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HomeMy WebLinkAbout20140415Direct S. Wright.pdfI BEEORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF THE APPLICATION OE IDAHO POWER COMPANY FOR AUTHORITY TO IMPLEMENT POWER COST ADJUSTMENT ('PCA") RATES EOR ELECTRIC SERVICE FROM JUNE T, 2074, THROUGH MAY 31, 20L5, AND TO UPDATE BASE RATES IN COMPLIANCE WITH ORDER NO. 33OOO. CASE NO. IPC-E-14-05 IDAHO POWER COMPANY DIRECT TESTIMONY OF SCOTT WRIGHT 1 2 3 4 5 6 1 8 9 10 11 12 13 L4 t_5 76 t7 18 1,9 20 2L 22 23 24 25 O. A. O. Please state your name, business address, and present positj-on with Idaho Power Company ("Idaho Power" or "Company"). A.My name is Scott Wright. My business address is 1,221 West Idaho Street, Boise, Idaho 83102. I am employed by Idaho Power as a Regulatory Analyst II in the Regulatory Affairs Department. O. Please describe your educational background. A. I received a Bachelor of Science degree in Business Economics from Eastern Oregon University. I have also attended the Center for Publ1c Utilities "Practical- Skil-Is for a Changing Electric Industry" a course offered through New Mexico State University in Albuquergue, New Mexico, the Edison Electric Institute's "Electric Rate Advanced Course" in Madj-son, Wisconsin, and the NERA "Marginal Costing for El-ectric Utilities", j-n Los Angeles, California. Pl-ease describe your work experj-ence. In May L998, I accepted a position as Research Assistant with Idaho Power in the Regulatory Affairs Department. In March 2007, I was promoted to a Regulatory Analyst. In March 2070, I was promoted to a Regulatory Anal-yst fI. As a Regulatory Analyst Il, I am responsible for running the AURORA model- to calculate Net Power Supply Expenses ("NPSE") for ratemaking purposes, preparing the WRIGHT, DI 1 Idaho Power Company 1 2 3 4 5 6 1 8 9 10 11 t2 13 14 15 76 t7 18 79 20 27 22 23 24 25 o. A. Power Cost Adjustment ("PCA") filings 1n Idaho and Oreqon, as well as the marginal cost of energy used in the Company's marginal cost analysis. I also provide analytical support for other regulatory actj-vities within the Regulatory Affairs Department, as well as providing testimony in other Company filings. What is the purpose of your testimony? The purpose of my testi-mony is to present the quantification of the 201,4-2075 PCA rates and to quantify the rate listed on Schedul-e 89, Unit Avolded Energy Cost for Cogeneration and Small Power Production ("Schedule 89',). O. Please provide a summary of the sections presented in your testimony. A.My testimony is divided into several- sections. The first section of my testimony provides an overview of the PCA components. The second section presents the quantification of the PCA forecast rate using the PCA components approved in Order No. 33000 in Case No. IPC-E- 1,3-20. The third section details the quantification of the True-Up and the True-Up of the True-Up. The fourth section addresses revenue sharing benefits and the proposal to transfer surplus Idaho Energy Efficiency Rider ('DSM Rj-der") funds, which are described in more detail in Mr. Timothy E. Tatum's testimony. The final section of my wRrGHT, Dr 2 Idaho Power Company 1 2 3 4 5 6 7 8 9 10 11 72 13 L4 15 16 t1 1B L9 20 2L 22 23 24 25 testimony describes the update to the Company's Schedul-e 89. O\IERVIEI'I OF PCA COMPOI{EI{TS Please describe the components of the PCA base. A. The PCA base level expenses are reflective of the following Federal- Energy Regulatory Commission (*FERC") Accounts: FERC Account 501, fuel (coal); FERC Account 536, water for power; FERC Account 541, fuel (gas); EERC Account 555, purchased power; EERC Account 555, transmission of electricity by others,' and EERC Account 447 , sales f or resale (typically referred to as surplus sales). The PCA base expense component for FERC Account 555 includes both power purchases resulting from the Publ-1c Utility Regulatory Policies Act of L918 (*PURPA") and non- PURPA (market) purchases. As per Order No. 32426, the Company adjusts FERC Account 555 to incl-ude demand response incentive payments that the Company provi-des to customers for participating in any of its three demand response programs. Ir. QUAITTTFTCATION OF pCA FORECAST O. Were there any changes to this year's PCA base components compared to l-ast year's PCA base components? WRIGHT, DI 3 Idaho Power Company 1 2 3 4 5 6 7 I 9 10 11 t2 13 74 15 t6 71 18 19 20 2L 22 23 24 25 A. Yes. On March 21, 2014, Order No. 33000 in Case No. IPC-E-13-20 approved the new base level components used for quantifying this year's PCA rates. 0.Please quantify the PCA component amounts described previously that are included in the PCA base from which deviations are to be tracked based on customers receiving a 95 percent share. A. Order No. 33000 approved the Company's base Ievel PCA component amounts from which deviations are to be tracked at 95 percent for customer responsi-bility as fo]1ows: Account 501, coal Account 536, water for power Account 547, gas Account 555, non-PURPA Account 565, transmission $108,503,180 $2,380,597 $ 33, 3 6't , 563 $62,606, 593 $5,455,955 Account 441, surplus sales ($51r 735,153) Net of 95 percent accounts $160,578 ,735 O. Please quantJ-fy the PCA component amounts included in the PCA base from which deviations are to be tracked with a 100 percent customer responsibility. A. Order No. 33000 approved the PCA base component amounts from which deviations are to be tracked with 100 percent customer responsJ-bility as fol-Iows: Account 555, PURPA $133,853,869 WRIGHT, DI 4 Idaho Power Company 1 2 3 4 tr 6 7 8 9 t-0 11 L2 1_3 1-4 15 1,6 L7 18 L9 20 2t 22 23 24 25 O. Pl-ease quantify the PCA component amounts i-ncluded in the PCA base from which deviations are tracked differently than described above. A.The base l-evel recovery of demand response j-ncentives in the amount of $71,,252,265 was approved per Order No. 33000. The $7L,252,265 represents the Idaho jurisdictional- share of the incentive costs. Because the demand response incentive payments are jurisdictionalized prior to j-ncl-usion in the PCA, this cost category is calculated separately from the net 95 percent accounts. Under this separate treatment, an Idaho jurisdictional sales denominator i-s used rather than the normalized system firm sales denominator used for 95 percent accounts in the PCA rate development process. o.Please detail the amounts included in the PCA forecast for which deviati-ons from base are to be tracked based upon a 95 percent customer sharing percentage. A.Based upon the Company's March 27, 20L4, Operatj-ng PIan ("Operating Plan"), the forecast of amounts for which deviations from base are to be tracked at 95 percent for customer responsJ-bility is as follows: Account 501, coal Account 536, water for power Account 54'7 , gas Account 555, non-PURPA $169,424,8'79 $1,7 51,000 $7 3 , 94L, 6'7 3 $6L,996,853 WRIGHT, DI 5 fdaho Power Company 1 2 3 4 5 6 1 8 9 1_0 11 L2 13 74 15 16 l1 18 19 20 2L 22 23 24 25 Account 565, transmission $6, 645,77 5 Account 447, surpl-us sales ($126,166,913) Net of 95 percent accounts $187,593,267 o.What is the difference between the net of the 95 percent accounts of the forecast amount of $187r593,261 and the $160,578,135 PCA base amount approved in Order No. 33000 ? A. The PCA forecast amount of $187,593,267 is higher than the base amount of $160,578,135, a dj-fference of 527,014,532. o.What is the Operating Pl-an quantification of PURPA expenses anticipated from April 201,4 through March 2075? A. The Operating PIan anticipates $134,L42,386 of PURPA expenses during the April 2014 through March 20L5 time perlod. O.How does this amount compare to the base level of PURPA expenses approved in Order No. 33000? A. The Operating Pl-an quantification of PURPA expense is $288,5L'7 greater than the base level amount of $133,853,869 approved in Order No. 33000. O. What j-s the Operating PIan quantification of the demand response incentive payments anticipated from April 201,4 through March 201-5? WRIGHT, DI 6 Idaho Power Company 1 2 3 4 5 6 7 8 9 10 11 t2 13 74 15 76 77 18 79 20 2t 22 23 24 25 A.The Operating Plan anticipates $8,290,603 of Idaho jurisdictional demand response incentive payments during the April 20!4 through March 2015 tj-me period. O. How does this amount compare to the base 1evel of Idaho jurisdictj-onal demand response incentive payments quantified in Order No. 33000? A.The Operating Plan quantification of demand response j-ncentive payments is $2,967,662 less than the $lL,252,265 quantified in the Company's update of power supply expenses approved per Order No. 33000. The lower incentive payments reflect the newly establ-ished demand response incentj-ve structure as agreed to by the settlement stipulation approved by the Idaho Public Utilities Commission ("Commission") in Order No. 32923. O.What is the rate for the projection portion of t.he PCA for April 201,4 through March 20L5? A.The rate for the projection portion of the PCA is equal to the sum of (1) 95 percent of the difference between the non-PURPA expenses quantj-fied in the Operating Pl-an and those quantlfied in the Company's last approved update of power supply expenses, divided by the Company's normallzed system firm sales, and (2) 100 percent of the difference between PURPA-rel-ated expenses quantified in the Operating Plan and those quantifled in the Company's l-ast approved update of power supply expenses, divided by the WRIGHT, DI 7 Idaho Power Company 1 2 3 4 5 6 7 I 9 10 11 72 13 l4 15 15 11 18 19 20 2t 22 23 24 25 Company's normalized system firm sal-es, and (3) 100 percent of the difference between the Idaho jurisdictional demand response incentive payments quantified in the Operating PIan and those quantified in the Company's last approved update of power supply expenses, divided by the Idaho jurisdictional sales. The rate for non-PURPA expenses is 0.1807 cents per kilowatt-hour (*kv0h"), which is ca1culated by multiplying $21,074,532 by 95 percent and then dividing it by the normal-ized system firm sales of 74,200r871- megawatt-hours (*MWh-) (($27,0:14,532 * O.95) / 74,200,871) $1.8l/MWh : 0.1807 cents/kwh). The rate for PURPA expenses is 0.0020 cents per kwh, which is calculated by dividing $288,577 by the 74,200,871 MWh ($288,5L7 / U,200,871 MWh : $0.o2lMwh : 0.0020 cents/kwh) . The rate for the demand response incentive payment is a negative 0.021-8 cents per kwh, which is calcul-ated by dividing a negative $2,961,662 by the Idaho jurisdictional firm sales of 13,558,865 MWh (-52,96L,662 / t2,558,865 MWh : -$0.22lMWh : -0.0218 cents/kwh). The projection portion of the PCA rate is 0.1609 cents per kwh, which is calculated by adding the non-PURPA expense of 0.1807 cents per kWh to the PURPA expense of 0.0020 cents per kWh to the demand response incentive payment of negative 0.0218 cents per kwh (0.1807 + 0.0020 + -0.0218 : 0.1609 cents/kwh) . WRIGHT, DI 8 Idaho Power Company I 2 3 4 5 6 1 8 9 10 11 t2 1_3 L4 t_5 76 t't 18 L9 20 2L 22 23 24 25 0. What j-s the recoverable deviation of forecast power supply expenses from base level- power supply expenses for the 201,4-2075 PCA forecast? A. The recoverable portion of power supply expenses is $22,990 , 660 million ( ($Zl ,0L4,532 x 0 . 95 ) + $288,517 + -$2,967,662 $22,990,660) . rrr. QUAIITIFICATTON OF TEE TRI,E-UP ATID TRT'E-UP OF THE TRT'E-UP O. Please describe the True-Up portion of the PCA rate. A.The True-Up portion of the PCA rate starts with the deferral expense report, attached as Exhibit No. 5. This report compares actual PCA account results to l-ast year's PCA account projections on a monthly basis, with the differences accumulated as the deferral balance. The ba1ance at the end of March 20L4, with interest applied, was $58,088,816, as shown on row 90 of Exhibit No. 5. The $58.1 mill-ion represents a charge to customers largely resulting from actual power supply expenses being greater than what had been forecast fast year. O. Please describe the computation of this year's True-Up rate. A. This year's True-Up component of the PCA is $58,088,8'76, divided by the Company's projected fdaho jurisdictiona1 sales of 13,558,865 MWh which resul-ts in a wRrGHT, Dr 9 Idaho Power Company 1 2 3 4 5 6 1 8 9 10 11 L2 13 74 15 76 77 18 79 20 2t 22 23 24 25 rate of 0.4284 cents per kwh ($58,088,876 / 73,558,865 = $4.28lrqWh : 0.4284 cents/kwh) . O. What is this year's True-Up of the True-Up rate? A.The Company under collected last year's PCA True-Up Balance by $L9,L40,9I7 as shown on row 109 of the deferral expense report. The True-Up of the True-Up rate is calculated by dividing $19,140,917 by the projected Idaho jurisdictional- sales of 13,558,865 MWh, which results in a rate of 0.7472 cents per kV[h ($19,740,977 / 73,558,865 : $1.41lMV{h : 0.\472 cents/kwh) . o.Please explain the combined effect of the True-Up and the True-Up of the True-Up in this year's PCA. A.The sum of the $58.1 million associated wi-th the True-Up and the $19.1 million associated with the True- Up of the True-Up represents $17.2 million of additional collection from customers. This additional cost in large part reflects that actual- net power supply expenses for the 2074-2075 PCA year were greater than the forecast. o.Does the quantified True-Up rate include the sales of Renewable Energy Certificates ("RECs") and Sulfur Dioxj-de ("SOz") proceeds? A.Yes. The RECs and SO2 proceeds are included in the Company's deferral expense report, provided as Exhibit No. 5 on l-ines 37 and 38. Order No. 32002 issued WRIGHT, DI 10 fdaho Power Company 1 2 3 4 ( 6 1 I 9 10 11 t2 13 74 15 t6 t7 18 19 20 2t 22 23 24 25 on June 11, 2070, approved the Company's REC Management P1an, which passes the customers' share of REC benefits back to the customer through the PCA. Order No. 32434 approved on January 12, 2012, directed the Company to pass SO2 proceeds through the PCA to help offset the Company's PCA deferral bal-ance. IV. RE\IENT'E SIIARING A}ID DSM RIDER ADdIuSTMENT O. Please give a brief overview of the revenue sharing and DSM Rider adjustment proposal described in Mr Tatum's testimony. A. The revenue sharing and DSM Rider adjustment proposal includes a revenue sharing benefit of $'7,602,043 as well as a transfer of DSM Rider funds of $20 miltion. O. How has the Company incorporated this refund into the PCA rate? A. As detailed in Mr. Tatum's testimony, the Company plans to apportion the revenue sharj-ng benefits and the transfer of $16 million in DSM Rider funds based on each class's proportlon of base revenues. The transfer of $a million in DSM Rider funds that is necessary to ensure a revenue neutral J-mplementation of the 2073 base leve1 NPSE will be provided as a uniform rate credit. This approach will allow each customer class to receive the credlt in the same proportj-on as their respective increase in base rates. AlI classes of customers will receive revenue sharing WRIGHT, DI 11 Idaho Power Company 1 2 3 4 5 6 1 I 9 10 11 12 13 L4 15 16 L7 18 L9 20 27 22 23 24 25 benefits in the form of a volumetri-c rate with the exception of the Special Contract customers who will receive this benefit in the form of 72 equal monthly bill credits. The transfer of DSM Rider funds wil-l- be provided in the form of a volumetric rate for all classes of customers. Exhibit No. 6, page 7, columns A, B, and C show the annual revenue sharing benefits and the transfer of DSM Rider funds for all classes of customers. Columns D, E, and E show the cents per kwh rate for the classes that will receive revenue sharing benefits and the transfer of DSM Rider funds in the form of a volumetric rate. o.What is the resulting PCA rate when you combine aII of the PCA components described previously? A.The Company's PCA rate for the 2074-20L5 PCA year is detailed in Exhibit No. 6, page l, col-umn H. The uniform PCA rate 1s comprised of (1) the 0.1609 cents per kwh adjustment for the 20L4-2075 projected power cost of serving firm loads, under the current PCA methodology and 95 percent sharing, (2) the 0.4284 cents per kwh for the 2013-20L4 True-Up portion of the PCA, and (3) the 0.7412 cents per kV[h for the True-Up of the True-Up. The sum of these three components results in a 0.7305 cents per kwh charge f or all rate cl-asses. In addition to the uniform PCA rate, each rate class is assigned a portion of the $7.6 million of revenue wRrGHT, Dr L2 Idaho Power Company 1 2 3 4 5 6 7 8 9 10 11 72 13 t4 15 1,6 17 18 L9 20 2t 22 23 24 25 sharing and a portion of the $20 million related to the transfer of DSM Rider funds. When these amounts are combined with the uniform PCA rate, each class will- receive a different PCA rate. The final- PCA rates, including revenue sharing and the transfer of DSM Rider funds are l-isted by rate schedule in Exhibit No. 6, page 7, col-umn I. O. Have you cal-cul-ated the expected PCA revenue using the PCA rates described above? A. Yes. The Company would expect to collect $99.0 mil-Iion through the uniform PCA rate using the approved base power supply expenses approved in Order No. 33000. This is $67.9 mil-Iion less than the $165.9 million associated with the current PCA rate. When the uniform PCA rate is combined wj-th the additional $7.6 million in revenue sharing and $20 mil-Ij-on for the transfer of DSM Rider funds, the Company would expect to col-Iect $71.4 mj-1lion through the final combined PCA rates. O. What is the revenue impact of the requested PCA rate combined with the revenue sharing rates and the transfer of DSM Rider funds when compared to the PCA rate currentl-y in effect? A. Attachment 2 to the Application provides a detailed description of the overall revenue impact of this filing on each customer cl-ass. As shown on Attachment 2, applying the requested PCA rates to expected customer loads WRIGHT, DI 13 Idaho Power Company 1 for the June 201-4 through May 2015 test year results in a 2 PCA increase of $11.1 million. V. SCBEDT'LE 89 UPDATE O. Please provide a brief overview of Schedule s 89. 6 A. In 1980, Schedule 89 was created pursuant to 7 Order Nos. 1,5746 and 16025 to provide PURPA contracts with I an updated avoided energy cost rate any time the Company 9 updated its variable power supply expenses. 10 O. Why 1s the Company updating Schedul-e 89 in 11 this proceeding? 72 A. The Company is updating Schedul-e 89 pursuant 13 to Order No. 32758 issued in Case No. IPC-E-12-28. Order 74 No. 32758 directs the Company to update Schedule 89 15 whenever NPSE amounts are updated, whereas typically this 76 update only occurred after a general rate case has been 71 approved. On l(arch, 2L, 2074, Order No. 33000 approved 18 updated NPSE amounts for the Company. 19 O. How is Schedule 89 calculated? 20 A. Schedule 89 is calcul-ated by combining Valmy's 27 variable power supply expense approved per Order No. 33000 22 and the variabl-e operations and maintenance expenses 23 assocj-ated with the p1ant. 24 O. Has the Company provided the proposed Schedule 25 89 tariff for approval? wRrGHT, DI 14 Idaho Power Company 1 2 3 4 5 6 1 8 9 10 11 t2 13 L4 15 L6 77 18 19 20 2L 22 23 24 25 A.Yes. The Company has included an updated Schedule 89 in Attachment 1 to the application. O. Shoul-d the Commission approve the Company's computation of the PCA rates using the PCA mitigation calculatj-ons and the update to Schedule 89? A. Yes. The Commission should approve the Company's computation of the PCA rates using the PCA mitigation calculations as wel-I as the update to Schedul-e 89. The calcul-ation of the PCA rates and the update to Schedule 89 follows the methodology that was approved in Order Nos. 30715, 30978, 32424, 32518, and 33000. O. Does this concl-ude your testimony? A. Yes. WRIGHT, DI 15 Idaho Power Company 1 2 3 4 5 6 7 I 9 t_0 11 72 13 L4 15 16 L1 18 19 20 2t 22 23 24 25 26 21 28 STATE OE IDAHO ) ) County of Ada ) lt Scott truthfully, and following: ATTESTAIION OF TESTIIONT SS. Wright, having been duly sworn to testify based upon my personal knowledge, state the I am employed by Idaho Power Company as a Regulatory Analyst II in the Regulatory Affairs Department and am competent to be a witness in this proceeding. f declare under penalty of perjury of the laws of the state of ldaho that the foregoJ-ng pre-filed testimony and exhibits are true and correct to the best of my information and belief. DATED this 15th day of April , 2074. Scot SUBSCRIBED AND April, 201-4. SWORN to before me this 15th day of wRrGHT, Dr L6 Idaho Power Company BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION GASE NO. IPC-E-14-05 IDAHO POWER COMPANY WRIGHT, DI TESTIMONY EXHIBIT NO.5 Exhibit No. 5 Case No. IPC-E-14-05 S. Wright, IPC Page 1 of2 Exhibit No. 5 Case No. IPC-E-14-05 S. Wright, IPC Page 2 of 2 BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION cAsE NO. IPC-E-14-05 IDAHO POWER COMPANY WRIGHT, DI TESTIMONY EXHIBIT NO.6 FOtsoNO@@66qcoo !toIqo 5ooNoqo o oco ooIoeoo o NoQoo z Ntso o@4 NFNoN QaN aoe DDoo NNooqqoo tooooo ooqqoo ooNNooooqcoo $oNNooOQqcoo 2Z N@to*- *-o{oo ooNON_ O_ NO$oN- O-ONo@ I o dt o iE;,; iiiEi €f ET#ri6 I NoooNFD@----*..1o@DFO-6ONNF@€@iloooo?@oN@NoNoooli?*-o66Nho60600toooooooooooooootooooooooooooooor- 6 d d ct d ci ci d o' o' d d ci ol oooooDo60Dbcoooooooo---a***looooooooooooooolNNNNNNNtsNNFtstsNtsIoooooooooooooootoooooooooooooool l@ON@oooNNoSO-rOlo@ON@tNOooONOSrlNO@FoNN$NFFt@oNlFFFNTT-OFFFFFNFIooooooooaaooooolqqqqqqqqoooooooloooaoooooooocicioi .l6.AaAaaaAA66io o o oroooooooooooooootNNNNNNNNNNNNNNNIoooooooooooooooloooooooooooooootqqqqq9qqqqqqcccl 99999999990oooor looOONTNO*Nr@o@ol@Ooooo@oS{F@OVNItoo@oooF@@@FooolFooOOOOFFNOIooooooooooQoooolqccqqcqqooooooold sddEddses= _^^]6.AaA6'46'CAA6'Aa=atoO@@Fo@F$O@@NNol@@@@o{tbtoooooslooOOOOOFOOAAoooIooooooooooooooolcqqqqcqqqqqcqcqlooooooooooooooot :laACa6'6'aCaA6s F o @roO6@tNNFNAO@O@ONlrN$OO9oN@o@@FOOOIN{d - N .j @ dtl-'jd ot rt o N !?lotOeetNO 66NeFee lO*vv6oF o-- lN.j -!1 g Z Z lo-.,l= .a6'aA.aacc6'aac6taNN@roO@NoN{@oFFl@ry o- o- o_ N- o- o- t- o- o- cl '1 o- N- @-l@-@@NN@ONOOtNO60NtN@9O@OoeNC@NNFoel@FveN$ivevN6o9@vlots -e'og --ci-- loc2?erF .l:9@ANoSO@No@oo@FlFF@NooooOt@@N$@91@o- N_ @- $- o- o-': \ oq 9 o. o. o- - NJ-- @oN$@@roN@N@N@-loOgrNooOe9tF@6Nelotve- @6ovevlN.i -e- e e-e - l(ggt4 t-Footsg*bpE$EXe=E 3= L58e*&tE: $EE= EiE fi o E*r8Es EE= *e$t;E Bfo'6- st; ; Ei#t: g8*5Pc EEE let =i88,= g EEo iEf +#0 io.P $jB =rn l! l! o o scoEEi,Co E, Ea iIEI C aE.3Eoa.! o.,.ECCrroP()8=-o6O-Co al, -o OOrE =EtoIco=N5.r Bolod 9Ee @@ oodd@tsNOC1 ri@ o@.: o-NOiN@o9@ @ NOo$@o@6ioooo2ts @ H H sig;[i[gli[it,gE n,,i g @oo8=;o o:d tr - Exhibit No. 6 Case No. IPC-E-'14-05 S. 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