HomeMy WebLinkAbout20211222Tatum Direct-Redacted.pdf
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER )
COMPANY’S APPLICATION FOR ) CASE NO. IPC-E-21-42
APPROVAL OF SPECIAL CONTRACT AND )
TARIFF SCHEDULE 33 TO PROVIDE )
ELECTRIC SERVICE TO BRISBIE LLC’S )
DATA CENTER FACILITY. )
)
IDAHO POWER COMPANY
DIRECT TESTIMONY
OF
TIMOTHY E. TATUM
TATUM, DI 1
Idaho Power Company
Q. Please state your name, business address, and 1
present position with Idaho Power Company (“Idaho Power” or 2
“Company”). 3
A. My name is Timothy E. Tatum. My business 4
address is 1221 West Idaho Street, Boise, Idaho 83702. I am 5
employed by Idaho Power as Vice President of Regulatory 6
Affairs. 7
Q. Please describe your educational background. 8
A. I earned a Bachelor of Business Administration 9
degree in Economics and a Master of Business Administration 10
degree from Boise State University. I have also attended 11
electric utility ratemaking courses, including “Practical 12
Skills for The Changing Electric Industry,” a course 13
offered through the New Mexico State University’s Center 14
for Public Utilities, “Introduction to Rate Design and Cost 15
of Service Concepts and Techniques” presented by Edison 16
Electric Utilities Consultants, Inc., and Edison Electric 17
Institute’s “Electric Rates Advanced Course.” In 2012, I 18
attended the Utility Executive Course (“UEC”) at the 19
University of Idaho. 20
Q. Please describe your work experience with 21
Idaho Power. 22
A. I began my employment with Idaho Power in 1996 23
in the Company’s Customer Service Center where I handled 24
customer phone calls, customer-related transactions, and 25
TATUM, DI 2
Idaho Power Company
general customer account maintenance in the areas of 1
billing and metering. 2
In June of 2003, I began working as an Economic 3
Analyst on the Energy Efficiency Team. As an Economic 4
Analyst, I was responsible for ensuring that the demand-5
side management (“DSM”) expenses were accounted for 6
properly, preparing and reporting DSM program costs and 7
activities to management and various external stakeholders, 8
conducting cost-benefit analyses of DSM programs, and 9
providing DSM analysis support for the Company’s Integrated 10
Resource Plan. 11
In August 2004, I accepted a position as a 12
Regulatory Analyst and in August of 2006, I was promoted to 13
Senior Regulatory Analyst. As a Senior Regulatory Analyst, 14
my responsibilities included the development of complex 15
financial studies to determine revenue recovery and pricing 16
strategies, including preparation of the Company’s cost-of-17
service studies. 18
In September of 2008, I was promoted to Manager of 19
Cost of Service, and in 2011, I was promoted to Senior 20
Manager of Cost of Service and oversaw the Company’s cost-21
of-service activities, such as power supply modeling, 22
jurisdictional separation studies, class cost-of-service 23
studies, and marginal cost studies. 24
TATUM, DI 3
Idaho Power Company
In March 2016, I was promoted to Vice President of 1
Regulatory Affairs. As Vice President of Regulatory 2
Affairs, I am responsible for the overall coordination and 3
direction of the Regulatory Affairs Department, including 4
development of jurisdictional revenue requirements and 5
class cost-of-service studies, preparation of rate design 6
analyses, and administration of tariffs and customer 7
contracts. 8
I. INTRODUCTION 9
Q. What is the Company requesting in this case? 10
A. Idaho Power is requesting approval of a 11
Special Contract to provide retail electric service to 12
Brisbie, LLC (“Brisbie”) inclusive of pricing elements that 13
facilitate a renewable resource arrangement to support 14
Brisbie’s annual energy requirements. With this request for 15
Special Contract approval the Company is also requesting 16
the Idaho Public Utilities Commission (“Commission”) 17
authorize a comprehensive regulatory framework for the 18
ongoing implementation and administration of the Special 19
Contract. 20
Q. Please provide a brief description of new 21
Special Contract customer Brisbie. 22
A. Brisbie plans to develop an enterprise data 23
center that will be part of the Idaho community for the 24
long-term. Brisbie anticipates beginning operations 25
TATUM, DI 4
Idaho Power Company
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Q. Does Brisbie have any specific energy service 4
needs that would differ from Idaho Power’s standard retail 5
service offerings? 6
A. Yes. In addition to its large load service 7
requirements, Brisbie has a sustainability objective to 8
support 100 percent of its operations with renewable 9
resources. Accomplishing this sustainability target based 10
on Brisbie’s expected load will require 11
of new renewable resources added to Idaho Power’s 12
system. 13
As explained in more detail below, Brisbie’s Special 14
Contract encompasses the pricing associated with retail 15
electric service from Idaho Power, cost and credit 16
components associated with new renewable resources to 17
support Brisbie’s load, and terms and conditions governing 18
the structure of this new arrangement, including provisions 19
that will hold other Idaho Power customers harmless for the 20
cost of the renewables. 21
Q. Is the regulatory framework in the Brisbie 22
Special Contract consistent with the Clean Energy Your Way 23
– Construction offering, as outlined in Idaho Power’s 24
recent application with the Commission (Case No. IPC-E-21-25
TATUM, DI 5
Idaho Power Company
40) to establish new clean energy offerings for customers 1
under the Clean Energy Your Way Program? 2
A. Yes. The Brisbie Special Contract mirrors the 3
clean energy framework for large customers as outlined in 4
the Company’s application and in the accompanying modified 5
Schedule 62 tariff.1 In that application, Idaho Power states 6
its belief that it can work with existing or future Special 7
Contract customers to integrate renewables into their 8
service agreement with the Company. To that end, the 9
Brisbie Special Contract is the first representation of the 10
Clean Energy Your Way – Construction offering. 11
Under the Clean Energy Your Way – Construction 12
offering, Idaho Power will work with customers to develop a 13
Renewable Construction Agreement — the document that 14
governs all pricing for Company electric service and the 15
customer’s accompanying renewables. For Brisbie, the 16
Renewable Construction Agreement doubles as the customer’s 17
Special Contract. A Special Contract is also referred to in 18
this document as the Energy Services Agreement (“ESA”). 19
Q. What are the major components of the requested 20
regulatory framework that would guide the implementation 21
and administration of Brisbie’s Special Contract with 22
accompanying renewables? 23
1 In the Matter of the Application of Idaho Power Company to Expand
Optional Customer Clean Energy Offerings Through the Clean Energy Your
Way Program, Case No. IPC-E-21-40, filed December 2, 2021.
TATUM, DI 6
Idaho Power Company
A. The specific components of the regulatory 1
framework for which Idaho Power respectfully requests 2
explicit approval are the following: 1) authority to 3
procure renewable resources for the purpose of supporting 4
Brisbie’s operations under a standard procurement 5
agreement, 2) the cost basis and pricing structure for the 6
supply of retail electric service by Idaho Power, 3) the 7
compensation structure for excess renewable energy 8
generation and capacity contribution of the renewable 9
resources, 4) authorization to treat bill credits provided 10
to Brisbie under the proposed compensation structure as 11
prudently incurred expenses for ratemaking purposes, and 5) 12
the cost recovery mechanisms necessary to protect existing 13
Idaho Power customers from inappropriate cost shifting and 14
ensure Idaho Power has an opportunity to recovery its cost 15
of service. 16
Q. How is the Company’s case organized? 17
A. My testimony will discuss two areas related to 18
the Special Contract and the Special Contract customer, 19
Brisbie. First, I will provide an overview of the ESA, and 20
second, a description of the renewable resource arrangement 21
under the ESA to meet Brisbie’s annual energy and 22
renewables requirements. The direct testimony of Pawel P. 23
Goralski details the pricing structure of the ESA and the 24
no-harm analysis conducted to demonstrate that the Brisbie 25
TATUM, DI 7
Idaho Power Company
special contract does not negatively impact Idaho Power’s 1
other retail customers. 2
Q. Have you prepared any exhibits to accompany 3
your testimony? 4
A. Yes. The ESA is presented as Confidential 5
Exhibit No. 1, with a draft power purchase agreement 6
(“PPA”) for procurement of renewable energy on behalf of 7
Brisbie attached as an exhibit to the ESA. Second, the 8
Construction Agreement for the interconnection facilities 9
associated with Brisbie is Confidential Exhibit No. 2. 10
II. ESA OVERVIEW 11
Q. Please describe the Special Contact agreement 12
with Brisbie. 13
A. Consistent with the requirements of Idaho 14
Power's Schedule 19, Large Power Service, the Company has 15
established a Special Contract (or ESA) to supply retail 16
electric service to Brisbie. As can be seen on Confidential 17
Exhibit No. 1, the ESA provides for a long-term contract 18
that becomes effective on the date of the order issued in 19
this case. It includes a contract demand schedule that 20
allows Brisbie to ramp up to and 21
provides for a two-block rate structure that incorporates 22
embedded cost-based pricing for a 20 MW block of power 23
based upon Schedule 19 base rates and a hybrid of embedded 24
cost and marginal cost-based pricing for capacity amounts 25
TATUM, DI 8
Idaho Power Company
above 20 MW. Under the proposed Special Contact, Idaho 1
Power would procure on Brisbie’s behalf enough renewable 2
resources to provide Brisbie with 100 percent renewable 3
support on an annual basis 4
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Q. Is the recovery of the cost of the initial 7
construction of transmission facilities needed to connect 8
Brisbie’s facility addressed in the ESA? 9
A. No. The cost recovery of the initial 10
construction for transmission facilities needed to serve 11
Brisbie’s load is provided for in a separate Construction 12
Agreement (included as Confidential Exhibit No. 2). 13
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Consistent with other transmission-level 16
service customers, Idaho Power will retain ownership of the 17
transmission interconnection station and the responsibility 18
for ongoing operating and maintenance costs up to the point 19
of delivery at 230 kilovolts (“kV”), while Brisbie will 20
retain ownership of all facilities downstream from the 21
point of delivery and will be responsible for ongoing 22
operating and maintenance of those facilities. 23
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TATUM, DI 9
Idaho Power Company
1
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Q. Why is 20 MW chosen to establish the pricing 3
blocks? 4
A. Idaho Power provides tariff service to industrial 5
customers under Schedule 19, Large Power Service. The 6
Applicability Section of Schedule 19 states: 7
"If the aggregate power requirement of a Customer 8
who receives service at one or more Points of 9
Delivery on the same Premises exceeds 20,000 kW, 10
the Customer is ineligible for service under this 11
schedule and is required to make special contract 12
arrangements with the Company." 13
Q. What is the purpose of this provision? 14
A. The requirement for a Special Contract serves 15
several purposes. First, it allows for the unique 16
characteristics of customers of this size to be captured 17
within the terms of an agreement. Second, special contracts 18
allow for specific cost-of-service information for each 19
large load to be reviewed during rate proceedings. And 20
third, special contracts provide protection to the Company 21
and the other retail customers from the system impacts that 22
very large loads could impose because of sheer size or 23
operating characteristics. 24
TATUM, DI 10
Idaho Power Company
Q. Does Idaho Power currently serve other special 1
contract customers? 2
A. Yes. There are currently three: (1) Micron 3
Technology, Inc., located in southeast Boise; (2) the 4
United States Department of Energy's Idaho National 5
Laboratory, located west of Idaho Falls; and (3) the J R 6
Simplot Company's Don Plant, located directly west of 7
Pocatello. These customers range in size from 20 to 70 MWs 8
of load. 9
Q. Does the Brisbie ESA contain any provisions to 10
financially protect Idaho Power and its customers? 11
A. Yes. Section 11.1 of the ESA identifies 12
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TATUM, DI 11
Idaho Power Company
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III. EXPLANATION OF THE RENEWABLES CONSTRUCT 10
Q. In practical terms, how does the renewables 11
arrangement work for Brisbie? 12
A. As noted earlier, Brisbie has a commitment to 13
support 100 percent of its operations with renewable energy 14
on an annual basis. Accomplishing this commitment 15
necessitates a tailored arrangement that provides the right 16
amount of renewable generation while ensuring reliable 17
electric service to the customer. Brisbie’s estimated load 18
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Q. Please explain the variance in Brisbie’s load 22
and the amount of renewables necessary to support that 23
load. 24
TATUM, DI 12
Idaho Power Company
A. As an enterprise data center, Brisbie’s energy 1
will remain high and consistent throughout the day. In 2
contrast, a renewable resource will only generate 3
electricity intermittently (e.g., solar resources only 4
produce energy during daylight hours). To reconcile this 5
mismatch of energy service requirements and renewable 6
generation but still achieve Brisbie’s renewables 7
objective, the renewable resources for Brisbie must be 8
appropriately sized to ensure that the total renewable 9
generation over the year matches or slightly exceeds the 10
annual Brisbie energy consumption. 11
Q. Will the amount of renewable resource 12
generation perfectly match Brisbie’s load on an annual 13
basis? 14
A. No. Considering variable renewable resource 15
performance and approximated capacity factors for renewable 16
resources, the generation from the renewable resources is 17
unlikely to perfectly match Brisbie’s load. However, the 18
renewable resources were sized greater than Brisbie’s 19
anticipated load to provide a reasonable buffer to ensure 20
that Brisbie’s full energy requirements are supported on an 21
annual basis. 22
Q. Given the magnitude of both the new load and 23
the associated renewables, has Idaho Power factored Brisbie 24
into long-term planning analyses? 25
TATUM, DI 13
Idaho Power Company
A. Yes. Brisbie is incorporated into the 1
Company’s forthcoming 2021 Integrated Resource Plan 2
(“IRP”). Idaho Power opted to include Brisbie’s load and 3
renewable resources (modeled as solar PV) in the base case 4
of the 2021 IRP once it became known to the Company that 5
Brisbie planned to locate in Idaho Power’s service area. 6
Q. Did Brisbie’s load impact Idaho Power’s 7
forecasted capacity deficit in 2023? 8
A. No. Brisbie’s load 9
and does not impact Idaho Power’s 2023 deficit. 10
Q. Will the renewable resources serve Brisbie 11
directly? 12
A. No. The renewable resources for Brisbie will be 13
procured on the customer’s behalf by Idaho Power and 14
connected directly to the Company’s transmission system. 15
Brisbie will pay for the costs associated with the 16
renewables required to support their load and will also be 17
credited for the value those resources bring to Idaho 18
Power’s system. To this end and as noted above, Brisbie’s 19
associated renewable resources are incorporated into the 20
base planning analysis of the 2021 IRP. Inclusion of the 21
renewables in the IRP modeling allows them to be treated as 22
system resources for modeling purposes and enables Idaho 23
Power to quantify their value to the Company and its 24
broader customer base. 25
TATUM, DI 14
Idaho Power Company
Q. Do the new renewables affect how Brisbie is 1
billed for taking service from Idaho Power? 2
A. Yes. Rather than simply being charged for 3
retail electric service under its Special Contract, Brisbie 4
will be charged for the services it requires from Idaho 5
Power, pay for the costs of the new renewable resources, 6
and be credited for any system benefits derived from those 7
resources. This treatment is fully consistent with the 8
structure outlined in the Clean Energy Your Way – 9
Construction offering in Idaho Power’s Case No. IPC-E-21-10
40. 11
Q. Considering both Brisbie’s load and 12
renewables, how will the customer be billed? 13
A. Pricing and billing are discussed in detail in 14
Mr. Goralski’s testimony, but, at a high level, various 15
cost and credit streams for Brisbie 16
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TATUM, DI 15
Idaho Power Company
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Q. Is the Company requesting anything in this 23
case beyond approval of the Brisbie ESA, including its 24
TATUM, DI 16
Idaho Power Company
pricing and compensation structure as detailed in Mr. 1
Goralski’s testimony? 2
A. Yes. The Brisbie ESA requires Idaho Power to 3
procure and supply energy from renewable resources to 4
provide Brisbie with 100 percent renewable support on an 5
annual basis. Brisbie is in turn required to pay Idaho 6
Power the associated cost of these resources. Because 7
Brisbie will pay the cost of new renewable resources under 8
the ESA, 9
Idaho Power requests authority to 10
procure the necessary resources contemplated within the ESA 11
without seeking Commission approval of each such 12
procurement. Further, Idaho Power requests approval from 13
the Commission that each such resource procurement would 14
receive the same ratemaking treatment outlined in this 15
case, unless otherwise modified in a subsequent proceeding. 16
VI. CONCLUSION 17
Q. Is it your opinion that the approval of the ESA 18
between Brisbie and the Company is in the public interest? 19
A. Yes. Idaho Power and Brisbie have worked together 20
to develop a retail rate structure that addresses the 21
renewable energy requirements of Brisbie and reflects 22
current energy economic realities (i.e., the marginal cost 23
of energy is expected to increase over time). The ESA 24
incorporates these goals in an equitable way that works for 25
TATUM, DI 17
Idaho Power Company
both the new customer, for the system, and for existing 1
customers. 2
Q. Does this complete your testimony? 3
A. Yes, it does. 4
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TATUM, DI 18
Idaho Power Company
DECLARATION OF TIMOTHY E. TATUM 1
I, Timothy E. Tatum, declare under penalty of 2
perjury under the laws of the state of Idaho: 3
1. My name is Timothy E. Tatum. I am employed 4
by Idaho Power Company as the Vice President of the 5
Regulatory Affairs Department and am competent to be a 6
witness in this proceeding. 7
2. On behalf of Idaho Power, I present this 8
pre-filed direct testimony and Confidential Exhibit Nos. 1 9
and 2 in this matter. 10
3. To the best of my knowledge, my pre-filed 11
direct testimony and exhibits are true and accurate. 12
I hereby declare that the above statement is true to 13
the best of my knowledge and belief, and that I understand 14
it is made for use as evidence before the Idaho Public 15
Utilities Commission and is subject to penalty for perjury. 16
SIGNED this 22nd day of December 2021, at Boise, 17
Idaho. 18
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Signed: _______________________ 20
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BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-21-42
IDAHO POWER COMPANY
TATUM, DI
TESTIMONY
CONFIDENTIAL
EXHIBIT 1
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. IPC-E-21-42
IDAHO POWER COMPANY
TATUM, DI
TESTIMONY
CONFIDENTIAL
EXHIBIT 2