20180315Goralski Direct.pdf

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BEEORE THE IDAHO PUBLIC UTILITIES COMMISSION
]N THE MATTER OF THE APPLICATION
OE IDAHO POWER COMPANY EOR
AUTHORITY TO IMPLEMENT FIXED COST
ADJUSTMENT ("ECA") RATES FOR
ELECTRIC SERVICE EROM JUNE I,
2OIB, THROUGH MAY 37, 20L9.
]DAHO POWER COMPANY
DIRECT TESTIMONY
OF
PAWEL P. GORALSKI
CASE NO. ]PC-E-1.8_02
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O. P1ease state your name and business address.
A. My name is Pawel P. Goralski and my business
address is 7221 West Idaho Street, Boise, Idaho 83'102.
O. By whom are you employed and in what capacity?
A. I am employed by Idaho Power Company ("Idaho
Power" or "Company") as a Regulatory Analyst in the
Regulatory Affairs department.
0. Pl-ease describe your educational- background.
A. In May of 2007 , I recej-ved a Bache1or of
Administration degree in Einance from Boise State
University in Boise, Idaho. In addition, I have attended
the "El-ectric Utility Fundamentals and Insights" course
offered by Western Energy fnstitute in 2018.
O. Pl-ease describe your work experience with
Idaho Power.
A. In 2071, I was hired as a Regulatory Analyst
in the Company's Regulatory Affairs Department. To-date,
my prlmary responsibilities have included supporting the
Company's monthl-y and annua.l- ECA calcul-ation, activities
associated with demand-side management (*DSM"), and I am
responsible for supporting the Company's cl-ass cost-of-
service actlvities.
O. What is the purpose of your testimony?
A. The purpose of my testimony is to describe the
Company's request to implement its annual ECA rates in
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GORALSKI, DI 1
Idaho Power Company
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conformance with Idaho Public Utilities Commission
("Commission") Order No. 32505 (Case No. IPC-E-ll-79),
which approved the FCA as a permanent rate mechanism for
the Residential and Smalf General Service customers. If
implemented as filed, the to-be-collected 2018-2079 FCA
deferral balance of $15,7L0,225 is a reduction of
$19,307,811 from the current FCA deferral balance of
$35,0L2,042.
Specifically, my testimony will discuss three areas
related to the FCA mechanism and Schedul-e 54, Fixed Cost
Adjustment. First, I wil-l- briefly discuss the FCA
mechanism itself and how the FCA amount is determined.
Second, I will describe the determination of the 20L1 FCA
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amount. Lastly, I
rates the Company proposing
2079.
will discuss the calculation of the FCA
IS to be effectlve June L,
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through May 3I,
I. FI)GD COST AD.'USTMENT MECIIA}II SM
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A.
"decoupI es , "
in order to
What is the purpose
The FCA is a true-up
or separates, billed
remove the financial
of the FCA mechani-sm?
mechani-sm that
energy sales
di s incent ive
from revenue
that exists
22 when the Company invests in DSM resources and activities.
23 Under the FCA, rates for Residential Service (Schedules 7,
.A 3 and 5) and Smaff General Service (Schedule 1)
25 customers are adjusted annually to recover or refund the
GORALSKI, DI 2
Idaho Power Company
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difference between the l-eveI of fixed cost recovery
authorized by the Commission in the Company's most recent
general rate case and the level of fixed cost recovery that
the Company received based upon the actual- billed energy
sales during the previous calendar year.
O. What level- of incremental- annual DSM energy
efficiency savings did Idaho Power achieve in 2017?
A. On a system-wide basis, Idaho Power achieved
19L,471 megawatt-hours of incremental annual energy
efficiency savings in 2071, which is a t2 percent increase
from finalized savings achieved in 2076. The energy
efficiency savings are enough energy to power almost 17,000
average homes a year in Idaho Power's service area.
O. Please describe the ECA mechanj-sm.
A. For both the Residential and Smal-l- General
Service classes, the FCA mechanism is the same. The
formula used to determine the FCA amount is:
FCA : (CUST X FCC) (ACTUAL X ECE)
Where:
FCA : Fixed Cost Adjustment;
CUST : Average Number of Customers, by class;
FCC : Eixed Cost per Customer rate, by class;
ACTUAL : Actual Bill-ed kilowatt-hours (*kwh")
Energy Sal-es, by class; and
FCE : Eixed Cost per Energy rate, by class.
GORALSKI, DI 3
Idaho Power Company
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1 The FCA amount is the difference between
level of "authorized
the Company's
(CUST X FCC)and2
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the level of "actual
O Can the
positive or negatlve?
A. Yes. A positive
authorized level- of fixed cost
leve1 of fixed costs recovered
10 decreased. The
fixed cost recovery"
fixed cost recovery"
FCA deferral balance
(ACTUAL X FCE) .
be either
greater than the
energy rate.
This woul-d occur when energy use per
effect would be that the Company has under-
11 collected its authorized level of fixed costs. In a
72 simil-ar fashion, a negative ECA indicates the Company's
13 authorized fixed cost recovery amount is less than the
14 fixed costs determined to have been recovered through the
15 energy rate and results j-n a refund to customers.
16 II. FCA DETERMINATION FOR CALETIDAR YEAR 2OL7
FCA indicates the Company's
recovery is
through the
customer has
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O. Did the FCC and FCE rates used to determlne
201,7 FCA deferral balance change from prior years?
A. No. The FCC and FCE rates used to determine
20L1 FCA deferral bal-ance are unchanged from the prior
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year. The FCC
Company's most
08, and can be
54, Fixed Cost
and FCE rates were establ-ished in the
recent general rate case, Case No. IPC-E-11-
found in the Company's tariff under Schedule
Adj ustment .
GORALSKT, Dr 4
Idaho Power Company
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tt How is the authorized level of fixed cost
recovery derived?
A The authorized level of fixed cost recovery is
the product of
by class. The
on the number
the FCC and the average number of customers,
Company uses a prorated customer count based
of active utility service agreements at the
end of each month. This approach applies the same
methodology that was used to determine customer counts in
the Company's most recent general
derived
prorated
rate case. The annual
10 average customer count is
11 average of the 72 monthly
by calculating the
customer counts.
L2 u How is the actual level of fixed cost recovery
13 determined?
t4 A . In compliance with
fixed cost recovery is
Order No. 33295, the actual-
15 levef of the product of the FCE and
L6 the actual billed energy sales for the cafendar year,
71 measured in kwh.
1B a Does the Company compute a monthly FCA
19 deferral bal-ance?
20 A Yes. Since 2009, the Company has reported the
2t estimated monthly
Report provided to
of the monthly ECA
end information.
ECA deferral balance in the monthly FCA
22 the Commission. Exhibit No. 1 is a copy
23 Report for calendar year 2071 with year-
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GORALSKI, DI 5
Idaho Power Company
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Although the ECA is an annual mechanism that is
ultj-mately calcul-ated and determined
the
uslng customer
entire calendar
counts
year,and billed energy sales data for
a monthly FCA deferral balance is
the Company's accounting records
estimated and recorded in
reported monthly FCA
from the annual amount?
to maintain compliance
with GeneralIy Accepted Accounting Principles. This
estimated monthly FCA deferral balance is provided to the
Commission in the monthly FCA Report.
O . Is it possi-b1e for the
bal-ance estimate to differ10 deferral
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Yes. Because the monthly FCA deferral balance
using monthly customer counts while the annual
balance is computed using the
year, the sum of the monthly
average customer
calculations may
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16 How is the reported monthly estimate adjusted
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is computed
FCA deferral
14 count for the
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to align with
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determj-ned, an adjustment is made to the
previously recorded 12 monthly estlmates
annuaf FCA deferral balance. Because the
22 count is the average of
the authorized annual amount?
At year-end, once the annual FCA amount is
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sum of the
to align with the
annual customer
the t2 monthly customer counts, it
year-end.
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GORALSKT, Dr 6
Idaho Power Company
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1 Q. What adjustments were made to the 2071 monthly
2 estimates to align these amounts with the Company's final
3 year-end 20L1 FCA deferraf balance?
4 A. To align with the annual FCA amount to be
5 recorded in the Company's 2011 financial statements, do
6 upward adjustment of $102,954 was made for the Residential
7 customer class, refl-ected on line 6, col-umn O of Exhibit
B No. 1. An upward adjustment of $560 was made for the Smal-l
9 General- Service customer cl-ass, reflected on l-ine 20,
10 column O of Exhibit No. 1. The total- upward adjustment for
11 both customer cl-asses 1s $103 ,5L4 .
72 O. What is the total amount of the FCA, not
13 including interest?
74 A. The total- amount of the FCA for both the
15 Residential- and Small- General Service customer classes, not
76 including interest, is $15,506,358. Exhibit No. 2 shows
L1 the calculati-on of the ECA for each customer class. The
18 calculati-on of the ECA uses the average annuaf customer
79 count and the annual billed sales amount, which are
20 included in Exhibit 3. The calculated FCA deferral balance
2L for the Resldential customer class, not including interest,
22 is $74,691,929. An amount of $14,697,927 is found in
23 Exhibit No. 1-, l-ine 6, column P. The $Z difference between
24 Exhibit No. 1 and Exhibit No. 2 ts due to rounding. The
25 calculated FCA deferral ba]ance for the Small General
GORALSKI, DI 1
Idaho Power Company
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$814 ,439. This amount 1s also found
20 , co1umn P.
O. What is the total amount of the
including interest, the Company is requesting
in rates on June 7, 2078?
A. The total- amount of the 2071 ECA
is requesting to begin recoverj-ng in rates on
Service customer class, not including
$ 14, 8 89 , 453 .64 ref l-ected
No. 4. The ECA for the
$820,717.46 reflected on
4. Exhibit No. 4 shows
interest, is
in Exhibit No. L, line
2071 ECA,
to implement
the Company
June t, 2078,
is $15,7L0,225.70, reffected on line 32, column V, of
10 Exhibit No. 4. The FCA for the Residentiaf class is
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on line 15, column V, of Exhibit
Small General- Service Cl-ass is
l-ine 29, column V, of Exhibit No.
the FCA deferral balances and
15 adjustments, plus interest, through May 20L8. Exhlbit No.
L6 4 and Exhibit No. 1 both contain the same information as
L] the FCA Report sent to the Commission each month; however,
1B Exhibit
May 2018
for the
No. 4 calcul-ates interest from January 2077 through
whj-le Exhibit No. 1 shows that information only
20L7 ca1endar year.
What is the significance of these numbers wlth
GORALSKI, DI 8
Idaho Power Company
22 respect to the Company's recovery of its fixed costs?
23 A. Because the Residential FCA is a positive
24 number, it means that the calcufated average use per
25 customer has decreased from the l-evel established in the
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Company's last general rate case. In accordance wlth the
approved mechanism, the Resj-dential class wilI recei-ve an
adjustment to allow for recovery of the fixed costs that
were not recovered through actual bil-Ied energy charges
during the year. The Small General Service ECA is also a
positive number, meaning that the calculated use per
customer for this cfass has afso decreased from the level
establ-ished in the Company's most
not recovered
recent general rate case
and the Company has its authorized level of
10 fixed costs based on actual billed sales for the Small
11 General- Servj-ce class. For both customer classes, the
12 average use per customer based on actual bilfed sales for
13 the year were fower than the level- establ-ished in the
74 Company's most recent general rate case.
15 III. CAICT'I.ATION OF THE 2018.2OL9 FCA RATE
76 O. Pl-ease describe the cal-cul-ation of the FCA
Ll rates the Company is proposing to go into effect on June L,
18 2OLB.
19 A. The FCA rates the Company proposes to go into
20 effect on June L, 20L8, were calculated by taking the ECA
2l deferral balances for each customer class described above
22 and dividing by the respective class energy sal-es forecast
23 for the June I, 20L8, through May 31, 2079, tj-me frame
24 ("Test Year"). The forecasted June 1 through May 31 time
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GORALSKI, DI 9
Idaho Power Company
1 frame is the same period that has been used historically
used for the Power Cost Adjustment mechanism.
What has the Company determined the forecast
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and is also
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energy
General
sales to be for both the Residential and Small-
Service cl-asses?
A. The Company's forecasted
5,165,352,702 kwh for the Residential-
energy sales are
class and 131 ,625,836
kVVh for the SmaII General Service class. The forecasted
energy safes are found in Exhibit No. 5
10 0. What are the corresponding FCA rates for the
11 Residential and Small General Service classes based on a
72 combined and equal ECA rate change, ds defined in the
13 approved mechanism?
14 A. To recover the authorized level of fixed
15 costs, the FCA rate for the Residential class would be
L6 0.2943 cents per kwh and the corresponding rate for the
L1 Sma1l General Service class woul-d be 0.3704 cents per kwh.
18 The calcul-atlon of these rates is found in Exhibit No. 5.
19 In Order No. 32505, the Commission ordered that the ECA
20 deferral- balance w111 continue to be recovered or refunded
21, equally between the Residential and Small General Service
22 customer classes. Order No. 32505 at 9. Because the
23 Residential and Smal-] General Service cl-asses reduced their
24 energy consumption per customer such that the Company
25 under-collected its authorized level of fixed costs as
GORALSKT, Dr 10
Idaho Power Company
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established in Case No. IPC-E-11-08, each class requires a
rate s,urcharge.
O. What is the difference between the FCA
deferral balance currently in amortization and the proposed
FCA deferral balance?
A. In this filing, the Company is proposing to
collect rates based on an ECA deferral balance of
$15,770,225, which is $19,301,817 less than the current FCA
deferral- balance of $35,072,042. The current deferral
10 balance was approved in
with rates
Order No. 33111 , j-ssued in Case No.
11 r PC-E- 7'7 -02 ,based on that balance effective for
L2 the period June 7, 20L7, through May 31, 20L8. Order No.
13 33111 at 4. The reduction in deferral balance is listed in
t4 Exhibit No. 5.
15 O. Is the reduction in deferra1 balance subject
16 to a rate adjustment cap?
71 A. No. Order No. 33295 cl-arifies that the 3
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percent cap applies
deferral balance are
O What is
to annual increases. Decreases in the
not capped.
the percentage change in billed
2L revenue as measured from total billed amounts
22 recovered from Residential- and Small- General
currently
Service
23 customers, including the current FCA?
24 A The resulting reduction of $19,301,817 the
25 Company is proposing to collect through the FCA rates
GORALSKT, Dr 11
Idaho Power Company
1 effective June 7, 20L8,
2 annual decrease of 3.60
May 31, 2079, represents an
from current blIled revenue
throuqh
percent
3 for the affected customer cl-asses. The percentage
decrease
change
proposed
to the
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in billed revenue is found in Exhibit No. 6. This
decrease results in an approximate $3.60
monthly bilI of a typical customer using
o.
surcharges
classes on
A.
950 kWh per month.
How will the Company incorporate the FCA
for the Residential and SmalI General Service
customers' bi11s?
10 The Company proposes to continue including the
11 FCA with the Annual Adjustment Mechanism line item on
72 Residential- and Small General Service customers' bil-l-s.
13 tl Does thj-s complete your testimony?
74 A Yes, it does.
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GORALSKT, Dr 72
Idaho Power Company
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ATTESTATION OF TESTIMONY
STATE OE ]DAHO
SS.
County of Ada
l, Pawel P. Goralski, having been duly sworn to
testify truthfully, and based upon my personal knowledge,
state the followj-ng:
I am employed by Idaho Power Company as a Regulatory
Analyst and am competent to be a witness in this
proceeding.
I declare under penalty of perjury of the laws of
the state of Idaho that the foregoing pre-filed direct
testimony is true and correct to the best of my informatlon
and belief.
DATED this 15th day of March 20L8.
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25 March 20L8.
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Pawel P. Goral-ski
SUBSCRIBED AND SWORN to before me this 15th day of
K.
Tr,^ul"t
Not ry Publ-for Idaho
ise, IdahoResiding a
My commission expires 1,2/20/20
GORALSKT, Dr 13
fdaho Power Company
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