20200114Annis Direct.pdf

RECEIVED
;i20 .r[]l I b PH 2: b I
SS
BEFORE THE IDAHO PUBLIC UTlLITIES COMMISSlON
IN THE MATTER OF THE APPLICATlON
OF TDAHO POWER COMPANY EOR
AUTHORITY TO MOD]EY SCHEDULE 30,
ELECTRIC SERVICE RATE EOR THE
UN]TED STATES DEPARTMENT OE ENERGY
CASE NO. ]PC-E-20-01
IDAHO POWER COMPANY
D]RECT TESTIMONY
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MARK A. ANNIS
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O PIease state your name, business address, and
present position
"Company").
A. Mv
with Idaho Power Company ("Idaho Power" or
name is Mark A-Annis. My business address
Idaho 83702. I amis L22l West Idaho Street, Boise,
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employed by Idaho Power as a Senior Regufatory Analyst in
the Regulatory Af f a j-rs Department.
O. Please describe your educationa.I background.
A. I earned a Bache.l-or of Arts degree in Business
Administration (accounting emphasis) from the University of
South Dakota in May 1984. Afso that year, I passed the
Uniform Certified Publ-ic Accountlng (*CPA") exam and am
currentfy a licensed CPA in the state of Idaho. I have also
attended electric utility ratemaking and finance courses,
incl-uding "Introduction to Rate Design and Cost of Service"
presented by El-ectric Utifities Consultants, Inc. and the
Edison El-ectric Institute's "Advanced Rates Course. "
O. PJ-ease describe your work experience with
fdaho Power.
A. I began my empJ-oyment with Idaho Power in 1997
in the Company's Finance department as an Accountant II,
where f performed a variety of general and corporate
accounting duties, with a focus on externaf reporting and
accounting research, Over the next 18 years I held several
other positions within the Einance department, including
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ANNIS, D]
IDAHO POWER COMPANY
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l- Business Analyst II, Techn.ica.I Research Coordinator,
2 External Reporting Team Leader, and Ej,nanc.ial Reporting and
3 Accounting Research Manager. In these positions I was
4 responsible for researching account j-ng policy issues and
5 implementing new accounting standards, including EederaL
6 Energy Regulatory Commission ('FERC") accounting and
7 report j-ng .l-ssues, and the completion of the Company' s
8 quarterJ-y and annual reports f j-l-ed with the Securities and
9 Exchange Commission and EERC.
10 In May 20L6 I accepted a posltion as the Budget and
11 Revenue Manager in the Einance department. In this position
12 I acted as a l-iaison between the Regufatory Affairs and
13 Einance departments as weLl as overseeing aspects of the
14 Company's budgeting processes.
15 In March 201,7 I went on a temporary duty assignment
16 in the Regul-atory Af faj,rs department, and in March 2018, I
7l transj-tioned full-time to Regulatory Affairs as a Senior
18 Regulatory Analyst. As a Regulatory Ana.lyst, I provide
19 support for the Company's various regulatory activities,
20 including regulatory ratemaking and compl.iance filings.
21, 0. What is fdaho Power requesting in this docket?
22 A. fdaho Power .is requesting approval to modify
23 Schedul-e 30, Electric Service Rate for United States
24 Department of Energy, Idaho Operations Office ("Schedufe
25 30"), effective April L, 2020, to reflect a new Antefope
ANNIS, D]
Idaho Power Company
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I Asset Charge ("nac", related to transmission facilities
used to provide service to the U.S, Department of Energy
("DoE") .
Is the Company requesting a rate change as part
of thls f iling?
No, other than the implementation of the DOE-
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specific AAC .
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A.
11 the basis for Schedule 30. Next,
testimony organi zed?
wi1J, begin with an overview of
I wifl provide an overvlew
facifities at the Antelope
How 1s your
My testlmony
10 Idaho Power's current specj-al- contract with the DOE that rs
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and history
Substat ion,
of the transmissi-on
L4 to the DOE'S
a portion of which are used to provide servlce
Ioad. I will then discuss the need to charge
15 the DoE for Idaho Power's costs of ownership and
maintenance of those facilities, which is the source of the
requested charge. Einal]y, I wiff describe the methodology
for cal,cul-ating the charge for costs related to owning,
operating, and maintaining those facilities.
I . IDAIIO POI|ER' S CI'RRENT SPECIAI. COIITR,ACT WITE TEE DOE
O Pfease describe the current speclaf contract
22 between ]daho Power and the DOE.
23 . The DOE, through
the facilities at the
its Idaho operations Office,
operates
(* rNL" )
Idaho National Laboratory
site located approximately 50 miles west of Idaho
ANN]S, DI 3
Idaho Power Company
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Eaffs, Idaho. Idaho Power serves the DOE under a special
contract in accordance with the rates and charges set forth
in Schedule 30.
The current special contract between Idaho Power and
the DOE, Contract No. GS-00P-0g-BSD-0651 ('2016 Special
Contract"), was approved
Comrnission ("Commiss ion" )
33621 lssued in Case No.
by the Idaho Public Utilities
on October L3, 20L6, in Order No.
IPC-E-16-18. The five-year term
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of the 2016 Special Contract runs from September 75, 2416,
through September 14, 2021..
II. A}ITELOPE SIIBSTATION EACILITIES
O. What prompted Antelope substation asset
transfer d.iscussions among the DOE, Idaho Power, and
PacifiCorp?
The DOE no longer wlshes to own.
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16 maintain the Antelope transmission substation
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17 necessary for it to receive electric service.
operate, and
faci-lities
At DOE'S
18 request, Idaho Power has agreed to assume ownership,
19 operationT and maintenance of the DOE's Antelope
20 transmission substation facilities. Idaho Power
2l concurrently will transfer partial ownership of DOE's
22 Antelope transmission substation facifities, and operation
23 and maintenance responsibif i t i es of these facilities, to
24 Paci fiCorp.
ANNIS, D]
Idaho Power Company
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O. Pfease provide an overview of the Antefope
Substation facilities.
A. The Ante.Iope Substation currently consists of
assets jointly or individually owned bry Idaho Power and
PacifiCorp, as welL as assets owned by the DOE. Idaho Power
provides service to the DOE with the point of delivery
being the DOE-owned assets. Eor severaf of the assets
jointly owned by Idaho Power and PacifiCorp, the soJ-e
function of Idaho Power's share is to provide service to
the DOE. Eor the sake of clarity, assets for which Idaho10
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Power currently possesses
Lo as the t'2015 As set s, "
an ownership
while assets
share are referred
currently
Assets. "
owned by
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O. How did Idaho Power initially acquire j-ts
j ointly-owned Antelope substatlon assets?
A. The Antefope Substation assets that are
currently jointly owned by Idaho Povrer and PacifiCorp
(i.e.. the 2015 Assets) were acquired by Idaho Power from
PacifiCorp in a 2015 exchange transaction, through the
Joint Purchase and Sal-e Agreement ("JPSA") . The Commission
approved the JPSA, as wefl as the corresponding Joint
Ownership and Operaling Agreement (*JOOA") between
PacifiCorp and Idaho Power in Order No. 3331-3 issued in
Case No. IPC-E-14-41 in October 2015.
O. Which entity operates the Antefope substation?
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Idaho Power Company
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1 A. In accordance with the ,JOOA, the Antelope
2 Substation is operated by PacifiCorp, which charges Idaho
3 Power for its share of operation and maintenance ("O&M")
4 costs at the substation, includi-ng an allocatlon of common
5 facility costs. O&M costs are cafculated in accordance
6 with the provisions of the JOOA. Currently, PacifiCorp
7 bi11s Idaho Power monthl-y for j-ts share of the O&M costs of
I the existing jointly-owned assets.
9 Q. Was the transfer of the 2019 Assets part of
10 the Company's negotiations wi-th DOE during the development
11 of the 201"6 Special Contract?
1,2 A. Yes. Negotiations regarding the transfer of
13 the 201-9 Assets occurred concurrently with negotiations to
the 2016
to
L4 finafize the 2015 Special Contract. Because
15 Special Contract was f ina.l-ized before the asset transfer
16 negotiations were complete, paragraph 5 of Attachment 1
L1 the 201-6 Special Contract described the expectation that
18 DOE would continue to be financially responsible for the
l9 Antelope facilities that so1e1y serve DOE, stating that:
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Upon such a transfer of tit]e, DOE
understands that IIdaho Power] through afacj-l-j-ty service charge o.r simifar
mechanj-sm wilf charge DoE for the
maintenance of the then formerly DoE-
owned equl-pment which wj-11 be malntained
in accordance with Prudent Utility
Practice.
ANN]S. DI
ldaho Power Company
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O When did negotiations conclude concerning the
201-9 Assets ?
PacifiCorp negot j-ated as set
the 2019 Assets. Under the
which have been provided as
Application, (1)
A In August 2019. the DOE, Idaho Power and
Company' s
interest in the 2019 Assets
transfer agreements related to
asset transfer agreement s,
Attachments l and 2 to the
the DOE conveys its ownership
to Idaho Power at zero cost and
(2) Idaho Power, in turn, transfers a portion of these same
with fdaho Power10 assets to Pacificorp at zero cost,
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retaining onfy the portion necessary to provide service to
the DOE.
In October 2019, FERC approved updates to the JOOA,
including the addition of the 2019 Assets subject to the
asset transfer agreements. After all necessary approvals
of the asset transfer are received, PacifiCorp will also
charge ldaho Power for its share of the O&M costs of the
2019 Assets, which is included as a pass-through component
of the AAC.
III. A}ITEI,OPE ASSET CEARGE
Pfease summarize the AAC that will be billed
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22 to the DOE.
23 A Exhibit No. 1 describes the various elements
24 of the AAC and olher detai,Is of the calculations. Exhibit
25 No. 1 includes O&M costs (as the PacifiCorp pass-through
ANNIS, DI
Idaho Power Company
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charge ('PPTC")), as well as Idaho Power Ownership Costs
O. How are O&M costs to be charged to the DOE
dete rmi ned?
of the substation,
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A. As operator
incur a1I O&M costs. O&M
Idaho Power wiII equal the
as calculatedIdaho Powe r,
approved JOOA. Thls
proportionate share
on Exhibit No. 1.
l3 determined?
costs charged by Pacificorp
in accordance with the EERC-
methodoJ-ogy j-ncludes O&M charges and a
of common equipment costs, as descrj-bed
Paci- f iCorp
to the DOE
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costs berng charged by
to
assets. As shown on Exhibit
the return of and on
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16 No. l, ownership
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j ointly-owned
costs incfude
O. How are fdaho Power's ownership costs
A Idaho Power incurs ownershj-p costs related to
1l investment, property taxes and income
18 and the DOE have agreed to calculate
19 manner simi.Iar to the method used to
20 in the JOOA.
taxes.
ownership
ca.Iculate
Exhibit
Idaho Power
costs in a
the "Monthfy
D of the JOOACommon Equipment Charge"
describes the ownership
Idaho Power and the DoE
JooA methodoloqy: (1)
retail rate of return
cost methodofogy in greater detaif.
determined two adjustments to the
applying the current 1y-approved Idaho
rather than the rate of return2A
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Idaho Power Company
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Eormula Rate, and
rate to the asset
(2) applying Idaho
acquisition value
Power' s property tax
rather than the net
book va1ue.
How wiII the AAC be updated in the future?
be updated annually on October 1
June updates to PacifiCorp's
The AAC wi 11
The JOOA prescribes
ca.l-cu]ation of the substation O&M cha.rges and common
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facilj-ty charges, which are the charges to be passed
through from Idaho Power to the DoE in the PPTC. In its
annuaf update, PacifiCorp updates the O&M and common
facility charge formula with its .Iatest EERC Eorm l data
and updated asset balances.
fdaho Power updates its JOOA formu.Ias annualfy on
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14 October 1 based on its fatest FERC Eorm 1 data and updated
15 asset ba-Iances. These annual changes wiII impact the
16 calculation of ownership costs. With the October 1 update,
71 Idaho Power wil] true up any differences between amounts
18 charged by PacifiCorp and amounts billed to the DOE. Idaho
19 Power will also adjust its charges to the DOE upon the
2A effective date of an approved change to Idaho Power's
2l authorized rate of return withi-n the state of Idaho.
22 IV. IDAHO POTTER'S PROPOSED ADDITION TO SCHEDI'I,E 30
23 O.
requesting?
What change to Schedule 30 is Idaho Power
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Idaho Power Company
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A. The Company's proposed tariff changes for
Schedufe 30 are reffected in Attachment 3 to the
Application. The costs to own, operate, and maintain the
Idaho Power assets specifically dedlcated to providing
service to the DoE shoufd be charged directly to the DoE.
Currently Schedule 30 does not provide for such a charge.
The Company is requesting that the Commission approve the
addition of the AAC to Schedule 30 to allow billing of
these costs to the DoE, ensuring other cfasses are not .Ieft
responsible for costs rel-ated to this specific customer.
V . OTHER ADMINI STR,ATI\TE I{AITERS
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1,2 O. Why has the
13 october 2015 for the costs
1,4 operating the DoE-related
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16 Pacificorp charges to the
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Company not charged the DOE since
of owning, maintaining, and
equipment ?
suspended the pass-through of the
DOE begj-nning in November 2015,
2 019 Asset transfer negotiations.
between regulated entitiesThese muLti-party negotiat ions
and the federal government have been compl i cated
In an effort to
and have
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Antelope fac111t ies-re fated billinq to the DOE, Idaho Power
and DOE agreed to suspend biJ.Iing and payment of expenses
re.Iated to the 2015 and 2019 Assets until- the Antefope
asset transfers received the requ.ired regu.l-atory approvafs
and the new Schedule 30 charge had commenced.
ANNIS.
I daho
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Power
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O. What amount does Idaho Power estimate j-t wiff
collect from DOE for the time period spanning November 2015
to the effective date of the AAC?
A. The Company has recorded a $288 thousand
receivab.Ie from the DOE refl-ecting charges from November
2015 through December 2019. Il has provided periodic
updates to the DoE regarding the true-up balance.
O. What is the estimated annual amount to be
col-.Iected from the DoE under the proposed AAC?
A. Based on currently available information (the
amounts provided in the 2019 JOOA update approved by EERC
j-n October 201,9\, the Company estimates that its annual AAC
will be approximately $75,000. Of that, approximatefy
$35,000 wil-l- be the pass-through of the amounts PacifiCorp
bills ldaho Power under the JOOA, and approximately $40,000
represents ldaho Power's ownership costs of the facilities.
This ca.Icu.Iation is described j-n greater detaj-1 j-n Exhibit
No. 1 to my testimony.
VI . CUSTOMER COMMT'NI CAT IO}I
20 O. Did the Company consult with
2L prior to the date of this flIing?
22 A. Yes. As descried previously
23 Idaho Power and the DOE have had multiple
24 related to the terms of the asset transfer
25 the re.Iated AAC ca.l-cuJ-ati-ons.
the customer
in my testimony,
discuss i ons
agreements and
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ANNIS, D]
Idaho Power
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O. What feedback did Idaho Power receive from the
DOE ?
A. The DOE indicated that it accepted the
proposed method of cal-cufating the AAC and the true-up.
VII . CONCLUSION
O. PLease summarize the Company's request j.n this
proceeding.
A. Idaho Power is requesting that the Commission
issue an order authorizing the Company to nodify Schedul-e
30 to incfude the AAC, in order to bilf the DOE, a special
contract customer, for Idaho Power's costs of owning,
operating, and maintaining transmission equipment specifj-c
to the provision of service to the DoE. The Company is also
requestlng approval of a true-up to reflect costs incurred
between November 2015 and the effective date of the AAC.
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Company's
A.
Why should the Commission approve the
the recovery of costs
to the DOE, ensuring that
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specific to
these costs
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request ?
The AAC re flect s
providrng servlce
are not shifted to
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other customer classes.
Does this conclude your testimony?
Yes, it does.
ANNIS, DI
Idaho Power
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ATTESTATION OF TESTIMONY
STATE OE ] DAHO
County of Ada
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I, Mark A. Annis, having been duly sworn to testify
truthfulLy, and based upon my personal knowledge, state the
fol lowing:
I am employed by Idaho Power Company as a Senlor
Regulatory Analyst and am competent to be a witness in this
proceeding.
I declare under pena.Ity of perjury of the faws of
the state of ldaho that the foregoing testimony is true and
correct to the best of my information and belief.
DATED this 14th day of January. 2020.
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Mark
SUBSCRIBED AND SWORN to before me this 14th day of
19 January, 2020.
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No ry Publ for Idaho
Residing at oise, Idaho
My commission expires : L2/20/20
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ANNIS, DI 13
Idaho Power Company
KIMBERLY K. TOWELL
coMMtsstoN #16958
NOTARY PUBLIC
STATE OF IOAHO
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. Anni s
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. !PG-E-20-01
IDAHO POWER COMPANY
ANNIS, DI
TESTIMONY
EXHIBIT NO. 1
CALCULATION OF ANTELOPE ASSET CHARGE
THE ANNUAL ANTELOPE ASSET CHARGE
The annual Antelope Asset Charge is the sum of the following cost factors applied to the Antelope
Transmission Substation assets used to serve ldaho National Laboratory load. These assets
("Transmission Assets") were acquired as part of the Joint Purchase and Sale Agreement
approved in 2015 and the Department of Energy ("DoE")/ldaho Power Transfer of Title
Agreement ("Transfer of Title") signed in 2019. There are two factors that comprise this charge:
1) Pacificorp Pass-Through Charge
2) ldaho Power Ownership Costs
Each cost factor is calculated by applying an annual percentage rate to ldaho Power's ownership
share of the DoE-related Transmission Asset values as detailed below. The tables also include
the source data used to determine each of the listed cost faclors.
Asset Balance Definitionq:
DOE Oiqinal Value - the cost to the DOE of the assets transferred to the utilities by the
Transfer of Title
Gross Asset Value (GA\1) - lhe Joint-Owned Acquisition Value plus the DOE Original Value
Joint-Owned Acq isition Value (AVl - This amount includes the jointowned acquisition
value per the Joint Ownership and Operating Agreement ("JOOA"), which excludes the DOE
Original Value, but rncludes costs incurred by the utilities to replace the DOE assets.
Net Rate Base Amount- (NRBA) - Joint-Owned Acquisition Value less accumulated
depreciation and accumulated deferred income taxes.
PacifiCorp Pass-Throuoh Charqe ("PPTC"): The PPTC is the allocation of the JOOA charges
to ldaho Power from PacifiCorp for Pacificorp's maintenance of the Transmission Assets. lt is
calculated as:
PPTC = (O&M.GAV) + (CEC) Where:
1 Open Access Transmission Tariff.
2 ldaho Power only passes on Pacificorp Common Equipment Charges related to Antelope
substation '161 kV and '138 kV equipment. The Pacilicorp Common Equipment Charges related to Antelope
substation 230 kV equipment are not passed through to the DOE.
Exhibit No. 1
Case No. IPC-E-20-01
M. Annis, IPC
Page '1 of 2
Rate
Component
Description of
Rate Component Source(s)
Current
Annual Rate
Applied to this
Specified Asset Value
o&M PacifiCorp O&M
Expense
PacifiCorp OATTl
Formula Rate
1 .170k GAV
CEC PacifiCorp
Common
Equipment Charge
(cEc)
lvlonthly amount
calculated per
JOOA Exhibit
D(4)(a)
N/A DOE share of common
equipment (currently
15.51oA) 2
Rate
Component
Description of
Rate Component Source
Current
Annual
Rate
Applied to this
Specified Asset
Value
ROC Recovery of
Capital Rate
ldaho Power OATT
Formula Rate
1.86%
PT Property Taxes
Rate
ldaho Power Actual
Property Tax Data
0.460/o
ROR Return on Capital
Rate
Current Authorized
ldaho Retail Rate of
Return
7 .860k NRBA
IT lncome Taxes
Rate
ldaho Power OATT
Formula Rate
1.93%NRBA
ldaho Power Ownership Costs ("OC"): The OC of the Transmission Assets include the
recovery of capital, property taxes, return on capital, and income taxes. lt is calculated as
OC = (ROC.AV) + (PT-AV) + (ROR,NRBA) + (IT*NRBA) Where:
THE MONTHLY ANTELOPE ASSET CHARGE
The Monthly Asset Charge is the annual Antelope Asset Charge divided by 12.
The Annual and Monthly Antelope Asset Charge will be updated:
1 . Annually on October 1s1 to coincide with the effective date of ldaho Power's OATT
Formula Rate update, where such annual change will also incorporate an annual true-up
of the PPTC, or2. Upon the effective date of an approved change to ldaho Power's authorized Rate of
Return ("ROR") within the state of ldaho, or
Exhibit No. 1
Case No. IPC-E-20-01
lvl. Annis, IPC
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