20161108Youngblood Direct.pdf

RECEIVE D
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER )
COMPANY'S APPLICATION FOR A ) CASE NO. IPC-E-16-28
CERTIFICATE OF PUBLIC CONVENIENCE )
AND NECESSITY TO CONSTRUCT SYSTEM )
IMPROVEMENTS TO SECURE ADEQUATE )
AND RELIABLE SERVICE TO CUSTOMERS )
IN THE WOOD RIVER VALLEY. )
)
IDAHO POWER COMPANY
DIRECT TESTIMONY
OF
MICHAEL J. YOUNGBLOOD
1
2
Q.
A.
Please state your name and business address.
My name is Michael J. Youngblood and my
3 business address is 1221 West Idaho Street, Boise, Idaho
4 83702.
5
6
Q.
A.
By whom are you employed and in what capacity?
I am employed by Idaho Power Company ("Idaho
7 Power" or "Company") as the Manager of Regulatory Projects
8 in the Regulatory Affairs Department.
9
10
Q.
A.
Please describe your educational background.
In May of 1977, I received a Bachelor of
11 Science Degree in Mathematics and Computer Science from the
12 University of Idaho. From 1994 through 1996, I was a
13 graduate student in the Executive MBA program of Colorado
14 State University. Over the years, I have attended numerous
15 industry conferences and training sessions, including
16 Edison Electric Institute's "Electric Rates Advanced
17 Course."
18 Q. Please describe your work experience with
19 Idaho Power.
A. I began my employment with Idaho Power in 20
21 1977. During my career, I have worked in several
22 departments of the Company and subsidiaries of IDACORP,
23 Inc., including Systems Development, Demand Planning,
24 Strategic Planning and IDACORP Solutions. From 1981 to
25 19 88 , I worked as a Rate Analyst in the Rates and Planning
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Idaho Power Company
1 Department where I was responsible for the preparation of
2 electric rate design studies and bill frequency analyses.
3 I was also responsible for the validation and analysis of
4 the load research data used for cost-of-service
5 allocations.
6 From 1988 through 1991, I worked in Demand Planning
7 and was responsible for the load research and load
8 forecasting functions of the Company, including sample
9 design, implementation, data retrieval, analysis, and
10 reporting. I was responsible for the preparation of the
11 five-year and 20-year load forecasts used in revenue
12 projections and resource plans as well as the presentation
13 of these forecasts to the public and regulatory
14 commissions.
15 From 1991 through 1998, I worked in Strategic
16 Planning. As a Strategic Planning Associate, I coordinated
17 the complex efforts of acquiring Prairie Power Cooperative,
18 the first acquisition of its kind for the Company in 40
19 years. From 1996 to 1998, as a part of a Strategic
20 Planning initiative, I helped develop and provide two-way
21 communication between customers and energy providers using
22 advanced computer technologies and telecommunications.
23 From 1998 to 2000, I was a General Manager of
24 IDACORP Solutions, a subsidiary of IDACORP, Inc., reporting
25 to the Vice President of Marketing. I was directly
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Idaho Power Company
1 responsible for the direction and management of the
2 Commercial & Industrial Business Solutions division.
3 In 2001, I returned to the Regulatory Affairs
4 Department and worked on special projects related to
5 deregulation, the Company's Integrated Resource Plan, and
6 filings with both the Idaho Public Utilities Commission
7 ( "Commission" or "I PUC") and the Public Utility Commission
8 of Oregon.
9 In 2008, I was promoted to the position of Manager
10 of Rate Design for Idaho Power. In that position, I was
11 responsible for the management of the rate design
12 strategies of the Company as well as the oversight of all
13 tariff administration.
14 In January of 2012, I became the Manager of
15 Regulatory Projects for Idaho Power, which is my current
16 position. In this position, I provide the regulatory
17 support for many of the large individual projects and
18 issues currently facing the Company. I provided the
19 regulatory support for the inclusion of the Langley Gulch
20 power plant investment in rate base, supported the
21 Company's efforts to address numerous issues involving
22 Qualifying Facilities ("QF") as defined under the Public
23 Utility Regulatory Policies Act of 1978 ("PURPA"),
24 including the Company's efforts in Case No. GNR-E-11-03,
25 the review of PURPA QF contract provisions. I provided
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Idaho Power Company
1 direct testimony for the Company in its Idaho application
2 for a Certificate of Public Convenience and Necessity
3 ("CPCN") for the investment in selective catalytic
4 reduction controls on Jim Bridger Units 3 and 4, IPUC Case
5 No. IPC-E-13-16, the Company's request to implement solar
6 integration rates and charges based upon the initial 2014
7 Study, IPUC Case No. IPC-E-14-18, as well as the Idaho case
8 to update those integration costs with the 2016 Study, IPUC
9 Case No. IPC-E-16-11.
10 Q. What is the purpose of your testimony in this
11 matter?
12 A. The purpose of my testimony is to provide an
13 overview of the Company's case and its request, pursuant to
14 Idaho Code§§ 61-508 and 61-526, that the Commission find
15 it to be in the public convenience and necessity that Idaho
16 Power construct a new 138 kilovolt ("kV") transmission line
17 and related facilities to provide a redundant source of
18 energy into the northern portion of the Wood River Valley
19 north of East Fork Road, including the communities of
20 Ketchum and Sun Valley and portions of Blaine County
21 ("North Valley"). The North Valley is currently supplied
22 by a 54-year-old, single-source radial line that
23 experiences sustained outage line events, which are
24 projected to increase in frequency. The North Valley is
25
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Idaho Power Company
1 the second largest load center in Idaho Power's service
2 territory served by one radial transmission line.
3 The proposed facilities are necessary and required
4 in order to continue providing reliable and adequate
5 electricity to Idaho Power's customers in the North Valley.
6
7
8 case.
9
Q.
A.
I. OVERVIEW
Please provide an overview of the Company's
In this case, the Company will support its
10 request for a CPCN by discussing Idaho Power's need to
11 construct a new transmission line in the Wood River Valley,
12 provi ding background information including extensive public
13 and community outreach and involvement, and discussing the
14 various redundant service alternatives considered and line
15 route options that support the request in this case. In
16 his direct testimony, Company witness David Angell will
17 discuss why the Company must construct facilities between
18 the substations in Hailey and Ketchum to meet its
19 continuing obligation to serve customers located in the
20 North Valley. He will also discuss the Company's long
21 history of planning for a second transmission line and the
22 cooperative efforts taken between Idaho Power and the
23 people in the communities of Sun Valley, Ketchum, and
24 Blaine County. This collaborative process was intended to
25 find agreement on the purpose and need for a redundant
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Idaho Power Company
1 source of energy and to determine the scope and feasibility
2 of a route that could be obtained and permitted.
3 Mr. Angell will discuss a number of construction
4 configurations the Company considered, both standard
5 practice and non-standard, to provide redundant service to
6 the North Valley, ultimately determining three viable
7 construction configurations for further analysis, which he
8 provided to Company witness Ryan Adelman. Mr. Adelman's
9 direct testimony will detail the costs, benefits, and
10 detriments of each of the viable construction
11 configurations, as well as providing cost estimates on
12 three additional options for one specific construction
13 configuration. Mr. Adelman concludes by identifying both
14 the Company's standard practice construction configuration
15 for building a redundant electrical solution, given the
16 cost estimates and the constraints of the North Valley, as
17 well as an economically equivalent alternative route, which
18 is the route for which the Company is requesting a CPCN be
19 issued.
20 Q. What were the three viable construction
21 configurations for providing redundant service to the North
22 Valley?
23 A. As more fully described in Mr. Adelman's
24 testimony, the three redundant service construction
25 configurations were identified as: (1) Underground
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Idaho Power Company
1 Transmission, (2) Overhead Distribution, and (3)
2 Underground Distribution.
3 Q. Which construction configuration did the
4 Company determine as the economic base case for providing
5 redundant service to the North Valley?
6 A. As described in Mr. Adelman's testimony, the
7 Overhead Distribution construction configuration was the
8 lowest-cost viable alternative, as well as the traditional
9 or standard practice for providing redundant electrical
10 service to an area and therefore became the basis for
11 comparison of other construction configurations.
12 Q. Would the Overhead Distribution base case be
13 considered one of the typical or standard construction
14 configurations applied by the Company when addressing the
15 need for redundant electrical service?
16 A. Yes. Based on discussion with Mr. Angell and
17 Mr. Adelman, the Company's traditional practice to reduce
18 the likelihood of sustained outages would be to construct
19 multiple overhead transmission lines (a redundant
20 transmission source) or to implement distribution circuits
21 with tie switches in order to continue providing customers
22 with reliable electric service. The Overhead Distribution
23 base case meets these criteria. However, while the
24 Overhead Distribution construction configuration was the
25 lowest-cost viable solution and would provide redundant
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Idaho Power Company
1 service to the North Valley, there would be some challenges
2 for the actual construction of this route, the land
3 acquisition required for the substation and other
4 facilities, and aesthetic concerns that warranted a look at
5 other alternatives. More specifically, ordinances in
6 Ketchum and Sun Valley requiring that all new electrical
7 facilities be constructed underground would make it more
8 difficult to construct overhead distribution lines because
9 of the communities' concern of visual impact on the area.
10 The Underground Transmission construction
11 configuration, with a similar range in cost estimates to
12 the lowest-cost Overhead Distribution base case, would also
13 provide redundant service. In addition, the Underground
14 Transmission construction configuration would provide
15 additional capacity, enabling future growth within the
16 area. The range in estimated costs for the Underground
17 Transmission construction configuration was dependent on
18 the location of the transition point from overhead-to-
19 underground transmission. The further along the path that
20 construction can remain above ground reduces the overall
21 total cost of the project. As described in Mr. Adelman's
22 testimony, three separate options to the Underground
23 Transmission construction configuration, with varying
24 overhead-to-underground transition points ("TP"), were
25 analyzed further: TPl, near the intersection of Elkhorn
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Idaho Power Company
1 Road and Highway 75; TP2, near the intersection of Hospital
2 Drive and Highway 75; and TP3, near the intersection of Owl
3 Rock Road and Highway 75. The TPl option, near the
4 intersection of Elkhorn Road, resulted in the lowest-cost
5 estimate for the Underground Transmission construction
6 configuration. The cost estimate for the TPl option was
7 essentially equivalent to the lowest-cost estimate of the
8 Overhead Distribution base case.
9 Q. Is the TPl route, at Elkhorn Road, the option
10 for which the Company is requesting a CPCN?
11 A. Yes. The Company's request is for the
12 Commission to find that the present and future public
13 convenience and necessity require the construction of a new
14 138 kV transmission line and related facilities to provide
15 a redundant source of energy into the North Valley. Both
16 of the viable options require the construction of a new
17 overhead 138 kV transmission line from the Wood River
18 station to a location near the intersection of Highway 75
19 and Owl Rock Road, referred to as the Common Route. From
20 that point north, either the TPl option or the Overhead
21 Distribution base case would provide the necessary
22 facilities to provide a redundant source of energy to the
23 North Valley, and are both economically equivalent.
24 However, the TPl option will provide additional stability
25 over time as it will allow for future growth in customer
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Idaho Power Company
1 demand . The Underground Transmission construction
2 configuration would provide full redundant capacity of the
3 existing 138 kV transmission line and would support a
4 build-out demand in the North Valley area of 120 megawatts
5 ("MW ") . The line would provide the ability to de -energize
6 any section of either transmission line for maintenance ,
7 inspection , repair, or reconstruction , without customer
8 int erruption . The co nstruction of the Underground
9 Transmission TPl option is the Company's requested route
10 for the Commission 's CPCN consideration .
11
12 Q.
II. FUNDING ALTERNATIVES
Would the other Underground Transmiss i on
13 options also provide the same benefits as the TPl opt i on?
14 A. Yes , however , at incrementally greater cost .
15 The estimated cost for TP2 is an additional $2 .7 million at
16 $32 .7 million and TP3 is an additional $5 .7 million over
17 the Overhead Distribution base case at $35 .7 million .
18 Q. Were all communities in agreement with the
19 selection of TPl?
20 A. No . There was interest expressed in putting
21 as much of the redundant line underground as possible ;
22 however , representatives for the communities were concerned
23 about the need to pay for the incremental costs for the
24 additional underground transmission line through a Local
25 Improvement District ("LID"), which would assess the
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Idaho Power Company
1 additional dollars based upon the North Valle y property
2 values . The Community Advisory Committee ("CAC") was
3 concerned that it would be very difficult to get an LID
4 approved .
5 Q. Did anyone in the community suggest that the
6 line should be placed underground regardless of the
7 location and cost?
8 A. At first, some members of the CAC suggested
9 that there should not be any incremental costs because of
10 the city ordinances restricting new overhead construction .
11 Q. What was Idaho Power's response to the
12 assertion that local communities should not be required to
13 fund the incremental costs of non-standard designs?
14 A . Idaho Power explained to the CAC that the
15 Company is obligated to build its infrastructure in the
16 most cost -effective manner possible . Idaho Power develops
17 transmission project designs throughout its service
18 territory that provide the least-cost solution while
19 adhering to consistent standards for service and that the
20 IPUC allows recovery of those reasonably incurred costs.
21 To the extent that customers or communities desire the
22 Company to pursue alternate designs, such as underground
23 transmission at a higher cost, it is the Company's
24 position , as previously supported by the IPUC ,1 that the
1Case No . IPC-E-04 -04 , Order No . 29634 .
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Idaho Power Company
1 customers requesting and benefiting from the alternate
2 design are responsible for the incremental cost
3 differential between t he lowest -cost standard practice
4 option and the desired option .
5 Q. What was the CAC 's response to the Company 's
6 position that the incremental costs should be recovered
7 from the North Valley community?
8 A. The CAC was still concerned that it may not be
9 possible to get an LID approved and asked if the Company
10 would consider adding the incremental costs as a surcharge
11 to the customers ' electric bills . The Company is not
12 generally in favor of collecting additional costs related
13 to meeting the preferences of a community on customers '
14 electric bills , and at first resisted . However , in an
15 attempt to reach a compromise and begin construction on a
16 much -needed project , the Company reconsidered its pos i tion .
17 Q. What wa s the result of the Company 's
18 reconsideration?
19 A . In looking at the three transition-point
20 options for the Underground Transmission construction
21 configuration , the Company considered possible funding
22 arrangements . The funding options are summarized in the
23 following table :
24
25
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Idaho Power Company
1
2
3
Table 1 : Transition Point Funding Options
Underground
Transition
Point
TPl -El khorn
Road
TP2 -Hospital
Drive
TP3 -Owl Rock
Road
Q.
Total
Cost Incremental Surcharge
Esti mate Cost Collection Method Rate/Duration
$30 .0 M $0 .0 M N/A N/A
$32 .7 M $2 .7 M Su r charge/Franchise 3%/-10 years
Fee
$35 .7 M $5 .7 M LID
Please explain the table above .
4 A. For the three transition point options for the
5 Underground Transmission construction configuration , TPl,
6 TP2, and TP3, the incremental cost ranges from $0.0 to $5 .7
7 million. I f the local jurisdi ctions supported the TPl
8 option , there wou l d be no inc r emental costs above the
9 lowest-cost economic base case ; therefore , no additional
10 incremental costs would need to be recovered from the North
11 Valley residents . However , i f the community 's choice was
12 for either of the other two transit i on point options , the
13 additional incremental costs would need to be recovered
14 from the customers directly benefiti ng from the redundant
15 facilities . The Company proposed that if the third option
16 was chosen , the incremental costs of $5 .7 mi llion were of
17 sufficient magnitude that they should not be recovered as a
18 surcharge on customers ' electric b i lls , but should be
19 recovered through an LID , a s had been suggested before .
20 However , if the community wanted opt i on TP2 , with the
21 underground transition poi nt a t Hospital Drive , the
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Idaho Power Company
1 incremental costs would be approximately $2 .7 million above
2 the economic base case. The Company agreed that if the
3 communities chose this option for the trans i tion point of
4 the Underground Transmission line, the Company wo uld add a
5 3 percent surcharge to the North Valley c ustomers' bills,
6 with the caveat that any city franchise fee was first fully
7 executed.
8 Q. What does fully executing a franchise fee mean
9 in this situation?
10 A. For Blaine County, for which a franchise fee
11 is not applicable,2 and for the City of Ketchum, which
12 already has a franchise fee at the maximum rate of 3
13 percent, the Company would add an additional 3 percent
14 surcharge to the customers' bills. Ho wev er, for the City
15 o f Sun Valley, which has a franchise fee agreement that is
16 currently set at O percent, the Company requested that the
17 city raise its franchise fee to the ma x imum of 3 percent in
18 order t o collect its respective share of the total
19 incremental cost of the TP2 option.
2 0 Q. Did the Company c ommuni c at e these options to
2 1 the respective communities?
2 2 A. Yes. I have attached as Ex hibit No. 1 copies
2 3 o f three letters that Idaho Power sent t o the
2 4 jurisdi c tions, as well as to Commission Staff, on May 19,
2 Franchise fees are levied by municipalities ; therefore , it is
not possible for Blaine County to implement a franchise fee .
YOUNGBLOOD, DI 14
Idaho Power Company
1 August 5 , and Augus t 31 , 2016 . These letters evidence the
2 most recent outreach by Idaho Power to the jurisdictions in
3 an attempt to reach a compromise or consensus regarding the
4 redundant line into the North Valley . The May 19 , 2016 ,
5 letter invites the jurisdictions to a "pre-filing
6 settlement conference " and states that prior to mak i ng a
7 formal filing with the IPUC that the Company would l i ke to
8 meet and update the parties regarding current routing
9 options and cost estimates and to discuss the parties '
10 respective positions in anticipation of an eventual IPUC
11 filing . The parties met , in response to this letter , on
12 May 31 , 2016 . Whi l e the discussions were productive in
13 establishing a common understanding of the various
14 positions taken by the respective stakeholder groups , no
15 compromise was reached .
16 At the conclusion of the May 31 , 2016 , meeting , the
17 jurisdictions agreed t o conduct pub l ic meetings and
18 consider the route and cost options for the Hailey to
19 Ketchum redundant transmission line prior to the end of
20 August . Company representatives met again on August 3 ,
21 2016 , with Sun Valley Mayor Peter Hendricks and staff ,
22 Ketchum Mayor Nina Jones and staff , and Blaine County
23 Commissioner Lawrence Schoen and staff to answer any
24 additional questions or concerns . The Company also met
25 individually with a few of the larger customers in the area
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Idaho Power Company
1 who might be most impacted by a 3 percent surcharge,
2 including the Sun Valley Company and St. Luke's Hospital.
3 In the August 5, 2016, letter, Idaho Power
4 communicated the offer described above that outlined the
5 associated estimated cost of the three different overhead-
6 to-underground transition points and offered that the
7 Company would consider agreement to a surcharge option for
8 the incremental cost associated with TP2. On August 18,
9 2016, the Company attended and presented at a Ketchum town
10 hall meeting to inform the public of the need for the
11 redundant source of energy and the estimated costs of the
12 various options.
13 Q. What was the response to the Company's
14 proposed options detailed in Table l?
15 A. In general, the jurisdictions were
16 appreciative of the Company's consideration of alternative
17 funding arrangements. Specifically, there was
18 acknowledgement of the TPl option with no incremental costs
19 and the Company's willingness to recover the incremental
20 costs associated with TP2 through a surcharge.
21 Q. Do all the jurisdictions support the TPl
22 option?
23 A. The Company has not received formal
24 notification from any of the three jurisdictions in
25 opposition to the TPl option. In order to get a
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Idaho Power Company
1 confirmation of the positions of the individual
2 jurisdictions, the Company sent a letter on August 31,
3 2016, asking for a written indication of their preference
4 as to the routing and funding of the proposed line by no
5 later than September 23, 2016. The Company chose that date
6 because it provided each jurisdiction with an opportunity
7 to conduct at least one additional decision meeting prior
8 to providing a response back to the Company. In the
9 letter, the Company stressed that it believed the
10 Underground Transmission-TPl option appropriately balanced
11 the collective interests of the communities with the
12 Company's desire to continue to provide safe, reliable
13 electric service into the future. The Company requested
14 that the responses from the jurisdictions indicate their
15 support, or non-opposition to, the preferred construction
16 configuration (Underground Transmission-TPl).
17 Q. What response did the Company receive from the
18 individual jurisdictions?
19 A. On September 29, 2016, the Company received a
20 letter from the City of Sun Valley. In summary, the letter
21 stated that Sun Valley felt it was thoroughly informed on
22 the purpose and need for the redundant line, as well as the
23 impacts of potential routing options. Sun Valley stated
24 that at the regular City Council meeting of September 1,
25 2016, the Council unanimously agreed that the redundant
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Idaho Power Company
1 line project was necessary and vital for its community and
2 that the best location at which to underground the line
3 would be near the intersection of Highway 75 and Elkhorn
4 Road (the TPl option) .
5 Blaine County did not respond to the Company's
6 request by the September 23, 2016, deadline. The Company
7 had previously filed a request for a conditional use permit
8 ("CUP") which was before the Blaine County Planning and
9 Zoning Commission ("P&Z"). The P&Z did send out a notice
10 to the public, and to the members of the Wood River
11 Citizens' Advisory Committee and contributors to the Wood
12 River Electrical Plan, inviting them to a public hearing
13 held on October 13, 2016, where the details of the
14 transmission line project were discussed. Representatives
15 from the Company attended the meeting presenting details of
16 the overall project to the P&Z and answering questions from
17 the public. A second meeting was scheduled and held on
18 October 20, 2016, where the communication was just between
19 the P&Z and Idaho Power, enabling the Company to provide
20 very specific details on transmission lines versus
21 distribution lines, the benefits to Hailey area residents,
22 specifics on the construction process, and details of
23 structures and routes, etc. The Company updated the P&Z on
24 the CAC process, the need for the project, estimated costs
25 of the various alternatives, and took time to review the
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Idaho Power Company
1 route, comparing the existing facility infrastructure with
2 the proposed facilities . A final decision on the CUP is
3 scheduled for November 10 , 2016 .
4 Q. What response has the Company received from
5 the City of Ketchum?
6 A. While the Company has not received any
7 response from the city directly, Idaho Power is aware that
8 the City Council met on October 3 , 2016. At that meeting ,
9 the Ketchum Energy Advisory Cornrni ttee ( "KEAC") recommended
10 that the City Council address its concerns to the IPUC and
11 request that Idaho Power be required to pay for an
12 independent cost-benefit and reliability analysis of
13 alternatives to a redundant transmission line. The KEAC
14 requested that in addition to evaluating local distributed
15 energy resource and microgrid options, that the city
16 request consideration of redundant distribution versus
17 transmission alternatives , which it believes , would allow
18 for local generation to integrate into the grid north of
19 the Hailey substation and move directly north , whereas, the
20 KEAC claims , redundant transmission does not.
21 Q. What is Idaho Power's conclusion from these
22 responses?
23 A. While the Company is aware of the concerns
24 raised by the City of Ketchum, the city's representatives
25 have not provided any viable alternative to the TPl option .
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Idaho Power Company
1 As discussed at length in Mr . Angell 's testimony , the
2 renewable and alternative solutions the City of Ketchum has
3 suggested are cost prohibitive , with implementation costs
4 much greater than the Company 's proposal . The City of Sun
5 Valley, as well as many other stakeholders in Blaine
6 County, have communicated with the Company that they are
7 supportive of the TPl option and understand that the
8 redundant line is needed and necessary for the Company to
9 continue providing reliable electric service to the North
10 Valley . The Company 's conclusion is that the TPl option
11 strikes a reasonable balance between project costs and the
12 goals of minimizing visual impacts . The Company believes
13 that the TPl option appropriately balances the collective
14 interests of the North Valley communities and stakehol ders
15 with the Company 's desire and obligation to continue to
16 provide safe , reliable electric service into the future.
17 Q. Has the Company received any other input from
18 community members regarding the August 5 , 2016 , proposal?
19 A. Yes . Since the May meeting , a number of
20 stakeholders from the jurisdictions expressed a preference
21 for TPl , the Elkhorn Road underground transmission line
22 option , with zero incremental costs above the economic base
23 case and no need for additional local funding . The TPl
24 option appears to strike a reasonable balance between the
25
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Idaho Power Company
1 overall project cost and the goal of minimizing adverse
2 visual impacts for the North Valley area.
3
4 Q.
III. REQUEST SUMMARY
Please provide a summary of the Company 's
5 request .
6 A. Idaho Power serves over 9 ,100 customers in the
7 North Valley with a winter peak load of more than 60 MW.
8 Electricity for the North Valley area is supplied by a
9 single , 12 .4 mile , 138 kV transmission line constructed in
10 1962 with wooden towers . Access to repair the line is
11 impeded by residential development . Rough and mountainous
12 terrain that limits vehicle access impedes equipment set-up
13 and contributes to avalanche threats, all of which results
14 in extended repair times . The existing line's access
15 limitations are likely to result in sustained outages, with
16 the potential for an extended outage being catastrophic,
17 not only from the economic loss of the area , but the
18 additional damage that may be caused by water pipes
19 freezing. It is estimated that reconstruction of the
20 current line to replace existing wood structures with steel
21 structures would require numerous eight -hour line outages,
22 with the replacement of the line conductor requiring a six
23 to 12-week continuous outage . Another source of
24 electricity to serve the customers of the Ketchum and
25
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Idaho Power Company
1 Elkhorn substations would be required during the
2 reconstruction period.
3 The Company has worked collaboratively for more than
4 a decade with the Wood River CAC to develop the Wood River
5 Valley Electrical Plan ("WREP"), a comprehensive plan for
6 future transmission facilities in the Wood River Valley,
7 including the North Valley area. The result was a plan
8 that recommended Idaho Power move forward with a series of
9 projects, including: (1) construction of a North Valley
10 project and (2) construction of a third 138 kV line in the
11 south valley. The Company is in the process of
12 constructing the south valley portion of the overa l l plan,
13 with the planned completion date in 2017.
14 The North Valley area presents a number of
15 challenges for the Company's traditional practices for
16 providing customers reliable electric service.
17 Traditionally, the Company would reduce the likelihood of
18 sustained outages by constructing multiple transmission
19 lines or implementing distribution circuits with tie
20 switches. But the North Valley is congested due to
21 numerous residences and businesses sited in a valley which
22 is less than one mile wide with mountains of steep slopes
23 and narrow roadways. In addition, the cities in the valley
24 have approved ordinances limiting development along the
25 mountains and restricting certain development for aesthetic
YOUNGBLOOD, DI 22
Idaho Power Company
1 reasons, requiring new electrical facilities in Ketchum and
2 Sun Valley to be located underground.
3 A number of redundant service options were proposed
4 by the WREP and analyzed by the Company, with the Overhead
5 Distribution base case being determined as the lowest-cost
6 viable option. The Overhead Distribution construction
7 configuration became the Company's economic base case at an
8 estimated cost of $30 million, based on conceptual design
9 level estimates, including a 30 percent contingency.
10 With constraints on overhead construction in the
11 Wood River Valley, the Company also considered the
12 Underground Transmission option with the overhead-to-
13 underground transition point being located near the
14 intersection of Elkhorn Road and Highway 75. The total
15 construction cost estimate for TPl option is also $30
16 million, making it an economic alternative to the Company's
17 base case.
18 The Company compared this economic base case to the
19 Underground Transmission construction configuration with
20 the TPl option, which is economically equivalent with an
21 estimated construction cost of $30 million. In comparison,
22 the TPl option will provide additional stability over time
23 as it would allow for future growth in customer demand.
24 The Underground Transmission construction configuration
25 would provide full redundant capacity of the existing 138
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Idaho Power Company
1 kV transmission line and would support a build-out demand
2 in the North Valley area of 120 MW. The line would provide
3 the ability to de-energize any section of either
4 transmission line for maintenance, inspection, repair, or
5 reconstruction, without customer interruption. The TPl
6 option appears to strike a reasonable balance between the
7 overall project cost and the goal of minimizing adverse
8 visual impacts for the North Valley area.
9 The Company has two compelling reasons that now
10 require the construction of this 138 kV transmission line:
11 (1) the increased reliability provided by the redundant
12 source of energy and (2) the need to reconstruct the
13 existing and aging 138 kV radial transmission line without
14 long-term disruption of service to the North Valley. The
15 Company has demonstrated the need for the redundant line,
16 has worked collaboratively with the North Valley community,
17 evaluated numerous alternatives to the viable solutions,
18 and has concluded with an economic alternative to the
19 lowest-cost option.
20 Q. What is the Company specifically requesting
21 the Commission provide?
22
23
A. Idaho Power respectfully requests that the
Commission issue an order: (l)specifically finding that
24 the present and future public convenience and necessity
25 requires the construction of a new 138 kV transmission line
YOUNGBLOOD, DI 24
Idaho Power Company
1 and related facilities to provide redundant service from
2 the Wood River substation, near Hailey, into the Ketchum
3 substation and (2) specifically granting the Company a
4 Certificate of Public Convenience and Necessity for the
5 construction of such line and facilities identified herein
6 as Underground Transmission-TPl.
7 Q. Is the Company, at this time, requesting a
8 rate adjustment for recovery of the construction cost
9 estimate of $30 million for the TPl option?
10 A. No, the Company is not seeking any specific
11 rate recovery for the facilities involved herein at this
12 time, and will do so in a proper rate recovery proceeding
13 in the future.
14
15
16
17
18
19
20
21
22
23
24
25
Q.
A.
Does this conclude your testimony?
Yes, it does.
YOUNGBLOOD, DI 25
Idaho Power Company
1 ATTESTATION OF TESTIMONY
2
3 STATE OF IDAHO
4 ss.
5 County of Ada
6
7 I, Michael J. Youngblood, having been duly sworn to
8 testify truthfully, and based upon my personal knowledge,
9 state the following:
10 I am employed by Idaho Power Company as the Manager
11 of Regulatory Projects in the Regulatory Affairs Department
12 and am competent to be a witness in this proceeding.
13 I declare under penalty of perjury of the laws of
14 the state of Idaho that the foregoing pre-filed testimony
15 and exhibit are true and correct to the best of my
16 information and belief. ,,.,,
17 DATED this ~ day of November 2016.
18
19
20
21
22 SUBSCRIBED
23 November 2016.
24
25
26
27
28
29
this )) th day of
S,
Notary Public
Residing at: Boise, Idaho
My commission expires: 02/04/2021
YOUNGBLOOD, DI 26
Idaho Power Company
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-16-28
IDAHO POWER COMPANY
YOUNGBLOOD, DI
TESTIMONY
EXHIBIT NO. 1
DONOVAN E. WALKER
Lead Counsel
[e-mail]
May 19, 2016
VIA E-MAIL ONLY
Jill S. Holinka
Moore Smith Buxton & Turcke
Legal Counsel, City of Ketchum
950 West Bannock Street, Suite 520
Boise, Idaho 83702
[e-mail]
Timothy K. Graves
Chief Deputy, Blaine County
Prosecuting Attorney's Office
219 1st Avenue South, Suite 201
Hailey, Idaho 83333
[e-mail]. us
Frederick C. Allington
Interim City Attorney
City of Sun Valley
115 Second Avenue South
Hailey, Idaho 83333
[e-mail]
Donald L. Howell, II
Lead Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington
P.O. Box 83720
Boise, Idaho 83720-0074
don. [e-mail]
An ID"CORP company
Nina Jones
Mayor, City of Ketchum
480 East Avenue North
P.O. Box 2315
Ketchum, Idaho 93340
[e-mail]
Lawrence Schoen
Commissioner, Blaine County
219 1st Avenue South, Su ite 208
Hailey, Idaho 83333
[e-mail]. us
Peter Hendricks
Mayor, City of Sun Valley
81 Elkhorn Road
P.O. Box 416
Sun Valley, Idaho 83353
[e-mail]
Randy Lobb
Utilities Division Administrator
Idaho Public Utilities Commission
472 West Washington
P.O. Box 83720
Boise, Idaho 83720-0074
randy. [e-mail]
1221 W. Idaho St. (83702)
P.O. Box 70
Boise, ID 83707 Exhibit No. 1
Case No. IPC-E-16-28
M. Youngblood, IPC
Page 1 of 10
Wood River Valley
May 19, 2016
Page 2 of 3
Re: Settlement Conference Regarding the Construction and Funding of the
Hailey to Ketchum Transmission Line
Dear Parties:
Idaho Power Company ("Idaho Power") would like all parties to attend a formal
settlement conference to attempt to reach resolution regarding the siting, construction ,
and funding of the planned secondary source for energy delivery to the northern portion
of the Wood River Valley ("North Valley"). Idaho Power proposes this settlement
conference be held on May 31, 2016. This is the first available date that the required
Idaho Power personnel are available. I hope this date is workable for everyone. If not,
please contact me directly so that we can adjust the date to accommodate schedules.
Idaho Power would be happy to host the settlement conference either at its corporate
headquarters in Boise, at its Hailey Operations Center, or at any other location most
convenient to the parties. For the past 30 years there has been an increasing need to
improve the reliability and quality of service provided by the current transmission line
into. the North Valley, between Hailey and Ketchum. At this conference we have an
opportunity to come together and resolve the remaining issues regarding the line prior
to any filings with the Idaho Public Utilities Commission ("IPUC"). Below I provide some
background on the present situation.
Idaho Power has spoken and worked with you and/or your respective
organizations about the need to construct a secondary source for electric energy to
serve the needs of Idaho Power customers in the North Valley. In the simplest terms,
the entire North Valley (City of Ketchum, City of Sun Valley, and Blaine County) has
been and is currently served by a single source of energy, a radial, 138 kilovolt ("kV")
transmission line that connects the Wood River substation, near Hailey, to the Elkhorn
and Ketchum substations. This existing line was constructed in 1962 with wood
structures. There have been a number of reliability events and concerns with the aging
line, and Idaho Power projects significant outages and interruptions of service going
forward. The line must be reconstructed.
More importantly, to truly improve the reliability and quality of service to the North
Valley, a second, independent source for energy-a second 138 kV transmission line­
is required. The second line has been needed and in various stages of planning for
approximately 30 years. For various reasons, primary of which is lack of agreement
upon siting a new line and the visual impacts of such, Idaho Power has been unable to
site and construct this second line into the North Valley. Idaho Power has conducted
two Community Advisory Committee ("CAC") proceedings, and various other community
outreach efforts regarding a proposed second transmission line. The result of the CAC
processes was a recommendation to construct the new 138 kV line overhead, generally
along the highway from Hailey until just south of the St. Luke's Medical Center, and then
underground through Ketchum to the Ketchum substation. Idaho Power has submitted
permit applications for this route.
Exhibit No. 1
Case No. IPC-E-16-28
M. Youngblood, IPC
Page 2 of 10
Wood River Valley
May 19, 2016
Page 3 of 3
However, the undergrounding of 138 kV transmission facilities is more expensive
than standard overhead construction. Because overhead construction costs less and
provides the required reliability and service quality improvements, the cost differential
resulting from the local requirement to underground the facilities must be borne by the
local beneficiaries of such undergrounding, and not by the entire body of Idaho Power
customers.
In our last discussions of cost allocation and payment for this incremental cost
difference, it appeared that the City of Sun Valley and Blaine County were willing to pay
their allocated portion. The City of Ketchum requested that Idaho Power include its
allocation as a surcharge for collection on Idaho Power's electric bills. Idaho Power
does not agree that this is appropriate, and Ketchum's response is that it would like to
hear from the IPUC on the matter before considering any other options. Since that time ,
Idaho Power has prepared a draft filing to bring this matter to the IPUC for
determination. Idaho Power, as referenced above, has also continued to seek the
necessary permits for the line, and to refine the possible route configurations and cost
estimates.
Prior to making a formal filling with the IPUC, Idaho Power would like affected
parties to come together for a formal, pre-filing settlement conference. Idaho Power
would like to update all parties with regard to current routing and cost estimates, as well
as discuss the draft IPUC filing, and what that process entails. IPUC Staff has been
invited to this settlement conference to offer its view and position on the issues. Most
importantly, it appears that the parties are close to being able to resolve the issues and
solve a long-term and continuing problem that will only get worse if left unattended.
A representative for each entity that has authority to negotiate and make
decisions should attend the settlement conference with its own legal counsel , it being
understood that any agreements reached may need some further action for approval.
Please let me know at your earliest convenience if you are able to attend a conference
on May 31 , 2016, and your preference for where the conference should be held. I look
forward to hearing back from you and hopefully working to a mutually agreeable
resolution .
Sincerely,
~z.w~
Donovan E. Walker
Lead Counsel, Idaho Power Company
DEW:csb
Exhibit No. 1
Case No. IPC-E-16-28
M. Youngblood, IPC
Page 3 of 10
;
DONOVAN E. WALKER
Lead Counsel
[e-mail]
August 31, 2016
VIA E-MAIL ONLY
Jill S. Holinka
Moore Smith Buxton & Turcke
Legal Counsel, City of Ketchum
950 West Bannock Street, Suite 520
Boise, Idaho 83702
[e-mail]
Timothy K. Graves
Chief Deputy, Blaine County
Prosecuting Attorney's Office
219 1st Avenue South, Suite 201
Hailey, Idaho 83333
[e-mail]
Frederick C. Allington
Interim City Attorney
City of Sun Valley
115 Second Avenue South
Hailey, Idaho 83333
fcallington@gmail .com
Karl T. Klein
Deputy Attorney General
Idaho Public Utilities Commission
4 72 West Washington
P.O. Box 83720
Boise, Idaho 83720-0074
[e-mail]
An IDACORP Company
Nina Jones
Mayor, City of Ketchum
480 East Avenue North
P.O. Box 2315
Ketchum, Idaho 93340
[e-mail]
Lawrence Schoen
Commissioner, Blaine County
219 1st Avenue South, Suite 208
Hailey, Idaho 83333
[e-mail]
Peter Hendricks
Mayor, City of Sun Valley
81 Elkhorn Road
P.O. Box 416
Sun Valley, Idaho 83353
[e-mail]
Randy Lobb
Utilities Division Administrator
Idaho Public Utilities Commission
472 West Washington
P.O. Box 83720
Boise, Idaho 83720-0074
[e-mail]
1221 W. Idaho St. (83702)
P.O. Box 70 Exhibit No. 1
Boise, ID 83707 Case No. IPC-E-16-28
M. Youngblood, IPC
Page 4 of 10
Wood River Valley
August 31, 2016
Page 2 of 3
Re: Construction and Funding of the Hailey to Ketchum Transmission Line -
Follow-up after Public Meetings
Dear Parties:
When we met on May 31 5\ the jurisdictions agreed to conduct public meetings
and consider the route and cost options for the Hailey to Ketchum Redundant
Transmission Line prior to the end of August. Thank you for conducting your public
meetings in that timeframe and for allowing Idaho Power's participation in the same.
As we discussed in May, the purpose of these discussions is to see if we could
reach agreement on a proposal to present to the Idaho Public Utilities Commission
(IPUC) as part of a request for a Certificate of Public Convenience and Necessity
related to construction of the redundant line. The purpose of my letter today is to ask
for a written indication of your preference as to the routing and funding of the proposed
line by no later than September 23, 2016. This chosen date provides each jurisdiction
with an opportunity to conduct at least one decision meeting prior to issuing a response
to this request.
Since our May meeting, a number of stakeholders from the jurisdictions have
expressed a preference for the Elkhorn Road underground transmission line option with
zero incremental cost and no local funding requirement. The Elkhorn Road underground
transmission line option appears to strike a reasonable balance between cost and
minimizing visual impacts. We have discussed this option with representatives from the
Sun Valley Water and Sewer District, St. Luke's Wood River Medical Center, and Idaho
Transportation Department, and based on those discussions, the option appears
feasible.
Idaho Power believes that the Elkhorn Road underground transmission line
option appropriately balances the collective interests of your communities with our
company's desire to continue to provide safe, reliable electric service into the future .
Based on that view, Idaho Power's preference is to move forward in pursuit of that
construction configuration. We ask that you respond by September 23, 2016, and hope
that your response will indicate support, or non-opposition to, this preferred construction
configuration.
As discussed previously, Idaho Power intends to make a filing with the IPUC by
the end of September/beginning of October and sincerely hopes that we can jointly
recommend an option to the IPUC. If there are any comments, questions, or issues
please feel free to contact me directly. Thank you for your time and consideration , and I
look forward to hearing back from you soon.
Exhibit No. 1
Case No. IPC-E-16-28
M. Youngblood, IPC
Page 5 of 10
Wood River Valley
August 31, 2016
Page 3 of 3
Sincerely,
~Z.u)~
Donovan E. Walker
Lead Counsel, Idaho Power Company
Exhibit No. 1
Case No. IPC-E-16-28
M. Youngblood, IPC
Page 6 of 10
,
Hailey to Ketchum Transmission Line
Transition Structure Location Options
August 2016
Options:
1 : Elkhorn Road
2: Hospital Drive
3: Owl Rock Road
- - - -Overhead Transmission
- - - -Underground Transmission
* Transition Location Varies
Exhibit No. 1
Case No. IPC-E-16-28
M. Youngblood, IPC
Page 7 of 10
DONOVAN E. WALKER
Lead Counsel
[e-mail]
August 5, 2016
VIA E-MAIL ONLY
Jill S. Holinka
Moore Smith Buxton & Turcke
Legal Counsel, City of Ketchum
950 West Bannock Street, Suite 520
Boise, Idaho 83702
[e-mail]
Timothy K. Graves
Chief Deputy, Blaine County
Prosecuting Attorney's Office
219 1st Avenue South, Suite 201
Hailey, Idaho 83333
[e-mail]. us
Frederick C. Allington
Interim City Attorney
City of Sun Valley
115 Second Avenue South
Hailey, Idaho 83333
[e-mail]
Karl T. Klein
Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington
P.O. Box 83720
Boise, Idaho 83720-0074
karl. [e-mail]
An IDACORP Company
Nina Jones
Mayor, City of Ketchum
480 East Avenue North
P.O. Box 2315
Ketchum, Idaho 93340
[e-mail]
Lawrence Schoen
Commissioner, Blaine County
219 1st Avenue South, Suite 208
Hailey, Idaho 83333
[e-mail]
Peter Hendricks
Mayor, City of Sun Valley
81 Elkhorn Road
P.O. Box416
Sun Valley, Idaho 83353
[e-mail]
Randy Lobb
Utilities Division Administrator
Idaho Public Utilities Commission
4 72 West Washington
P.O. Box 83720
Boise, Idaho 83720-0074
randy. [e-mail]
1221 W. Idaho St. (83702)
P.O. Box 70 Exhibit No. 1
Boise, ID 83707 Case No. IPC-E-16-28
M. Youngblood, IPC
Page 8 of 10
Wood River Valley
August 5, 2016
Page 2 of 3
Re: Construction and Funding of the Hailey to Ketchum Transmission Line -
Follow-up to May 31, 2016, Meeting
Dear Parties:
Thank you for meeting with us and Mr. Howell, representing the Idaho Public
Utility Commission ("IPUC") Staff, on May 31 to discuss the Hailey to Ketchum
Redundant Transmission Line. We at Idaho Power remain concerned about the
reliability of electric service to the Wood River Valley, north of East Fork Road, and
believe a second transmission line is necessary to reduce the risk of extended outages.
We appreciate the jurisdictions' commitment to bring the options we discussed to the
public and to identify community preferred options for location and funding by the end of
August. Idaho Power is committed to providing support during your public meetings.
During our discussions regarding funding options for the jurisdictions, including at
the May 31, 2016, meeting, the City of Ketchum requested that Idaho Power include
Ketchum's allocation of incremental cost difference as a surcharge for collection on
Idaho Power's electric bills. Idaho Power has stated that a surcharge is not a suitable
solution. Ketchum's response has been that it would like to hear from the IPUC on the
matter before considering any other options. Because of the unique circumstances
presented in the North Valley, and because we are now so close to solving this long
term problem, in the hope that we can reach agreement with the jurisdictions as to
funding, Idaho Power has reconsidered its position regarding a surcharge. The
Company has heard and understands the requests for a surcharge, and after much
further deliberation would be willing to agree, under certain circumstances, to a
surcharge funding option.
Idaho Power wishes to communicate this information to the jurisdictions, and to
clarify the current options in advance of the public meetings. There are currently three
options for locating the transition from overhead to underground:
(1) Elkhorn Road -This option is the northernmost option and would have no
incremental cost difference from the typical overhead construction solution.
Consequently, there would be no local funding requirement with this option;
(2) Hospital Drive -This option would locate the transition from overhead to
underground directly near the intersection of Hospital Drive and State Highway 75. It
would contain an incremental cost above the typical overhead solution of approximately
$2.6 million. Idaho Power would agree that the City of Ketchum and Blaine County
could implement a 3% surcharge for approximately 10 years to collect this amount plus
cost of financing, and the City of Sun Valley could implement a 3% franchise fee to
accomplish the same;
(3) Owl Rock Road -This is the current southernmost option for the overhead to
Exhibit No. 1
Case No. IPC-E-16-28
M. Youngblood, IPC
Page 9 of 10
Wood River Valley
August 5, 2016
Page 3 of 3
underground transition and has an estimated incremental cost above the typical
overhead solution of approximately $5.5 million. This amount is too large for Idaho
Power to agree to a surcharge option and each jurisdiction could implement a Local
Improvement District ("LID") to collect the amount.
These funding options are summarized in the following table:
Underground Total Cost Incremental Collection Method Surcharge
Transition Location Estimate* Cost* Rate/Du ration
Option 1 -$30.0M $0 N/A N/A
Elkhorn Road
Option 2-$32.6M $2.6M Surcharge and 3%/-10 years
Hospital Drive (excluding Franchise Fee
financing
cost)
Option 3-$35.5M $5.5M LID
Owl Rock Road
*The costs are based on conceptual level design estimates provided by a third party
engineer and may increase or decrease as the final design is refined . Variances may
result from securing right-of-way and identifying unique construction conditions.
Idaho Power looks forward to working with you at your upcoming public
meetings, and sincerely hopes that we can jointly recommend one of the above three
options, along with the jurisdictions, to the IPUC in a September or October filing.
Sincerely,
~Z.td~
Donovan E. Walker
Lead Counsel, Idaho Power Company
Attachment: Map
Exhibit No. 1
Case No. IPC-E-16-28
M. Youngblood, IPC
Page 10 of 10