20130823Additional Comments.pdf

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An IDACORP Companv
LISA D. NORDSTROM
Lead Counsel
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August 22,2013
VIA HAND DELIVERY
Jean D. Jewell, Secretary
ldaho Public Utilities Commission
472 West Washington Street
Boise, ldaho 83702
Re: Case No. IPC-E-13-09
Glanbia Foods, lnc.'s Petition ldaho Power Company's Additional
Comments
Dear Ms. Jewell:
Enclosed forfiling in the above matterare an originaland seven (7) copies of ldaho
Power Company's Additional Comments.
ln addition, an original and seven (7) copies of the confidential attachment are
enclosed in a separate envelope. Please handle the confidentia! attachment in accordance
with the Protective Agreement executed in this matter.
Sincerely,
3*,..A.ZGrl-,r*-
Lisa D. Nordstrom
LDN:csb
Enclosures
1221 W. ldaho St. (83702)
P.O. Box 70
Boise, lD 83707
LISA D. NORDSTROM (lSB No. 5733)
JULIA A. HILTON (lSB No. 7740)
ldaho Power Company
1221West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
I nordstrom @ida hopower. co m
ih ilton@ida hopower. com
Attorneys for ldaho Power Company
IN THE MATTER OF THE PETITION OF
GLANBIA FOODS, INC. FOR APPROVAL
OF A LINE EXTENSION ALLOWANCE
PURSUANT TO IDAHO POWER
COMPANY'S RULE H.
r. c t . Ii-'l-.: 1:' U r
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
Case No. IPC-E-13-09
IDAHO POWER COMPANY'S
ADDlTIONAL COMMENTS
Idaho Power Company ("!daho Powe/' or "Company") respectfully submits the
following Additional Comments pursuant to Idaho Public Utilities Commission
("Commission") Order Nos. 32848 and 32862, which directed the Company to file
additional written comments discussing an appropriate calculation of an allowance for
the proposed Glanbia Foods, lnc. ("Glanbia") electric facilities upgrade.
Subsequent to the Commission issuing Order No. 32848, the Company met with
Commission Staff ("Staff') and Glanbia to discuss the Commission directive contained
in Order No. 32848. The Company, Staff, and Glanbia each have distinct and differing
impressions of the Commission directive. The Company believes that the Commission
did not desire additional comments on all issues in this case; rather, the Company
IDAHO POWER COMPANY'S ADDITIONAL COMMENTS - 1
believes that the Commission desires additional comments solely related to the
determination of an equitable allowance methodology. Therefore, the Company's
response is limited to clarification of its allowance practices and by the scope as set
forth in the aforementioned order. However, based upon the discussions between
parties at the meeting; ldaho Power recognizes other parties' additional comments
could include additional arguments regarding issues not related to the determination of
an allowance. lf the Commission desires to expand the scope of its directive beyond
the determination of an allowance, the Company respectfully reserves the right to
respond to any new arguments introduced into the record by other parties' additional
comments.
I. CLARIFICATION OF THE COMPANY'S SCHEDULE 19
ALLOWANCE PRACTICES
Based upon language within Order No. 32848, the Company believes its current
allowance practices with regard to Schedule 19, Large Power Service, customers and
Rule H may not be fully understood. Specifically, the Company never believed that the
Commission intended to eliminate allowances for Schedule 19 customers "simply
because those customers normally are not served by the same 'standard terminal
facilities' required to serve residentia! customers."l
While Rule H does include a provision for Schedule 19 allowances on a "Case-
by-Case" basis, it is the Company's position that the "Case-by-Case" provision is only
appropriately considered within the context of Rule H in the event a Schedule 19
customer's request includes distribution terminal facilities. As more fully explained in
the Company's Reply Comments, a Schedule 19 customer could qualify for a
distribution facilities allowance under Rule H if the customer elected to take service at a
' Order No. 32848, p.6.
IDAHO POWER COMPANY'S ADDITIONAL COMMENTS - 2
Secondary Service Level voltage.2 ln fact, the Company does have a Schedule 19
customer who takes service at a Secondary Service Leve! and that customer did
receive a Rule H distribution facilities allowance at the time the distribution facilities
were installed. The Company's position in this complaint continues to be that under
Rule H, no distribution facilities allowance is appropriate for Glanbia's request because
Rule H specifically states that it does not apply to transmission or substation facilities.
None of the facilities Glanbia has requested are distribution facilities.
Regarding the Company's treatment of a Contribution in Aid of Construction
(.CIAC") required from a Schedule 19 customer for transmission and substation
upgrades, the current treatment is that any upgrade of transmission or substation
facilities that is requested by and will only benefit one Schedule 19 customer will be paid
for by that one customer. The Company believes this treatment is the best way to
protect the greater body of customers from being required to pay for, in their rates,
facilities that can be directly assigned to the specific customer requesting the service.
The Company's approach to addressing Schedule 19 CIACs has been supported
in prior Commission findings. ln Case No. IPC-E-00-12, the Commission supported the
collection of Schedule 19 CIACs for substation plant "as such payments directly offset
Company investment and additions to rate base."3 The Commission stated in the same
order that "Rule H does not apply in this case because the complaint concerns costs
associated with the Bethel Court Substation facilities," noting that "Schedule 19
customers pay for their share of substation costs through up-front charges when
'Case No. IPC-E-13-09, ldaho Power Reply Comments, p. 7.
3 Kmbatt Properties Limited Partnership, and Hewlett-Packard Company vs. ldaho Power
Company, Case No. IPC-E-00-12, Order No. 29529, p. 6.
IDAHO POWER COMPANY'S ADDITIONAL COMMENTS.3
capacity is not available."a Finally, the Commission stated that the Schedule 19
treatment was "fair, just and reasonable and that it fairly allocates the costs of new
facilities."s The Company has treated Glanbia's request in accordance with these
Commission findings.
The Company's CIAC review practice is to determine what facilities will be
needed to provide the requested service, and to determine whether any Company
Betterment6 wil! occur once the facilities are constructed. lf it is determined that
Company Betterment would be derived from the new facilities, the amount of the CIAC
is reduced by that portion of the cost that will benefit other customers. The remaining
cost of the facilities is collected from the individual customer requesting the service.
For the customer requesting the facilities, Company Betterment is effectively an
allowance because any Company Betterment is a reduction of the CIAC the customer
will fund. Company Betterment is applied on a case-by-case basis, and is considered
and included in the "special arrangements" made between the Company and the
customer as referenced in the "Availability" section of Schedule 19.7
o ld., p. T.
u td.
u |.P.U.C. No.29, Tariff No. 101, Rule H New Service Attachments and Distribution Line
lnstallations or Line Alterations, First Revised Sheet No. H-1. Rule H states, "Company Betterment is that
portion of the Work Order Cost of a Line lnstallation and/or Alteration that provides a benefit to the
Company not required by the Applicant or Additional Applicant. lncreases in conductor size and work
necessitated by the increase in conductor size are considered a Company Betterment if the Connected
Load added by the Applicant or Additional Applicant is less than 100 kilowatts. lf, however, in the
Company's discretion, it is determined that the additional Connected Load added by the Applicant or
AdditionalApplicant, even though less than 100 kilowatts, is (1) located in a remote location, or (2) a part
of a development or project which will add a load greater than 100 kilowatts, the Company will not
consider the work necessitated by the load increase to be a Company Betterment."
't.p.U.C. No.29, Tariff No. 101, Schedule 19 Large Power Service, First Revised Sheet No. 19-
1. Schedule 19 states, "To the extentthat additional facilities not provided for under Rule H, including
transmission and/or substation facilities, are required to provide the requested service, special
arrangements will be made in a separate agreement between the Customer and the Company."
(Emphasis added.)
IDAHO POWER COMPANY'S ADDITIONAL COMMENTS - 4
The Company did analyze Glanbia's request to determine if there was any
benefit other customers would derive from the constructed facilities. The Company
determined there was no near-term need for additional capacity in the geographic area
of Glanbia's load,8 and the decision was communicated to Glanbia that it would be
required to fund the upgrade required to serve its request. But for Glanbia's request, no
additions or upgrades to the facilities that serve Glanbia or the Company's surrounding
customers would have been made in the near term.
II. NEW POLICY FOR SUBSTATION ALLOWANCE
IN RESPONSE TO ORDER NO. 32848
While the Company believes the current practice of requiring each requesting
Schedule 19 customer to pay for transmission and substation facilities that will only
benefit the requesting customer is still the best policy, it understands the Commission
may wish to change policy and create new allowances for Schedule 19 customers.
Based on the Commission's directive in Order No. 32848, the Company has formulated
a methodology that could be implemented and administered to ensure that all new
Schedule 19 customers requesting service that would require substation alterations or
upgrades would be treated in a consistent manner and would be eligible to receive a
substation allowance.
A. Calculation of Fixed Substation Allowance.
In Order No. 32848, the Commission asked the parties to consider "how an
equitable allowance can be structured to eliminate any potential cost to the Company's
genera! body of customers."e The directive to "eliminate any potentia! cost to the
8 The Company's Betterment analysis of the Glanbia request is described in Attachment 1 to the
Company's Reply Comments filed on June 14,2013, in this case.
n Order No. 32848, p.6
IDAHO POWER COMPANY'S ADDITIONAL COMMENTS - 5
Company's general body of customers"l0 is not possible because any time the
Company makes an investment in substation and transmission plant without a direct
offset by means of a CIAC, the Company's other customers are financially impacted by
the addition of Company investment to rate base. However, the Company has
quantified what it considers to be an "equitable" impact to existing customers by
determining a new fixed substation allowance for Schedule 19 customers based upon a
similar approach as that taken in Rule H allowances for distribution terminal facilities.
While Schedule 19 customers have a high degree of variability in their load
patterns, the Company believes that if a substation allowance is adopted by the
Commission, it is appropriate to determine a fixed substation allowance similar to other
customer classes for the installation of new distribution facilities under Rule H. The
Company's approach to a new methodology involves first determining what a "typical"
Schedule 19 customer's average annual demand is. The Company reviewed the
Schedule 19 class's 2012 individual customer 1S-minute maximum demand data to
determine the "average" Schedule 19 customer had a peak of 3.03 megawatts ("MW")11
during each individual customer's maximum demand time. The Company rounded this
number to 3 MW. The Company believes this 3 MW value reasonably represents a
typical Schedule 19 customer. Seventy-one percent of the Company's Schedule 19
customers had a maximum demand that was below 3 MW during 2012.12
to rd.
" The Company's analysis looked at actual 2012 dala to identify each individual Schedule 19
customer's 1S-minute maximum demand. This number relates to the individual customer's 2012 billing
demand.
" A distribution of the data revealed that 71 percent of the 117 Schedule 19 customers had a
peak that was below 3 MW and 29 percent of Schedule 19 customers had a peak that exceeded 3 MW.
The Schedule 19 distribution data is included as Attachment 1.
IDAHO POWER COMPANY'S ADDITIONAL COMMENTS.6
Next, the Company considered what "terminal" facilities would be installed to
serye a typical Schedule 19 customer's request. The Company reviewed the
substations that feed the existing Schedule 19 customers and concluded the majority of
Schedule 19 customers are fed off a 30 megavolt-ampere ("MVA') or higher transformer
with metalclad. While there are not specific "terminal" facilities installed for Schedule 19
customers, based on the substation review, the Company determined that its "standard
installation" request for a Schedule 19 customer would involve a 30 MVA transformer
and the related grounding and safety equipment required for installation. The Company
included the grounding and safety equipment because it determined that these types of
facilities are akin to "Standard Terminal Facilities" that a three phase distribution
allowance is based upon. The Company's calculation includes only the installation of
that transformer and related equipment, not the equipment required to build-out an
entire substation, which is similar to residential/commercial distribution allowances that
are based on the transformer and related equipment but do not include all facilities
required to serve a residential or commercial customer, like the distribution pole or
underground trenching.
The Company believes that if the Commission chooses to change the existing
policy, then a fixed substation allowance that provides an offset for the facilities required
to provide service to the "typical" Schedule 19 customer would provide a fair and
equitable method that could be applied to all customers within the class. Based on this
rationale, the Company used the size of the typica! Schedule 19 customer (3 MW) to
calculate a prorated share of the 30 MVA transformer installation cost to determine a
IDAHO POWER COMPANY'S ADDITIONAL COMMENTS - 7
fixed substation allowance amount of $197,202.13 The Company believes that its
quantification of the potentia! fixed substation allowance might be considered equitable
in that it would provide an allowance based on the size of a typical Schedule 19
customer. lf this substation allowance had existed in the past, 71 percent of Schedule
19 customers who were smaller than the 3 MW average would not have had to make
any contribution and those larger customers, like Glanbia, would have paid for the costs
above the 3 MW prorated allowance. This concept is consistent with the Company's
distribution line extension policy, Rule H, in which Standard Terminal Facilities are
provided for all residential and commercial customers, but those who require facilities
above those that are standard must pay for those facilities.
While the fixed substation allowance of $197,202 complies with the directive
contained in Order No. 32848 to "address an appropriate calculation of an allowance,"14
this substation allowance does not "eliminate any potential cost to the Company's
general body of customers."1s The only way to eliminate anv potential cost would be to
follow the existing practice of requiring the Schedule 19 customer who solely benefits
from the new transmission and substation facilities to pay for those facilities.
B. Substation Allowance Structure and Applicabilitv.
lf the Commission chooses to implement a new Schedule 19 substation
allowance, the Company recommends its tariffs be modified such that: (1) the
Company's Rule H would remained unchanged, as substation allowances are expressly
13 The entire cost of a 30 MVA transformer, airbreak switches, interrupter, metalclad and
protection equipment is currently estimated at almost $2 million. lf the typical 3 MW customer's request
prompted the Company to alter or upgrade an existing substation to meet that request, the customer
would be responsible for 3/30'n'of the cost of the entire alteration, or approximalely $197,202. The
installation cost breakdown is included as confidentialAttachment 2.
1a Order No. 32848, p. 7.
" /d., p. o.
IDAHO POWER COMPANY'S ADDITIONAL COMMENTS - 8
excluded from the Rule and (2) Schedule 19 would be changed to include a section
describing the amount of substation allowance and its applicability. If the Commission
adopts a substation allowance, the Company also recommends updating the fixed
substation allowance in Schedule 19 annually coincident with updating distribution
allowances in Rule H.
ln terms of applicability, the Company proposes that any Schedule 19 customer
who requires substation upgrades be installed receive a substation allowance only one
time, which is consistent with the Company's treatment of customers requiring new
distribution facilities under Rule H. A substation allowance would be calculated when
the custome/s original request for service is received, but any subsequent upgrade
would not qualify for additional substation allowances.
Under this methodology, a substation allowance for Glanbia's current request
would be zero because Glanbia already received the benefit of "free capacity" when it
originally requested service from the Company.lo Other customer classes do not
receive more than one allowance, even when adding new load, because the allowance
is intended to be a one-time offset against facilities required to serve the customer. The
Company believes that allowing Schedule 19 customers to receive multiple substation
allowances is inappropriate and will result in upward pressure on all rates.17
16 The current request is Glanbia's second upgrade request since it began taking service at this
service point. Glanbia originally took service with no upfront cost for substation upgrades and
subsequently requested a 2.5 MW increase to its load on October 25, 2012, which was also
accommodated at no additional upfront cost to Glanbia because there was existing capacity in the
substation.
" The Company believes if the Commission authorizes an allowance for Glanbia's proposed
facilities upgrade, the Company would be required, pursuant to ldaho Code $ 61-315, to provide multiple
allowances for all Schedule'19 customer requests of this type on a going forward basis, unless the
Comm ission indicates otherwise.
IDAHO POWER COMPANY'S ADDITIONAL COMMENTS - 9
C. Reiected Allowance Methodoloqies.
The Company internally evaluated a proposal for the entire cost of the substation
to be provided as an allowance. However, the Company does not believe this is
consistent with the Commission's Order to "structure an allowance for Glanbia's project
so that it does not create a cost risk to Idaho Powe/s other customers."18 Providing the
entire cost of the substation as an allowance would have a direct financial impact on
other customers and the Company does not believe this solution to be fair and equitable
nor responsive to the Commission's Order.
The Company also evaluated an alternate methodology of providing "scalable"
allowances that could be applied on a "per MW" basis. This is not a methodology the
Company supports re-introducing, as it is similar to the historical Rule H allowance
methodology that was abandoned during Case No. IPC-E-95-18. Scalable allowances
are problematic for several reasons. This approach could incentivize a customer to
"scale" its request to ensure there would be no contribution required, essentially
resulting in the Company's previously rejected consideration of providing the entire cost
of the substation for a customer. Operationally, this practice leads to an overbuilding of
the Company's overall electrical system and the unnecessary building of rate base,
which ultimately increases rates for all customers.
III. POLICY IMPLICATIONS FOR CUSTOMER RATES
Changing the long-standing policy of requiring Schedule 19 customers to pay for
new substation facilities up front could have several negative impacts, and while the
Commission is able to change policy, the Company believes a shift in this policy will
provide upward pressure on future rates paid by all customers. Any change should be
prospective, and the Commission should recognize that other Schedule 19 customers
" Order No. 32848, p. 6.
IDAHO POWER COMPANY'S ADDITIONAL COMMENTS - 1O
who have recently paid for 100 percent of the cost of similar facilities to serve their own
needs will now be required to pay, through their rates, for the facilities that will only
benefit Glanbia.
Most importantly, any new Company investment will be an addition to plant in
rate base and will be recovered through all customers' rates. While the Company does
not eam a retum on plant when a CIAC is collected from any individual customer, the
Company believes the current policy best insulates the greater body of customers from
one individua! customer's request. Socializing these types of customer-specific costs
will add to rate base and will increase rates for all customers, not just the Schedule 19
class.
DATED at Boise, ldaho, this 22nd day of August 2013.
Attorney for ldaho Power Company
IDAHO POWER COMPANY'S ADDITIONAL COMMENTS - 11
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 22"d day of August 2013 ! served a true and
correct copy of IDAHO POWER COMPANY'S ADDITIONAL COMMENTS upon the
following named parties by the method indicated below, and addressed to the following:
Commission Staff
Weldon B. Stutzman
Deputy Attorney General
ldaho Public Utilities Commission
472 West Washington (83702)
P.O. Box 83720
Boise, ldaho 83720-007 4
Glanbia Foods, lnc.
Peter J. Richardson
Gregory M. Adams
RICHARDSON ADAMS, PLLC
515 North 27th Street (83702)
P.O. Box 7218
Boise, Idaho 83707
X Hand Delivered
_U.S. Mai!
Overnight Mail
FAXX Email [e-mail]
Hand DeliveredX U.S. Mail
Overnight Mail
FAXX Email [e-mail]
[e-mail]
Christa Bearry, Legal Assista
IDAHO POWER COMPANY'S ADDITIONAL COMMENTS - 12
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
GASE NO. IPC-E-13-09
IDAHO POWER COMPANY
ATTACHMENT 1
Schedule 19 Customer Class's 2012 lndividual Customer 15-Minute Maximum Demand
Customer ldentifier
M0289
M0294
M0159
MO2t2
M0437
M0199
M0185
M0155
M0150
M0204
M0002
M0024
M0128
M0025
M0170
M0013
M0115
M0006
M0035
M0005
M0460
M0028
M0106
M0'rc5
M0309
M0498
M0012
M0393
M0016
M0329
M0019
M0133
M0037
M0253
M0452
M0003
M0067
M0155
M0060
M0076
M0258
M@72
M0383
M0363
M0078
M0007
M0114
M0181
M0081
M0082
M0151
M0450
M0484
M0055
M0033
M0008
M0083
M0079
13,30s
L2,2LO
It,46t
to,42t
9,537
9,513
9,342
8,463
8,3rf8
8,280
8,130
6,96s
6,457
6,21t
6,031
5,00s
5,924
5,7L3
5,468
s,390
4,5t2
4,430
3,990
3,676
3,s28
3,412
3,'106
3,37s
3,329
3,L74
3,139
3,109
3,O70
3,035
2,942
2,gto
2,792
2,726
2,63L
2,622
2,510
2,507
2,Ms
2,4\3
2,273
2,216
2,2t3
2,t4L
2,074
2,053
2,046
2,030
L,977
L,942
1,861
1,860
L,857
L,798
Customer I Count
Greaterthan 3.03 MW 34
Less than 3.03 MW 83
Total tl7
29%
7t%
too%
ldentifier Demand
L,736
t,723
L,7L2
1,599
L,68
L,648
1,630
t,520
L,440
L,439
1,428
1,389
1,356
r,347
1,34L
1,304
1,24L
1,208
7,2M
1,L96
1,190
1,186
1,186
I,L69
1,155
1,L54
1,139
1,138
1,106
1,098
1,093
L,O75
1,0/m
t,o32
t,o22
L,O22
1,010
981
975
967
950
937
892
87L
76L
730
568
487
477
462
429
/rc9
352
330
165
140
68
55
L4
M0020
M0109
M0118
M0173
M0423
M0092
M0090
M0399
M0040
M0215
M0180
M00s9
M0068
M0475
M0195
M0407
M0428
M0027
M0196
M0503
M0408
M03s8
M0486
M0036
M0330
Mm09
M0057
M0094
M0149
M0353
M0159
M0102
M0419
M0411
M0044
M0236
M0112
M0454
MO467
M0091
M0380
M0230
M0500
M0099
M0218
M0356
M0160
M0164
Mm'22
M03s2
M00s2
M0108
M0080
M0491
M0137
M00s0
M0014
M0086
M0070
Total 3,029
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
cAsE NO. IPC-E-I3-09
IDAHO POWER COMPANY
ATTACHMENT 2
THIS ATTACHMENT IS
CONFIDENTIAL
AND WI LL BE PROVI DED
TO THOSE PARTIES THAT
HAVE SIGNED THE
PROTEGTIVE
AGREEMENT