20211222Goralski 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
PAWEL P. GORALSKI
GORALSKI, DI 1
Idaho Power Company
Q. Please state your name and business address. 1
A. My name is Pawel P. Goralski. My business 2
address is 1221 West Idaho Street, Boise, Idaho 83702. 3
Q. By whom are you employed and in what capacity? 4
A. I am employed by Idaho Power Company (“Idaho 5
Power” or “Company”) as a Regulatory Consultant in the 6
Regulatory Affairs Department. 7
Q. Please describe your educational background. 8
A. In May of 2007, I received a Bachelor of 9
Business Administration degree in Finance from Boise State 10
University in Boise, Idaho. I have also attended “The 11
Basics: Practical Regulatory Training for the Electric 12
Industry,” an electric utility ratemaking course offered 13
through the New Mexico State University’s Center for Public 14
Utilities, “Electric Utility Fundamentals and Insights,” an 15
electric utility course offered by Western Energy 16
Institute, and “Electric Rates Advanced Course,” an 17
electric utility ratemaking course offered through Edison 18
Electric Institute. 19
Q. Please describe your work experience with 20
Idaho Power. 21
A. In 2017, I was hired as a Regulatory Analyst 22
in the Company’s Regulatory Affairs Department, and in 2020 23
I was promoted to my current position of Regulatory 24
Consultant. My primary responsibilities include supporting 25
GORALSKI, DI 2
Idaho Power Company
the Company’s class cost-of-service activities, developing 1
pricing for special contract customers and other large load 2
pricing analysis, supporting the Company’s annual Fixed 3
Cost Adjustment calculation and serving as the Company 4
witness, and I have been the Company’s witness for the 5
Company’s annual demand-side management prudency filing. 6
Q. What is the purpose of your testimony? 7
A. The purpose of my testimony is to describe the 8
pricing structure of Brisbie, LLC’s (“Brisbie”) Energy 9
Services Agreement (“ESA”), detail the ESA provisions 10
applicable to the procurement of renewables to support the 11
customer’s energy use, review the associated compensation 12
structure and necessary cost-recovery mechanisms under the 13
ESA, and, finally, present the no-harm analysis for the 14
Brisbie contract. 15
Q. Have you prepared any exhibits? 16
A. Yes. My testimony includes Confidential 17
Exhibit No. 3, which summarizes the present value revenue 18
requirement analysis demonstrating the Brisbie ESA will not 19
financially harm other retail customers. 20
I. ESA PRICING STRUCTURE 21
Q. What were your goals in developing the pricing 22
compensation structure for Brisbie’s ESA? 23
A. I set several goals to guide the development 24
of the Brisbie ESA pricing and compensation structure: 25
GORALSKI, DI 3
Idaho Power Company
1. Develop rates for Idaho Power supply of energy 1
that are cost-based and avoid any unreasonable cost shift 2
to existing Idaho Power customers; 3
2. Develop a rate structure that provides for 4
nondiscriminatory treatment of cost assignment for Brisbie 5
and other similar customers; 6
3. Develop rate and compensation structures for 7
dedicated renewables that properly assigns costs and 8
benefits between Brisbie and other retail customers; 9
4. And finally, scalable rates 10
. 11
Q. What inputs did Brisbie provide to inform 12
derivation of pricing? 13
A. Brisbie provided a load ramp forecasting 14
monthly peak demand, average demand, and energy requirement 15
with an approximate start date of 16
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New, incremental renewable resources are added 22
in tranches approximately corresponding to the data center 23
facility build out, maintaining Brisbie’s annual energy 24
GORALSKI, DI 4
Idaho Power Company
requirement is supported by renewable resources during the 1
load ramp. 2
Q. Was an alternate load ramp evaluated? 3
A. Yes. As noted, 4
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, informed the need to 14
evaluate this scenario in Idaho Power’s planning analysis 15
to identify integration and Idaho Power system impacts. 16
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GORALSKI, DI 5
Idaho Power Company
Q. Please describe the pricing structure of the 1
ESA. 2
A. The proposed ESA provides for a two-block 3
pricing structure under which the first 20 MW of Brisbie 4
load is served at Schedule 19 retail rates under block 1, 5
and all load in excess of 20 MW is served under a hybrid 6
pricing structure consisting of embedded and marginal costs 7
under block 2. 8
Q. How is Brisbie’s capacity requirement met and 9
priced under the two-block structure? 10
A. The entirety of Brisbie’s capacity requirement 11
is served by Idaho Power for both block 1 and block 2. 12
Both pricing blocks are based on 13
costs, block 1 priced at Schedule 19 – Large Power Service 14
Transmission Service retail rates, and block 2 rates 15
derived following cost-of-service allocation methodology 16
consistent with the Company’s most recent general rate 17
case.1 18
Q. Why is Brisbie allocated a load-ratio share of 19
Idaho Power’s if Brisbie is served 20
by renewable resources procured solely to serve them? 21
A. While new, incremental renewable resources 22
will meet Brisbie’s annual energy requirements, Brisbie 23

1 In the Matter of the Application of Idaho Power Company for Authority
to Increase its Rates and Charges for Electric Service to its Customers in the State of Idaho, Case No. IPC-E-11-08, filed June 1, 2011.
GORALSKI, DI 6
Idaho Power Company
benefits from and pays their load-ratio share of Idaho 1
Power’s generation and transmission system for two main 2
reasons. First, Idaho Power’s generation and transmission 3
system will be required to meet Brisbie’s load at any time 4
a renewable resource in not generating. And second, the 5
renewable resources are interconnected to Idaho Power’s 6
system and utilize existing transmission lines to travel to 7
Brisbie’s load, other load centers on Idaho Power’s system, 8
or market hubs when renewable generation exceeds Brisbie’s 9
load requirement. 10
Q. How are allocated to 11
the second pricing block to properly assign system costs to 12
Brisbie? 13
A. At a high level, the cost-of-service study 14
utilized in the Company’s 2011 general rate case was used 15
as the basis to allocate costs to the new Brisbie facility 16
according to projected loads which fall under block 2. 17
Once revenue requirement from the 2011 general rate case 18
was allocated to the Brisbie Special Contract, rates were 19
adjusted to reflect changes that have occurred since the 20
conclusion of the 2011 general rate case. 21
Q. What was the process to update Idaho Power’s 22
to reflect current Idaho Public 23
Utilities Commission (“Commission”)-approved costs? 24
GORALSKI, DI 7
Idaho Power Company
A. The Company adjusted the Special Contract to 1
capture base rate changes resulting from Commission orders 2
related to the Open Access Transmission Tariff (“OATT”) 3
deferral adjustment,2 the depreciation study adjustment,3 4
the Boardman balancing account adjustment,4 the Langley 5
Gulch power plant adjustment,5 the update to base net power 6
supply expenses,6 Valmy early retirement,7 tax reform,8 2019 7
Valmy update,9 and two Boardman updates associated with the 8

2 In the Matter of the Application of Idaho Power Company for Authority to Increase its Rates Due to the Inclusion of Transmission Costs Associated with FERC Docket No. ER06-787, Case No. IPC-E-12-06, filed February 15, 2012.
3 In the Matter of the Application of Idaho Power Company for Authority
to Increase its Rates Due to Revised Depreciation Rates for Electric Plant-in-Service, Case No. IPC-E-12-08, filed February 15, 2012.

4 In the Matter of the Application of Idaho Power Company for Authority to Increase its Rates for Electric Service to Recover the Boardman
Balancing Account, Case No. IPC-E-12-09, filed February 15, 2012.

5 In the Matter of the Application of Idaho Power Company for Authority to Increase its Rates and Charges for Electric Service Due to the
Inclusion of the Langley Gulch Power Plant Investment in Rate Base, Case No. IPC-E-12-14, filed March 2, 2012.
6 In the Matter of the Application of Idaho Power Company for Authority to Establish a New Base Level of Net Power Supply Expense, Case No. IPC-E-13-20, filed November 1, 2013.
(Because Brisbie’s block 2 is priced at a marginal energy rate, while this adjustment is included in the model, it has no impact to Brisbie’s block 2 energy rates.)

7 In the Matter of Idaho Power Company’s Application to Increase its Rates for Electric Service to Recover costs associated with the North
Valmy Power Plant, Case No. IPC-E-16-24, filed October 21, 2016.
8 In the Matter of the Investigation into the Impact of Federal Tax Code
Revisions on Utility Costs and Ratemaking, Final Order No. 34071, Case No. GNR-U-18-01, May 31, 2018.
9 In the Matter of Idaho Power Company’s Application for Authority to Increase its Rates for Electric Service to Recover Costs Associated with the North Valmy Power Plant, Case No. IPC-E-19-08, filed March 8,
2019.
GORALSKI, DI 8
Idaho Power Company
cessation of operations at the plant in 201910 and 2020.11 1
To appropriately reflect the outcomes of these cases, Idaho 2
Power adjusted the Brisbie Special Contract rates in the 3
same manner as the final approved rate changes from those 4
cases.12 5
The rates resulting from the calculations described 6
above are reasonable, consistent with previous cost-of-7
service determinations, and in the public interest. 8
Further, the use of the 2011 general rate case cost-of-9
service study as the basis for this analysis is in 10
alignment with the Commission's direction provided in Case 11
No. IPC-E-13-23.13 The intent of this rate-setting 12
methodology was to develop the customer-specific cost of 13
providing electrical service to the new Brisbie facility 14
utilizing the most current cost-of-service information 15
available. 16

10 In the Matter of Idaho Power Company’s Application for Authority to Decrease its Rates for Electric Service for Costs Associated with the Boardman Power Plant, Case No. IPC-E-19-32, filed October 17, 2019.

11 In the Matter of Idaho Power Company’s Application for Authority to Decrease its Rates for Electric Service for Costs Associated with the
Boardman Power Plant, Case No. IPC-E-20-32, filed August 21, 2020.
12 For example, the tax reform adjustment was applied to all classes on a uniform percentage change to all billing components; therefore, the classified and functionalized costs for the Brisbie Special Contract were adjusted using the same proportion approved in Case No. GNR-U-18-01.
13 Case No. IPC-E-13-23, Order No. 33038 at 12 (May 19,2014), ". . . we
find that a rate utilizing cost-of-service as a starting point for negotiation is consistent with prior Commission Orders and is fair, just and reasonable."

GORALSKI, DI 9
Idaho Power Company
Q. Were there additional cost assignment 1
considerations in the development of Brisbie’s rates? 2
A. Yes. Because Brisbie’s load ramp begins in 3
. 4
For the “no-harm” analysis, future rates incorporate the 5
growth of Brisbie’s load as outlined by the load ramp and 6
changes to Idaho jurisdiction load ratio share. 7
Q. Is there a difference in Brisbie rates used 8
for no-harm analysis and proposed Schedule 33? 9
A. Yes, the rates included on Schedule 33 reflect 10
Commission-approved costs as of the Company’s most recent 11
change to Idaho base rate revenue requirement, effective 12
January 1, 2021,14 not future projected costs. Schedule 33 13
will be subject to future Commission-approved changes to 14
demand revenue requirement beginning at the time the 15
Commission approves Schedule 33, including the period when 16
the tariff is “on the shelf” before Brisbie begins taking 17
service from Idaho Power. This is similar to the special 18
contract for J.R. Simplot Company’s Caldwell Facility, 19
Schedule 32, approved in 201515 but for which Simplot-20

14 In the Matter of Idaho Power Company’s Application for Authority to
Decrease its Rates for Electric Service for Costs Associated with the Boardman Power Plant, Case No. IPC-E-20-32, Final Order No. 34885.
15 In the Matter of Idaho Power Company’s Application for Approval of Special Contract and Tariff Schedule 32 to Provide Electric Service to J.R. Simplot Company’s Caldwell Facility, Final Order No. 33303, Case
No. IPC-E-15-13, issued May 22, 2015.
GORALSKI, DI 10
Idaho Power Company
Caldwell has not yet met the 20 MW requirement to begin 1
taking service under. 2
Q. How is Brisbie’s energy requirement met under 3
the proposed structure? 4
A. Consistent with the Schedule 62 Clean Your Way 5
– Construction option,16 Brisbie’s energy requirement is 6
reconciled against the generation of their renewable 7
resources 8
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16 In the Matter of Idaho Power Company’s Application to Expand Optional
Customer Clean Energy Offerings Through the Clean Energy Your Way Program, Case No. IPC-E-21-40, filed December 3, 2021.
GORALSKI, DI 11
Idaho Power Company
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Idaho Power Company
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Idaho Power Company
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Q. Are billing components included to address 3
potential impacts to Idaho Power’s system from variance 4
from Brisbie’s estimated load forecast? 5
A. Yes, similar to several other Idaho Power 6
special contract customers, Brisbie’s Special Contract 7
includes both a Contract Demand charge and Daily Excess 8
Demand charge. The Contract Demand charge, 9
, applies to the block 2 10
portion of Brisbie’s estimated load forecast for the 11
upcoming twelve months. 12
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GORALSKI, DI 14
Idaho Power Company
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Q. Which party is responsible for costs of the 17
output from the new, incremental renewable resources? 18
A. Aligning with Brisbie’s goal to support annual 19
operating energy requirements with new, incremental 20
renewable resources, Idaho Power purchases the renewable 21
output from a third-party renewable developer and passes 22
the cost through to Brisbie. 23
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Idaho Power Company
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Idaho Power Company
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Idaho Power Company
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Idaho Power Company
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Idaho Power Company
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Idaho Power Company
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Idaho Power Company
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II. NO-HARM FINANCIAL ANALYSIS 17
Q. Please describe how Idaho Power evaluated the 18
revenue to be collected from Brisbie under the ESA against 19
system costs and benefits, to determine no financial harm 20
to all other Idaho Power retail customers. 21
A. Idaho Power completed a present-value revenue 22
requirement analysis for two portfolios and evaluated the 23
difference in cost as compared to revenues collected 24
through Bribie’s pricing framework to ensure any 25
GORALSKI, DI 22
Idaho Power Company
unreasonable cost shift to existing Idaho Power customers 1
is avoided. 2
Q. How was each portfolio developed? 3
A. Following the methodology used in the 4
Company’s 2021 IRP analysis, Idaho Power first developed a 5
sales and load forecast for future demand for electricity 6
within the Company’s service area for a 20-year period from 7
2021 through 2040. This “base case” sales and load forecast 8
includes Brisbie’s data center facility 9
. The 10
sales and load forecast was then input into AURORA’s Long-11
Term Capacity Expansion model to determine resource 12
additions and costs necessary to serve the total projected 13
load inclusive of Brisbie. The new, incremental renewable 14
resources procured to meet Brisbie’s annual energy 15
requirement are held static in the modeling like other 16
must-take resources, so that they are always included in 17
resource selection, and so that the system must balance 18
their integration. This base case portfolio identified the 19
resource additions, timing, and cost required to serve 20
customers and balance Idaho Power’s system, for all load 21
forecast from 2021 through 2040 including Brisbie. 22
A similar process was used to develop a “base-low” 23
portfolio which excludes both Brisbie’s data center 24
GORALSKI, DI 23
Idaho Power Company
facility load and accompanying new, incremental renewable 1
resources. 2
Q. How were portfolio costs evaluated? 3
A. For both the base case, and base-low 4
portfolios, a model was developed to determine annual 5
revenue requirement for power supply costs, existing 6
resource revenue requirement, as well as new, incremental 7
resource additions’ revenue requirement for that portfolio. 8
Because the model allows for the retail customer revenue 9
requirement to adjust each year, the model assumes costs 10
are included as if the Company had a general rate case each 11
year. 12
The base-low case customer revenue requirement 13
becomes the ceiling in the comparative analysis as it 14
represents the amount of retail revenue collected from all 15
Idaho Power’s customers in a portfolio without Brisbie. 16
For the base case analysis, Brisbie’s forecast 17
revenues from the pricing framework are included in the 18
base case revenue requirement, along with the static retail 19
customer revenue ceiling from the base-low portfolio. Each 20
year is compared to validate that the additional system 21
costs and benefits from the inclusion of Brisbie’s load and 22
new, incremental resources, does not result in an increase 23
in the implied revenue requirement for all other retail 24
customers identified in the base-low portfolio. 25
GORALSKI, DI 24
Idaho Power Company
Q. What are the results of the no-harm analysis? 1
A. Included on Confidential Exhibit No. 3, on a 2
10-year net present value revenue requirement basis, Idaho 3
Power found that including the collections from Brisbie’s 4
pricing framework, resulted in a negative, or lower by 5
revenue requirement, than the base-low case 6
when including the costs and benefits from Brisbie and 7
their renewable resources as part of Idaho Power’s system. 8
The negative revenue requirement demonstrates that all 9
other Idaho Power retail customers benefit with the 10
proposed Brisbie pricing framework, and this benefit 11
continues when evaluated on a 20-year present value revenue 12
requirement basis through the 2040 resource planning 13
horizon. 14
Q. Does the no-harm analysis indicate an equal 15
benefit in each year? 16
A. No. Due to the forecast of resource additions 17
identified in the IRP analysis, 18
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periods may show higher cost. These individual years of 21
higher costs are outweighed by the overall benefit as 22
demonstrated by a negative, or lower, net present value 23
revenue requirement for both 10- and 20-year periods. 24
GORALSKI, DI 25
Idaho Power Company
Q. Did Idaho Power consider imputed debt as part 1
of its evaluation of the Brisbie contract? 2
A. Yes. The first tranche of renewables is 3
likely to be sourced from a third-party renewable 4
developer, and Idaho Power calculated the imputed debt 5
impact of a . The 6
Company’s analysis concluded that the cost of imputed debt 7
is less than the resulting net present value revenue 8
requirement benefit from Brisbie joining Idaho Power’s 9
system. Thus, any ultimate imputed debt costs would not be 10
borne by other Idaho Power customers. 11
III. CONCLUSION 12
Q. Does the pricing framework developed for 13
Brisbie and described herein meet the goals identified for 14
the pricing structure, and result in rates that are fair, 15
just, and reasonable? 16
A. Yes. The rates developed for Brisbie are cost-17
based and avoid any unreasonable shifting of costs to 18
existing Idaho Power customers. Further, the compensation 19
components of the Brisbie arrangement were developed to 20
properly assign costs and benefits to Brisbie and other 21
retail customers. Finally, the overall structure is 22
consistent with the Clean Energy Your Way – Construction 23
offering, as outlined in Mr. Tatum’s testimony. 24
Q. Does this complete your testimony? 25
GORALSKI, DI 26
Idaho Power Company
A. Yes, it does. 1
2 3
GORALSKI, DI 27
Idaho Power Company
DECLARATION OF PAWEL P. GORALSKI 1
I, Pawel P. Goralski, declare under penalty of 2
perjury under the laws of the state of Idaho: 3
1. My name is Pawel P. Goralski. I am employed 4
by Idaho Power Company as a Regulatory Consultant in 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 No. 3 9
in this matter. 10
3. To the best of my knowledge, my pre-filed 11
direct testimony and exhibit 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

GORALSKI, DI
TESTIMONY

Confidential
EXHIBIT 3