.

21 Q. Does the type of net metering service that is at issue in this case something
22 which the City of Boise wishes to continue to promote and foster?
Woods, Di 7
City of Boise
I A. Yes. The City believes that net metering can be employed to help it meet its
2 sustainability goals. Furthermore, net metering can both help citizens of Boise manage
3 their energy consumption, while also providing IPCo with a clean and local energy
4 generation resource. The City believes further development and expansion of net
5 metering will also promote the economic development of industries that support
6 renewable power generation in this area which, of course, leads to the addition of new
7 jobs and investments in our community. The City's interest in net metering and
8 customer-sited generation is not unique and is a trend that continues to grow. For
9 example, the city of Lancaster, California, has recently required almost all new homes to
10 either come equipped with solar panels or be in subdivisions that produce one kilowatt of
11 solar energy per house.3
12 Q. Does this conclude your testimony in this case?
13 A. Yes.
See With 1-leip from Nature, a Town Aims to Be a Solar Capital, The New York Times, by Felicity Barringer, Published
April 8. 2013. www.nytimes.com/20 I 3/04/09/us/lancaster-cali f-focuses-on-becoming-solar-capital-of-universe.
Woods, Di 8
City of Boise
CERTIFICATE OF SERVICE
3 I HEREBY CERTIFY That on this 10" day of May, 2013, I caused a true and
4 correct copy of the foregoing to be served upon the following in the manner indicated:
COMMISSION STAFF
Jean Jewell, Commission Secretary [] Personal Delivery
IDAHO PUBLIC UTILITIES COMMISSION 0 U.S. Mall (postage prepaid)
472 W. Washington Street Facsimile (208.342.3829)
P.O. Box 83720 0 Overnight Mail
Boise, Idaho 83720-0074 Z E-mail (jean.jewellpuc.idaho.gov )
Karl Klein, Deputy Attorney General 0 Personal Delivery
IDAHO PUBLIC UTILITIES COMMISSION 0 U.S. Mail (postage prepaid)
472 W. Washington Street El Facsimile (208.342.3829)
P.O. Box 83720 0 Overnight Mail
Boise, Idaho 83720-0074 Z E-mail (karl.kleinpuc.idaho.gov )
IDAHO POWER COMPANY
Lisa D. Nordstrom El Personal Delivery
Regulatory Dockets El U.S. Mail (postage prepaid)
IDAHO POWER COMPANY El Facsimile (208.388.6936)
1221 W. Idaho St. El Overnight Mail
P.O. Box 70 Z E-mail ([e-mail];
Boise, Idaho 83707 [e-mail])
Matt Larkin El Personal Delivery
Greg Said El U.S. Mail (postage prepaid)
IDAHO POWER COMPANY 0 Facsimile (208.388.6936)
1221 W. Idaho St. 0 Overnight Mall
P.O. Box 70 E-mail ([e-mail] ;
Boise, Idaho 83707 gsaididahopower.com)
IDAHO CONSERVATION LEAGUE
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710 N. 6th St. 0 U.S. Mail (postage prepaid)
Boise, Idaho 83701 El Facsimile (208.344.0344)
0 Overnight Mail
E-mail (bottoidconservation.org)
POWERWORKS LLC
Chris Aepelbacher, Project Director El Personal Delivery
POWERWORKS LLC El U.S. Mail (postage prepaid)
5420 W. Wicher Rd. El Facsimile
Glenns Ferry, Idaho 83623 El Overnight Mail
E-mail (capowerworks.com)
Woods, Di 9
City of Boise
PIONEER POWER, LLC
Peter J. Richardson Personal Delivery
RICHARDSON & O'LEARY [] U.S. Mail (postage prepaid)
515 N. 27th St. Facsimile (208.938.7904)
P.O. Box 7218 [J Overnight Mail
Boise, ID 83702 Z E-mail (peteKrichardsonando!eaiy.com)
John Steiner 0 Personal Delivery
24597 Collett Rd. 0 U.S. Mail (postage prepaid)
Oreana, ID 83650-5070 0 Facsimile
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E-mail ([e-mail])
SNAKE RIVER ALLIANCE
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E-mail ([e-mail] )
IDAHO CLEAN ENERGY ASSN. INC.
Dean J. Miller 0 Personal Delivery
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420 W. Bannock St. n Facsimile (208 336.6912)
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Board of Directors Personal Delivery
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E-mail (Ieif@siteba denergy.com)
LT
5 John Wljammond, Jr.
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Woods, Di 10
City of Boise