20221012Reply Comments.pdf

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October 12,2022
VIA ELECTRONIC FILING
Jan Noriyuki, Secretary
Idaho Public Utilities Commission
11331 W. Chinden Blvd., Bldg 8,
Suite 201-A (83714)
PO Box 83720
Boise, ldaho 83720-0074
Re Case No. IPC-E-22-22
ln the Matter of ldaho Power Company's Application to Complete the Study
Review Phase of the Comprehensive Study of Costs and Benefits of On-
Site Customer Generation & For Authority to lmplement Changes to
Schedules 6, 8 and 84lor Non-Legacy Systems
Dear Ms. Noriyuki
Attached for electronic filing is ldaho Power Company's Reply Comments in the
above-referenced matter. Please find the Affidavit of Kurt G. Strunk as Attachment 1 to its
Reply Comments.
lf you have any questions about the documents referenced above, please do not
hesitate to contact me.
Very truly yours,
LISA D. NORDSTROM
Lead Counsel
I [e-mail]
LDN:sg
Attachments
Lisa D. Nordstrom
LISA D. NORDSTROM (lSB No. 5733)
MEGAN GOICOECHEA ALLEN (lSB No. 7623)
ldaho Power Company
1221 West ldaho Street (83702)
P.O. Box 70
Boise, ldaho 83707
Telephone: [phone]
Facsimile: [phone]
lnordstrom@ida hopower.com
mooicoecheaa llen@ida hopower.com
Attorneys for ldaho Power Company
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF IDAHO POWER
COMPANY'S APPLICATION TO
COMPLETE THE STUDY REVIEW PHASE
OF THE COMPREHENSIVE STUDY OF
COSTS AND BENEFITS OF ON-SITE
CUSTOMER GENERATION & FOR
AUTHORITY TO IMPLEMENT CHANGES
TO SCHEDULES 6, 8, AND 84
CASE NO. |PC-E-22-22
IDAHO POWER COMPANY'S
REPLY COMMENTS
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COMES NOW, ldaho Power Company ("ldaho Powe/' or 'Company"), and
pursuant to the Notice of Schedule, Notice of Workshops, and Notice of Comment
Deadlines issued by the ldaho Public Utilities Commission ("Commission") in Order No.
35512, respectfully submits its reply comments in the above-referenced case as follows.
IDAHO POWER COMPANY'S REPLY COMMENTS - 1
I. BACKGROUND
On September 21,2022, the following parties submitted initia! written comments
pursuant to the Commission's scheduling orderl in this matter: Commission Staff ("Staff');
Clean Energy Opportunities for ldaho ("CEO'); City of Boise; ldaho Conservation League
("!CL"); and ldaho lrrigation Pumpers Association, lnc. (.'llPA"). ln addition, several
members of the public submitted comments. The Company appreciates the opportunity
to offer comments and continues to value the participation of the parties and the public in
this docket.
The written comments submitted to date concerning the"2022 Value of Distributed
Energy Resources Study" filed by ldaho Power (.'VODER Study") raise a number of
important issues, though in the interest of procedural efficiency, the Company intends to
focus these reply comments on ICL's lnitial Comment and, specifically, the Attachment
thereto: Crossborder Energy's "lndependent Review of ldaho Power's Value of
Distributed Energy Resources Study" ("Crossborder Review"). Crossborder Energy is a
California consulting firm hired by lCL, other environmental groups, and solar
companies,2 for the purpose of critiquing the VODER Study. With respect to issues raised
in the written comments that are not addressed herein, ldaho Power intends to utilize its
final response comments3 to clariff and refine aspects of the VODER Study, as explained
I Order No. 35512
2 ldaho Statesman, ldaho Power wants to pay less for homeowners' rcoftop solar, new rcpoft says
(September 29,2022). ("Crossborder's report was paid for by the ldaho Conservation League, the ldaho
Chapter of the Sierra Club, EGT Solar, Vote Solar, the Portneuf Resource Council, the Snake River
Alliance, CED Greentech, Sunnova, Empowered Solar, the Climate Action Coalition of the Wood River
Valley and the ldaho Organization of Resource Councils.')
3 Pursuant to Order No. 35512, the Company's final response comments are due October 26,2022.
IDAHO POWER COMPANY'S REPLY COMMENTS - 2
more fully in its initial comments, and wi!! also address any outstanding issues and
comments in the process. As such, the Company's silence at this stage on an issue or
stance should not be construed as agreement with the position.
The Company conducted the VODER Study pursuant to the Study Framework that
the Commission approved in Case No. IPC-E-21-214 after considering more than 250
written public comments, oral testimony at a public hearing, and written comments filed
by eleven parties to that proceeding. Notably, having reviewed the extensive record in
that case, the Commission declined to order the VODER Study be conducted by a third
party, finding that the Company itself was "best positioned to access and study the
extensive data and issues specific to the ldaho Power system at a reasonable cost."s As
set forth more fully below, the wisdom of the Commission's determination is demonstrated
by the review commissioned by lCL, which lacks an understanding and appreciation of
the nuances of the ldaho regulatory environment and the particulars of the Company's
system.
II. CROSSBORDER REVIEW OF THE IDAHO POWER VODER STUDY
The Company appreciates ICL's recognition of the Company's clear and detailed
explanation of the analysis it conducted for the VODER Study and its continued
commitment to industry, customer, and community involvement. Nevertheless, ICL has
retained a consulting firm based in Berkeley, California, to critique the VODER Study filed
by ldaho Power. Having assessed the Crossborder Review, associated workpapers, and
a ln the Mafter of ldaho Power Company's Application to lnitiate a Multi-Phase Collaborative Process for
the Study of Cosfg Benefits, and Compensation of Net Excess Eneryy Associated with Customer On-Site
Generation, Case No. IPC-E-21-21, Order No. 35284 (Dec. 30, 2021).
5 ld. a|11.
IDAHO POWER COMPANY'S REPLY COMMENTS - 3
related discovery responses, the Company has identified several flaws, which include
assumptions and methodologies inconsistent with ldaho regulatory precedent and
incongruous with the Commission-approved Study Framework.
As more fully set forth herein, the Crossborder Review not only falls short of being
an "independent" review and fails to meet the Commission's criteriao for a comprehensive
study, it contains arguments and conclusions that are misleading, inherently flawed, and
directly conflict with prior Commission decisions. More specifically, the following
components of the Crossborder Review, summarized as follows and addressed more
fully herein, are problematic for the reasons stated and should be rejected as a result:
1) Avoided Enerov Costs - The Crossborder Review incorrectly concludes
that the data provided in the VODER Study is "outdated and inaccurate,'
instead merely using more recent data and not introducing new or different
avoided energy cost concepts than the VODER Study already considered
demonstrates that ldaho Power's examination was thorough and
appropriate.
2) Avoided Generation Capacitv - The Crossborder Review's analysis of the
avoided generation capacity is in direct conflict with the Commission-
approved Study Framework. The analysis erroneously includes the capacity
contribution of energy offtet by the customer-generator behind the meter
and proposes a method that does not rely on industry best practices or
system-specific data. Additionally, the Crossborder Review does not select
6 Case No. IPC-E-21-21, Order No. 35284 at 9-32
IDAHO POWER COMPANY'S REPLY COMMENTS -4
the lowest-cost selectable resource from the most recently acknowledged
lntegrated Resource Plan ("lRP").
3) Avoided Transmission & Distribution Capacitv - The Crossborder Energy
estimates of ldaho Power's avoided transmission and distribution
investment are not accurate, are overstated, and are based on
inappropriate implementation of marginal costing techniques.
4) Avoided Line Losses - The Crossborder Review's line loss assumptions
erroneously and arbitrarily double the line losses from ldaho Power's most
recent line loss study and are not based on ldaho Power's system data.
5) lnteoration Costs - The Crossborder Review assumptions are inherently
flawed as it relates to the applicability of the cases studied in ldaho Powers
most recent integration study as discussed herein.
6) Fuel Hedqino - The analysis and cgnclusions reached by the Crossborder
Review demonstrate a lack of understanding of Idaho Power's hedging
practices and conflict with the Commission-approved Study Framework by
attributing value to the energy consumed by the customer-generator behind
the meter.
7) Avoided Costs of Carbon Emission - The Crossborder Review suggests
including carbon emission costs that may - or may not - affect rates at
some future point should be considered. The Crossborder Review directly
conflicts with the Commission-approved Study Framework by including
carbon emission costs that are not currently in customer rates.
IDAHO POWER COMPANY'S REPLY COMMENTS.5
8) Societal Benefits The Crossborder Review itself notes that the
Commission did not direct the Company to study societal benefits, and they
may not be appropriate for inclusion in the Export Credit Rate ("ECR"). The
Crossborder Review's attempt to include those benefits should be rejected
by the Commission.
1) Avoided Energy Costs
On the issue of avoided energy costs, the Crossborder Review incorrectly
concludes that the data provided in the VODER Study is "outdated and inaccurate."T As
directed by the Commission, the Company utilized the most recent data and information
to develop possible avoided energy cost methodologies and presented those in the
VODER Study, The Company did not, as inferred by the Crossborder Review, propose
the values presented in the report be utilized as an approved ECR. Rather, the Company
presented several methodologies that could be used to develop an ECR and be updated
as appropriate. The Crossborder Review goes on to focus on the importance of
incorporating recent higher energy prices into the avoided energy cost component of the
ECR, erroneously concluding recent geopoliticalevents make the historicaldata included
in the VODER Study "outdated and inaccurate."
The VODER Study evaluated a range of methods, some of which rely on an actual
market price such as the lntercontinental Exchange Mid-Columbia CICE Mid-C") or
Energy lmbalance Market Load Aggregation Point ("ELAP"), and one that relies on
forecasted values (i.e., IRP forecast) to represent the avoided energy cost component of
7 Crossborder Review at 2
IDAHO POWER COMPANY'S REPLY COMMENTS -6
the ECR.8 Depending on the price used as the basis for avoided energy, the timing of
updates to the inputs for energy prices may vary.e As stated in the VODER Study:
ldaho Power, stakeholders, and ultimately the Commission,
must evaluate the benefits and potential impacts of leveraging
a forecasted energy price or an actual market energy price.
Both approaches have merit as a representative proxy for the
value provided for avoided energy attributed to customer-
generator exports.lo
The Crossborder Review notes that energy prices in 2022 significantly increased
compared to prior years and states: "Avoided energy costs should reflect more timely and
accurate data than the lRP forecast or the three-year rolling averages used by lPC. For
example, they could be based on EIM prices from the prior 12 months."11
The Crossborder Review incorrectly concludes that the VODER Study does not
evaluate a real-time pricing option. For the VODER Study, a historical 3-year average of
the ELAP price was used for illustrative purposes.12 However, what the Crossborder
Review overlooks is that the VODER Study suggests that the Commission could approve
the use of actual market prices in real-time to "capture changes in market conditions
resulting in higher or lower energy prices.'l3 As a result, the energy input would not need
to remain constant and "[i]nstead, ldaho Power's billing system could apply actual market
8 VODER Study at 35 (June 2022).
s ld. at71.
10 ld.
11 Crossborder Review at 2.
12 VODER Study at 37 ('For purposes of the study, the value for the ECR uses a historically based
indicative price based on a 3-year average of the ICE Mid-C lndex.'), and 38 ("The value for the ECR, for
purposes of the study, uses a historically based indicative price based on a 3-year average of the ELAP
price.").
13 /d. at 38.
IDAHO POWER COMPANY'S REPLY COMMENTS - 7
prices for the given hour that the customer-generato/s export occurs. The energy input
would continually use the [market prices] to value exports in the billing period.'14
Therefore, inherent in the methods identified in the VODER Study, if the Commission
selected an actua! real-time market price method during implementation, the ECR would
incorporate changes in market prices such as those mentioned in the Crossborder
Review.
The intent of the VODER Study, as defined in the Study Framework, was to
evaluate an array of methodologies and pricing inputs - not to presuppose a singular
approach as suggested in the Crossborder Review. The fact that the Crossborder Review
merely used more recent data and did not introduce new or different avoided energy cost
concepts than the VODER Study already considered further demonstrates that Idaho
Powefs examination was thorough and appropriate. Crossborde/s suggestions to the
contrary are unavailing.
2) Avoided Generation Capacity
The Crossborder Review suggests the VODER Study under-quantified (1) the
contribution capacity of distributed energy resources ("DER' or "DERs") and (2) the
avoided cost of generation capacity for the utility.ls The arguments that support these
conclusions are misleading, inherently flawed, directly conflict with prior Commission
decisions, and should therefore be rejected by the Commission.
1a ld. a171.
ls Crossborder Review at 3.
IDAHO POWER COMPANY'S REPLY COMMENTS - 8
Capacitv Contibution of Distributed Enerqv Resources - ELCC
The Crossborder Review attempts to undermine the credibility of the avoided
generation capacity quantified in the VODER Study by comparing the ELCC of the
Company's existing and planned utility scale solar resources (62.3% from the 2021 IRP)
and the Jackpot solar proje ct (34.0o/o from the 2021 IRP)16 to the ELCC of customer-
generator exports (7.620/o from the VODER Study).17 The basis for comparing these
values is flawed for a couple of reasons.
First, a utility-scale solar project, such as Jackpot solar, exports all produced
energy to the grid. !n contrast, customer-generator net exports are significantly reduced
during the summer months as most energy is consumed by the customers on-site (i.e.,
behind the meter). The Crossborder Review incorrectly concludes that excluding the
value of capaci$ associated with generation consumed on-site is an error that leads to
an understated ELCC.18 The VODER Study's evaluation of only excess net energy is
consistent with the Commission's decision in Case No. IPC-E-21-21: "We find it
reasonable to base the capacity value on the energy exported rather than the total
generator installed capacity." le The Commission further noted, 'it would be double
counting to base the capacity value on anything more than the energy that is exported."20
The analysis in the Crossborder Review of avoided generation capacity overlooks the
16 ln the Mafter of ldaho Power Company's 2021 lntegnted Resource P/an, Case No. IPC-E-2143,2021
IRP Appendix C: Technical Report at 98.
17 VODER Study at 51.
18 Grossborder Review at 3.
1e Case No. IPC-E-21-21, Order No. 352&4 at 18.
20 ld.
IDAHO POWER COMPANY'S REPLY COMMENTS - 9
Commission's determination. Energy consumed by the customer on-site wil! not be
subject to the ECR and should not be incorporated into the calculation of avoided
generation capacity (or other components of the ECR, as the Crossborder Review
consistently does). The ECR is only intended to apply to the energy exported to the grid,
thus invalidating the assumption and suggestion in the Crossborder Review.
Second, the Crossborder Review compared ELCCs of two otherexisting resources
but failed to mention that the 2021 IRP lists the ELCC of future utility-scale solar as 10.2
percent.2l The results of the 2021 IRP demonstrate that the contribution from solar to
high-risk hours declines as solar penetration increases in the absence of energy storage.
Again, the 10.2 percent ELCC from the 2021 IRP analysis includes allgenerated energy
produced by the plant and provided to the utility, not just net energy exports.
Capacitv Contribution of Distibuted Enerqv Resources - Peak Caoacifu Allocation
Factor ('PCAF")
The Crossborder Review suggests that the ELCC method is inferior because it
introduces variability from year to year and instead suggests the use of the peak capacity
allocation factor (.'PCAF') method. zz The Crossborder Review posits that the PCAF
method "is a widely-used approach to determining the capacity contribution of sola/' and
is'simpler and more stable than the ELCC approach."23 However, that conclusion is not
supported by industry literature, does not lead to an accurate valuation of the capacity
21 Case No. IPC-E-2143,2021|RP at 53 and Appendix C: Technical Report at 99.
22 Crossborder Review at 3.
23 ld. at34.
IDAHO POWER COMPANY'S REPLY COMMENTS - 1O
contribution to ldaho Power's system, and therefore is inconsistentwith prior Commission
directives to conduct a comprehensive study specific to the ldaho Power system.2a
The Crossborder Review claims that the PCAF calculates the capacity contribution
of solar during hours within 10 percent of the system peak resulting in a "more stable"
capacity value.2s However, the stability of the PCAF method referenced in the
Crossborder Review ignores the impact of higher solar penetration on the system. This
fata!flaw of the PCAF methodology resulted in the widespread adoption of ELCC to value
capacity.26
For background, the quantification of the capacity contribution of solar has evolved
industry-wide as well as specifically on ldaho Power's system. For example, during the
2017 lRP, ldaho Power used a variant of the PCAF method by calculating the capacity
contribution of solar during the top 150 load hours resulting in a capacity contribution of
28.4 percent for a fixed-tilt system that is oriented due south.27 Recognizing that this
method was limited and did not capture the impact of high solar penetration, ldaho
Power's 2019 IRP transitioned to the 8,760 hour-based method developed by the National
Renewable Energy Laboratory ('NREL1.z8 To further capture the impact of higher DER
24 IPC-E-21-21, Order No. 35284 at 11
25 Crossborder Review at 4
26 ELCC has quickly gained traction among lSOs and utilities. See Olson, A., Ming, 2., and Carron, B.
(2021, August 30). ELCC Concepts and Considentions for lmplementafion [PowerPoint slidesl at 12.
2021 NYISO lnstalled Capacity Working Group.
https:/Arww.nviso.com/documents/2O14212417272SINYISO%20ELCC 210820 Auoust%2030%20Prese
ntation.pdf
27 ln the Matterof ldaho PowerCompany's 2017 lntegrated Resource P/an, Case No. IPC-E-17-11,2017
IRP at 37 and 130.
28 ln the Matter of ldaho Power Company's 2019 lntegrated Resource Plan, Case No. IPC-E-19-19, 2019
IRP at 37.
IDAHO POWER GOMPANY'S REPLY COMMENTS - 11
penetration levels, ldaho Power, with the support of its lntegrated Resource Plan Advisory
Council ('|RPAC"), adopted the industry best standard, the ELCC method, for the 2021
lRP.2s
\Mile the Crossborder Review claims that the PCAF method is "more stable and
transparent than ELCCs,'3o it fails to acknowledge that the PCAF method ignores the shift
in high-risk hours toward sundown as penetration of renewable resources increases on
the system. lnstead, the PCAF method only uses the system load as the weighting factor
for evaluating capacity contribution. The PCAF method calculates the capacity
contribution independent of renewable penetration. As a result, the PCAF method result
wil! not adequately account for changes in DER penetration on ldaho Power's system.
The Crossborder Review also ignores that the ELCC is a well-documented method
that can be found in a variety of system reliability literature and reports.3l The North
American Electric Reliability Corporation ("NERC") states: "Simplified approaches should
be benchmarked and calibrated to the rigorous ELCC calculations to ensure the validity
of the approximation."32 The Company's research found that the ELCC is the preferred
method throughout the industry to calculate the capacity contribution of variable energy
2e Case No. IPC-E-2143,20211RP at 51.
s Crossborder Review at 4.
t' Roy Billinton and Ronald N. Allan, Reliability Evaluation of Power Sysfems, Springer (1996).
32 Milligan, M. (201'1, April 12). Methods to Model and Calculate Capacity Contibutions of Variable
Generation for Resource Adequacy Planning (lVGTFl-2) [PorerPoint Slides]. Joint NERC-UWG
Workshop, Kansas City. https ://www. n rel. oov/docs/fy 1 1 osti/S 1 485. odf
IDAHO PO\A/ER COMPANY'S REPLY COMMENTS - 12
resources.33 \ffhile the PCAF method may result in a consistently higher value, it is
entirely unrelated to the benefit of customer-generator exports on ldaho Power's system.
The Crossborder Review suggestionil to use the PCAF method is in direct conflict with
the Commission's directive in Order No. 35284 to utilize "system specific data" for
"determining how exports for customer-generators will avoid the cost and provide
benefits" to ldaho Power's system.3s
Avoided Cost of Capacitv
The Crossborder Review states that "the VODER Study assumes, without
explanation, that a gas-fired combustion turbine ("CT') is fldaho Power's] marginalsource
of generation capacity."36 The explanation for selecting the avoided levelized fixed cost
of a simple cycle combustion turbine is stated on page 72 of the VODER Study: "the
levelized fixed cost of the avoided resource is determined in ldaho Power's lRP." 37
For avoided capacity calculations, the Company believes it is most appropriate to
utilize the lowest levelized cost of capacity. An August 2022 Commission order upheld
sSee, e.9., Milligan, M. and Porter, K. (2018, June'14). Determining the Capacity Value of Wind: An
Updated Suruey of Methods and lmplementation [Paper presentation]. WindPower 2008, Houston, Texas.
https://www. n rel. qov/docs/fu 08osti/43433. odf ;
Olson, e|a1.,2021.
hftos://www.nviso.com/documents/2014212417272SINYISO%20ELCC 210820 Auoust%2030%20Prese
ntation.pdf: and
Levitt. A. (2021. April20). How Effective Load Carrying Capability (ELCC") Accreditation Works
[PowerPoint slides]. PJM Planning Committee Special Session - CIR for ELCC. https://www.oim.com/-
/media/committees-qroups/committees/pc/2021120210420-special/20210420-item-03b-how-effective-
load+arryi nq-capabil itv-works. ashx
il Crossborder Review at 34 and 6.
35 Case No. IPC-E-21-21,Order No.35284 at 11
36 Crossborder Review at 4
37 VODER Study at 72, referencing the 2021 IRP at 109 (Figure 8.5 Levelized Capacity (Fixed) Costs in
Millions of 2021 Dollars per kW per Month). The capacity cost of a SCCT is lower than that of any battery
storage resource.
IDAHO POWER COMPANY'S REPLY COMMENTS - 13
this approach as reasonable, where the Commission stated: 'We find it fair, just, and
reasonable that the resource(s) used as a surrogate to determine avoided capacity cost
be identified using the Iowest-cost selectable resource from the most recently
acknowledged lRP at the time of [power purchase agreement] execution."38
Finally, while no discussion orjustification is presented, Table 1 of the Crossborder
Review proposes to increase the avoided generation capacity cost by an amount equal
to ldaho Power's 2021 Planning Reserve Margin ('PRM'). To assume the PRM should
inflate the avoided generation capacity cost shows a lack of understanding of the purpose
of the PRM and how it pertains to the planning process.
The PRM is a value calculated during the IRP process and used in the Long-Term
Capacity Expansion ('LTCE') modelto ensure reliable portfolios are produced. The PRM
has no relation to the avoided capacity of a single resource. As such, the valuation of
avoided generation capacity should not be included in the calculations for the cost of
avoided generation capacity. More information on the PRM's purpose and how it is
derived can be found in the Planning Margin section on page 116 of ldaho Power's 2021
IRP.
3) Avoided T&D Capacity
The Crossborder Review assumes that because the VODER Study "reports very
low avoided costs for transmission and distribution ("T&D') capacity deferrals,"3e those
values have been under-quantified. The Crossborder Review arguments that support
8 ln the Matter of ldaho Power Company's Application for Approval of a Replacement Contnct with
Micron Technology, lnc. and a Power Purchase Agreement with Black Mesa Energy, LLC, Case No. IPC-
E-22-06, OrderNo. 3il82 at 17 (Aug. 1,2022).
3e Crossborder Review at 4.
IDAHO PO\A'ER COMPANY'S REPLY COMMENTS.14
these conclusions are misleading, counter to industry best practices, directly conflict with
prior Commission decisions, and should be rejected by the Commission as a result.
The Crossborder Review relies on a method specific for cost allocation - the
National Economic Research Associates ("NERA') regression model. The NERA
regression modelcompares T&D investments found in FERC Form 1 to changes in peak
demand. The Crossborder Review refers to the NERA model as a method "U.S. utilities
have long used to calculate T&D capacity costs for ratemaking,"40 vaguely inferring that
the NERA regression model is commonly used as a basis to establish rates that
customers are charged for service. The Crossborder Review then makes a blatant
mischaracterization by suggesting that "[t]he NERA regression model determines
avoided T or D costs"41 - a categorically flawed assertion.
Upon evaluating the Crossborder Review, the Company contacted Kurt G. Strunk,
Managing Director at NERA, and asked if NERA would be willing to assess the
Crossborder Review to determine the reasonableness of its "analysis." The Company met
twice with Mr. Strunk to answer clariffing questions about the method presented in the
VODER Study. lncluded as Attachment 1 to these comments is an affidavit received from
Mr. Strunk, concluding that'Crossborder Energy's estimates of ldaho Power's avoided
T&D investment attributable to behind the meter solar exports are not accurate, are
e /d. at 5.
al /d (emphasis added)
IDAHO PO\A'ER COMPANY'S REPLY COMMENTS - 15
overstated, and are based on an inappropriate implementation of marginal costing
techniques."a2
It is also important to note that the Commission previously directed the Company
to'evaluate, for use, examples from the Lawrence Berkeley National Lab" ("LBNL') when
valuing this element of the ECR.43 The LBNL Locational Value of Distributed Energy
Resources Report states the following:
...a marginal cost approach provides a general relationship
between peak loads and distribution costs, but which are not
necessarily directly avoidable by DERs. ln the present worth
method, future investment costs are tied to peak load in
specific locations where there are opportunities to defer
specific upgrades. These estimates better reflect the marginal
avoided distribution costs of DERs than estimates of system
marginal cost.a
The VODER Study relies on a location-specific project method,a5 which, as the LBNL
points out, provides a better estimate of the T&D deferral costs.
While the NERA method should not have been considered relevant to quantiff
avoided T&D, the Crossborder Review did not attempt to evaluate whether the results of
the VODER Study were reasonable - a fact that undercuts the credibility of the analysis.
ldaho Power cannot avoid many of the T&D investments included in the Crossborder
Review, much less defer, due to the addition of DERs. The following list provides a few
42 Attachment 1, Strunk Affidavit at 7.
43 IPC-E-21-21, Order No 35284 at 19.
a Frick, Natalie Mims, et al. Locational Value of Distibuted Eneryy Resources al16 (2021).
1s VODER Study at 55-57.
IDAHO PO\A'ER COMPANY'S REPLY COMMENTS - 16
examples of T&D investment classifications that DERs cannot defer butwere erroneously
included in the Crossborder Review:
o Asset Maintenance and Replacement: ldaho Power's infrastructure
is aging, and many of the lines installed decades ago are being
maintained or replaced. Exported energy from customer generation
does not defer this large category of T&D investment. The
Crossborder Review claims that "replacement projects are demand-
r€lated,"46 and the implied assertion that DER would delay such
projects, is emphatically false.
o New Service: T&D projects are often the result of new or incrementa!
load in new Iocations. Line extensions, service transformers, and
other interconnection equipment are required to serve these new
customers where no infrastructure existed previously. Exported
energy from customer generation, even if nearby, does not replace
the need for this new infrastructure.
. Road \Mdenino Proiects: The population growth in ldaho, especially
in the Treasure Valley, has led to many road widening projects by
the highway districts. Those road projects result in the relocation and
rebuilding of lines to accommodate the new rights-of-way. Exports
from customer generation cannot defer or replace relocation
projects.
ao Crossborder Review at 5.
IDAHO POWER COMPANY'S REPLY COMMENTS - 17
. @ ldaho Power is improving system
communications and technology to better transition from the grid of
the past (i.e., one-way power flow; separate generation and
distribution resources) to the future (i.e., two-way power flow with
distributed loads and resources). For example, ldaho Power has
implemented an lntegrated Volt-VAR Control('lWC') system, which
remotely monitors the voltage and volt-amp reactive ('VAR") flow on
distribution lines and uses that information to controlthe operation of
equipment remotely. This IWC system allows the distribution
system to respond to changes in magnitude and direction of energy
flow and maintain quality service. These grid modernization projects
and changes help the system accommodate customer generation.
Far from being deferrable, the need for these projects increases with
additional customer generation.
Another miscalculation within the Crossborder Review is that its assumptions are
based on customer generation at system peak rather than on the exported energy at the
local peak time. The local peaks of distribution circuits vary considerably, ranging from 7
am to 11 pm depending on local loads and whether the location is winter or summer
peaking. A method using the system peak time can under- or over-estimate the local
exported energy compared to the local peak exported energy values. As a result,
Crossborder Review's suggested method does not accurately represent the local
exported energy required to defer a growth project. On the contrary - and achieving a
IDAHO POVVER COMPANY'S REPLY COMMENTS - 18
more credible result - the VODER Study used the expected exports for the time of each
individual local peak,aT
While the Crossborder Review correctly asserts that the VODER Study spreads
customer generation penetration evenly across ldaho Power's service area, it incorrectly
concludes that this spread deflates the value of T&D deferral.as The method used to
quantiff the value of T&D deferral in the VODER Study represents how additional
customer generation can come online anywhere on the system and capture the local and
varying nature of T&D deferral value.
Customer-generator DER exported energy is most effective at deferring projects
"on the edge," meaning the loading threshold at which an upgrade is initiated is barely
exceeded and in areas where load growth is minimal. The spread of customer-generator
exports over the system allows the deferral of some projects that otherwise would not be
deferred. Analyzing the specific project deferrals that led to the T&D deferral value
indicates that the value is overstated due to this spread, contrary to the Crossborder
Review's claim that the value is diminished in the VODER Study.
To test the claim in the Crossborder Review, ldaho Power reviewed two methods.
The first method looked at the top 10, 20, and 30 locations by highest aggregated
customer generation nameplate capacity. The Company found either that those locations
are not where deferrable T&D projects exist or that the aggregated amount of DER in
those areas were not enough to defer the projects. The second method looked at the
specific areas where the project deferrals that led to the T&D deferralvalue occurred and
17 VODER Study at 55.
s Crossborder Review at 4-5.
IDAHO POWER COMPANY'S REPLY COMMENTS - 19
found that by considering customer generation systems at these locations, the T&D
deferral value is diminished. Therefore, most customer generation projects on ldaho
Power's system would not have deferred T&D investment over the 20-year analysis
timeframe, including historical and projected T&D growth investments.
Enerov Efficiencv and Demand Response Have No Associated Enerqv Exootts
The Crossborder Review includes energy efficiency ('EE") and demand response
("DR") in the T&D deferralanalysis. The analysis double-counts and artificially inflates the
T&D deferral value by including these components. EE and DR are evaluated and
compensated separately and are out of scope within this docket.
Further, per the Commission's direction, "the main purpose of the study is to value
the customer-generators'exports to the system.uae EE and DR do not produce or export
energy to the system. There is no evidence that the Crossborder Review focused on
exports only in their assessment; its focus on the total DER production shape - not the
shape of net usage or exports - invalidates the evaluation. For these reasons, the
approach used in the VODER Study better aligns with the Commission-approved Study
Framework in Case No. IPC-E-21-21and the Commission should reject the Crossborder
Review.
4) Avoided Line Losses
The Crossborder Review states: 'ln the absence of an up-to-date study of marginal
line losses, it is reasonable to double !PC's system average resistive line losses from
2012,to 1'1.60/o, to capture the higher marginal losses avoided by new DER resources."S0
4s IPC-E-21-21, Order No. 35284 at 13.
s Crossborder Review at 8.
IDAHO PO\A'ER COMPANY'S REPLY COMMENTS - 20
This suggestion shows a clear lack of understanding of basic distribution and
transmission planning. Perhaps most concerning, the Crossborder Review erroneously
and arbitrarily inflated the line losses by 100 percent. ldaho Power's service area has
experienced significant load increases in the past ten years. However, the Crossborder
Review, and the 2011 white paper it based its recommendation on, ignore that to serve
new customers, the utility upgrades and builds new distribution and transmission facilities
to accommodate that load growth. As a result, the current flow in individual conductors
(which causes line losses) is relatively consistent over time. Therefore, suggesting an
increase to line losses of 100 percent is irrational.
To illustrate the irrationa! logic of doubling losses, Table 1 shows the Company's
total system losses over time, as reported annually on page 401a on the Company's
FERC Form 1.
Table 1
ldaho Power Total m Losses 11-2021
Year
Total Losses
(MWh)
Total Energy
ruwh)Total Loss %
2021 1,076,855 17,821,743 6.042o/o
2020 1,059,618 17,775,017 5.961%
2019 1,146,923 18,534,459 6.188%
2018 1,267,436 1 8 71 7 595 6.771o/o
2017 1,256,411 17,963,014 6.994o/o
2016 1,181,741 16,563,370 7.135o/o
2015 1,051,718 16,570,347 6.347o/o
2014 1,144,985 17,457,771 6.559%
2013 1,157,469 17,460,117 6.6290/o
2012 1,253,953 17,522,531 7.1560/o
20 11 1,226,910 18,596,264 6.598%
IDAHO PO\A'ER COMPANY'S REPLY COMMENTS - 21
As shown in the column titled "Total Loss o/o" in Table 1 , the Company's system-
wide losses remain relatively consistent year-to-year and, if anything, appear to be on a
downward trend. Line losses have not doubled.
ln the white paper referenced in the Crossborder Review, the average Iosses
increase as the total system load increases. As shown in Table 1, ldaho Power's average
line losses have not increased between 2011 and 2021 - contradicting the assumptions
leveraged in the Crossborder Review. The Crossborder Review again includes allenergy
generated instead of only using net exports to the grid as directed by the Commission in
the Study Framework. The exports to the grid are lower during the system peak when
customers consume most of the energy generated by the system. While the Crossborder
Review erroneously leverages FERC Form 1 data in its T&D Deferra! evaluation, it
disregards this data for its assessment of the avoided line loss value - which reasonably
represents actual conditions on ldaho Power's system. The Crossborder Review's line
loss assumptions are not based on ldaho Powe/s system data and should be rejected
by the Commission.
5) lntegration Costs
ln2O2O, the Company completed a Variable Energy Resource ("VER') lntegration
Study in parallelwith the conclusion of the 2019 IRP. The VODER Study determined that
Case 1 from the VER lntegration Study was the most representative of the Company's
current system.sl Case 1 includes the addition of about 250 megawatts ('MW') of solar
over today's current penetration and determines an integration cost associated with the
51 VODER Study at 63-67, Appendix 4.15
IDAHO POWER COMPANY'S REPLY COMMENTS - 22
incremental solar of $2.93 per MWh.52 The Crossborder Review states: "The scenario
whose resource mix most closely resembles the subsequent2O2l IRP's preferred plan is
Case 9 - the High Solar with 200 MW Storage case. This scenario shows much lower
integration costs of $0.64 per [megawatt-hour ("MWh"11."ss
The Crossborder Review includes a critical error in the logic related to the
appropriate VER lntegration Study case to use for an ECR. Case 9 was a sensitivity case
to determine the incremental integration cost tor 794 MW of solar coupled with 200 MW
of four-hour storage above Case 1.
The integration costs for Case 1 and Case 9 from the VER lntegration Study cannot
be directly compared. The integration cost of $2.93 per MVUh from Case 1 was the
calculated incremental cost for adding 251 MW of additional solar beyond the 310 MW of
solar on Idaho Power's system in2020.u The integration cost of $0.64 per MWh for Case
9 is the calculated incremental integration cost to integrate 7941200 MW of coupled
solar/battery beyond the 251 MW of utility solar added in Case 1.55 The Case 9 value as
applied in the Crossborder Review incorrectly applies the VER Integration Study costs
and should be rejected by the Commission.
The VER lntegration Study Case 1 best represents the Company's current system.
As required by the Commission, the VODER Study utilized the most recent information
available with the expectation that the Company would update the various components
52 ld.
53 Crossborder Review at 8.
54 VODER Study Appendix 4.15 at 29-31 and 44 (E3 report pages 19-21 and 34)
5s d.
IDAHO POWER COMPANY'S REPLY COMMENTS - 23
of the ECR periodically. The Company does expect to add 131 MW of storage in 2023.
This incremental storage and other incrementa! resources will be factored into the next
VER lntegration Study, and the Company would update the lntegration Cost component
of the ECR at that time as ordered by the Commission
6) Fue! Hedging
The Crossborder Review reaches several incorrect conclusions about fuel
hedging, suggesting a $11.70 per M\A/h benefit associated with fue! hedging.s6 The
analysis and conclusions reached by the Crossborder Review demonstrate a lack of
understanding of ldaho Power's hedging practices, are misguided, flawed, and should be
rejected by the Commission.
The severe flaw in considering a fuel hedge benefit for customer exports is that
there is minimal grid reliability risk regarding resource adequacy when solar energy is
generated during the day due to the increasing penetration of solar generation across the
West. There is minimal price risk if there is no resource adequacy risk. lf there is liftle
price risk, there is no reason forthe Companyto hedge to protect against run-away pricing
- a primary purpose of the Company's risk management policies.
ldaho Power's Enerov Risk Manaqement Standards and Variable Enerqv Resources
The ldaho Power Energy Risk Management Standards ("ERMS') adopted
pursuant to the ldaho Power Energy Risk Management Policy is on file with the
Commission.5T Per ldaho Power's ERMS, hedges are transacted based on average
s Crossborder Review at 11.
57 ln the Matter of ldaho Power Company's lnteim and Prospective Hedging, Resource Planning,
Transaction Picing, and IDACORP Energy So/utions (IES) Agreemenf, Case No. IPC-E-01-16.
IDAHO POVVER COMPANY'S REPLY COMMENTS - 24
heavy load ("HL") and light load ("LL") positions. Natural gas hedges are applied to fix a
deficit or long position on an average MW basis. Physical index-priced gas is
subsequently purchased to fulfill the financial hedge. The physical natural gas can be
shaped to meet a net-load profile, where less gas is consumed during low net-demand
hours and generation is ramped up in high net-demand hours. The financial hedges
provide price certainty for all hours, including net-peak hours, and reduce exposure to the
volatile spot market price.
The shape of the variable energy resources from customer-generators does not fit
the required hedge profile per ldaho Power's ERMS for 16 hours of peak power. The spot
price of power or gas over net-peak hours can be expensive and difficult to procure, given
liquidity and transmission constraints in the short-term markets. Suppose naturalgas term
hedges are reduced based on forecasted customer generation. ln that case, ldaho Power
would have greater exposure to serving net-peak load where shortfall energy must be
purchased in the volatile and more expensive spot markets - resulting in increased power
supply costs for all customers. Due to the increased exposure to the spot market during
the net-peak hours when customer generation is low, exported energy from customer-
generators is not a hedge or a substitute for a bona fide natural gas hedge. As a result,
customer-generator exports on ldaho Power's system often occur in the midday hours
when it is generally less valuable, rather than the highest net-peak hours, when it would
be most needed - resulting in no reduction in pricing risk during the morning and evening
net-peak load.
IDAHO POWER COMPANY'S REPLY COMMENTS - 25
A Market-Based Avoided Cost Methodoloov & lncreased Exposure to Market Volatilitv
The Crossborder Review concludes that a "[uel hedging] benefit will be reduced
to the extent that the ECR is linked directly to electric market prices that are driven by
natural gas prices."S8 ln response to ldaho Power's Request for Production No. 22
included as Attachment 2 to these Reply Comments, lCL stated the following regarding
fuel hedging value for an ECR
...for each of the electricity market-based export credit rates
listed above flCE Mid-C lndex Price and ELAP Pricel, which
4 dependent on natural gas market prices, there is little or
no fuel hedge value...it is the behind the meter solar
generating serving the customer's load that provides a
hedge against the gas-cost sensitive utility supply costs that
otherwise would have to be incurred by lPC. To be
conservative, and to recognize that IPC proposed export
credit rates willfluctuate with naturalgas prices, we removed
exports from the fuel hedge value. (emphasis added)
It appears that the position of ICL in the above response, consistent with the Crossborder
Review, believes that there should be no fuel hedge value associated with exports
Also, the Commission should reject the suggestion to include a fuel hedge value
as part of the ECR because the Commission previously stated the following regarding
energy offset behind the meter:
Capacity and energy offtet by customer generation behind
the meter is not measured. This does not mean that the value
is not realized by the on-site generator. Net-metering
customers get 1:1 kWh benefit for a!! energy produced and
used behind the meter. Therefore, it would be double
counting to base the capacity value on anything more than
the energy that is exported.ss
s Crossborder Review at 11.
se Case No. IPC-E-21-21, Order No. 35284 at 18 (emphasis added)
IDAHO POWER COMPANY'S REPLY COMMENTS - 26
Therefore, contrary to the Crossborder Review, the ECR should not include the value for
energy that is generated and consumed behind the meter.
!f exporting customers are to be paid actual market prices, the Company's general
body of customers would pay those actual market prices to compensate exporting
customers for the exported energy. A hedge eliminates direct exposure to market prices;
therefore, for the Crossborder Review to suggest that non-exporting customers pay
exporting customers both (1) actual market prices and (2) a fuel hedge benefit amount
would effectively double-count or over-compensate customer-generators to the detriment
of non-exporting customers. The Crossborder Review is inherently flawed by attributing
value to the energy consumed by the customer-generator behind the meter and should
be rejected by the Commission.
7) Avoided Costs of Carbon Emission
\Mile the Crossborder Review acknowledges the Commission's directive to
evaluate all "benefits and costs that are quantifiable, measurable, and avoided costs that
affect rates,"oo the Crossborder Review takes that directive one step further. The
Crossborder Review concludes that avoided carbon emission costs are costs "that will
affect IPC's rates,"61 and those costs should be included in the VODER Study. This is not
a simple distinction without a difference. ldaho Power believes the Commission language
was clear that only costs that currently affect rates - not those that may or may not affect
rates at some future point - should be reasonably considered.
m Id. at 27 (emphasis added).
61 Crossborder Review at 12 (emphasis added)
IDAHO PO\A'ER COMPANY'S REPLY COMMENTS .27
The Crossborder Review assumes that because ldaho Power utilizes a carbon
price adder in its lRP, it is appropriate to include a benefit in the ECR.62 This assumption
is misguided. The carbon price adders included in ldaho Powefs IRP have historically
been included to assess the risk of adding carbon-emitting generation to the system.
However, it is essential to note that these adders have not traditionally been included in
the first several years of the IRP planning horizon to reflect the implementation delay that
would occur between the passage of the hypotheticalfederal legislation and the effective
date of the rules once promulgated. For example, in the 2021 IRP, these price adders
were not present in the first two years of the plan, and for the 2023 !RP, carbon adders
were discussed with the IRPAC, and it aligned with the position that the new carbon adder
forecast will start in 2027 (the fifth year of the planning horizon). Finally, there are no
current indications that a state or federally imposed carbon adder are imminently
forthcoming. These carbon price adders are only appropriately included in an ECR if and
when they materialize as actual costs impacting ldaho Power customer rates.
8) Societa! Benefits
The Company agrees with the Crossborder Review on the following: "The Order
did not direct IPC to study [Societal Benefits of Distributed Solar Generation], and such
benefits may not be appropriate for inclusion in the ECR."63 Therefore, the Crossborder
Review's aftempt to include those benefits should be rejected by the Commission. lf the
social cost of carbon were measurable, as the Crossborder Review claims, then sources
shouldn't generate different results as identified in its review.
62 ld. at 56 and 12.
63 /d at 13.
IDAHO PO\A'ER COMPANY'S REPLY COMMENTS - 28
Measurability issues aside, the critique commits the logical fallacy that the Company
should pay more for these benefits. lf all these benefits can be obtained from a solar
power purchase agreement or a utility self-build solar facility, then paying more for the
same benefits would not be in the best interest of ldaho Power's customers.
III. THE COMMISSION SHOULD REJECT THE CROSSBORDER REVIEW
ldaho Power understands and appreciates the deep convictions held by many on
the issue of customer on-site generation and appreciates the robust participation by
stakeholders in these regulatory proceedings. The Company welcomes the constructive
feedback and input it has received to date with respect to the VODER Study that will help
to refine and clariff issues moving forward. !t is concerned, however, with the
perpetuation of misinformation that has followed its release of the VODER Study and the
subsequent Crossborder Review. Criticalthinking on these issues is crucialto achieve an
outcome that is fair to all customers, including those with on-site generation.
As set forth above, the recommendations and conclusions in the Crossborder
Review are unavailing insofar as they are unsupported and/or based on mistaken
premises and their reliability is further undermined when one considers the genesis of the
report, which was funded in part by solar interests, many of whom may benefit financially
if the Company and its customers continue to overpay for on-site generation.
Despite the title of Attachment A to ICL's lnitial Comment, the consultant hired to
author the review cannot reasonably be said to be "independent." Mr. Beach has been
involved in at least three proceedings before this Commission over the Iast decade
offering direct and rebuttal testimony on behalf of two environmental advocacy entities:
the ldaho Conservation League and the ldaho chapter of the Sierra Club. In response to
IDAHO POWER COMPANY'S REPLY COMMENTS - 29
the comprehensive study of the costs and benefits of on-site generation filed by the
Company in this docket (the VODER Study), which spanned over 100 pages and included
over 30 appendices, ICL again retained Dr. Beach to represent its interests and critique
the Company's work. The result was the 21-page Crossborder Review, which
recommends a significant increase to each component of the ECR consistent with his
prior advocacy.
Notably, the cursory critique authored by Crossborder Energy fails to satisff the
minimum criteria established by the Commission for purposes of ensuring credibility and
fairness in studying the costs and benefits of distributed on-site generation. The
Commission mandated several criteriail for the Company's VODER Study, including the
following, which presumably would also apply to others conducting similar evaluations:
. The data must use the most current data possible, and the data must be
readily available to the public, and in the Commission's decision-making
record.o The study must be written so it is understandable to an average customer,
but its analysis must be able to withstand expert scrutiny.
The data relied on in the Crossborder Review is not readily available to the public,
hindering the ability to veriff and vet facts and sour@s. \Mile the VODER Study filed by
the Company was accompanied by all workpapers and analysis relied upon in its
development, ICL did not file any workpapers with the Crossborder Review. ICL did not
make the information publicly available, nor did it enter those workpapers into the
Commission's decision-making record.
uln the Matter of the Petition of ldaho Power Company to Study the Cosfg Benefits, and Compensation
of Net Excess Energy Supplied by Customer On-Sife Generation, Case No. IPC-E-18-15, Order No.
34509 at 9 (Dec. 20,2019).
IDAHO POVVER COMPANY'S REPLY COMMENTS - 30
The lack of transparency in the Crossbody Review is concerning in its own right
but it is important to note it also undermines the Commission's requirement that the
analysis be able to withstand expert scrutiny. As more fully explained above, upon
examining the Crossborder Review, a NERA representative provided a sworn affidavit
concluding the methodology relied upon by the Crossborder Review (referenced therein
as "the NERA method") was inappropriately relied upon for the purpose of quantiffing an
avoided T&D value.
ln addition, the Crossborder Review does not reflect the nuances of ldaho's
regulatory scheme or the particulars of the Company and is not tailored to address ldaho
Power specific issues. As a result, the proposed recommendations cannot be said to be
determinative of what is most reasonable for ldaho Power's customers and are of limited
utility in informing implementation decisions.
IV. CONCLUSION
ldaho Power is legally obligated to provide safe, reliable, and fair-priced service to
its customers.os As a regulated utility, ldaho Power routinely conducts complex studies to
inform Commission decisions in ratemaking mafters such as this. lt has a vested interest
in ensuring the information it puts forth is fair and credible to support its ability to reliably
meet its electric service obligation to the public with retail rates that are equitable among
similarly situated classes and commensurate with the services being provided.
The Crossborder Review is misleading, inherently flawed, directly conflict with prior
Commission decisions, and should therefore be rejected by the Commission. Idaho
s Under ldaho's regulatory mandate and model, the Company has an obligation to provide adequate,
efficient, just, and reasonable service on a nondiscriminatory basis to allthose that request it within its
certificated service area. ldaho Code SS 61-302, 61-315, 61-507.
IDAHO POWER COMPANY'S REPLY COMMENTS - 31
Power recommends Commission-approval of the VODER Study, contingent on revisions
and modifications as will be outlined in the Company's Final Comments on October 26,
2022. The Company anticipates it will continue to receive valuable insight moving fonrard
that may identiff further areas to hone and that can be incorporated into the revised
VODER Study to be filed by the Company with its final comments on October 26,2022.
The revised VODER Study will not include any substantive modifications but will aim to
clarifo and refine the information therein based on the guidance received throughout the
review process in order to provide a solid foundation on which the Parties can make
recommendations for potential modifications to its on-site generation offerings for the
Commission's consideration in the next phase of this proceeding.
DATED at Boise, ldaho, this 12th day of October 2022.
fr; !.ff,"r.t.^,
LISA D. NORDSTROM
Attorney for ldaho Power Company
IDAHO PO\A'ER COMPANY'S REPLY COMMENTS - 32
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on the 12th day of October 2022,1 served a true and
correct copy of ldaho Power Company's Reply Comments upon the following named
parties by the method indicated below, and addressed to the following:
Commission Staff
Riley Newton
Chris Burdin
Deputy Attorney General
ldaho Public Utilities Commission
11331 W. Chinden Blvd., Bldg No.8
Suite 201-A (83714)
PO Box 83720
Boise, lD 83720-0074
_Hand Delivered
_U.S. Mai!
_Overnight Mai!
_FAX_FTP SiteX Email [e-mail]
Ch ris.bu rdin@puc. idaho.qov
ldaHydro
C. Tom Arkoosh
Amber Dresslar
ARKOOSH LAW OFFICES
913 W. River Street, Suite 450
P.O. Box 2900
Boise, ldaho 83701
_Hand Delivered
_U.S. Mail
_Overnight Mail
_FAX_FTP SiteX Email [e-mail]
[e-mail]
[e-mail]
ldaho Gonseryation League
Marie Kellner
ldaho Conservation League
710 North 6th Street
Boise, ldaho 83702
_Hand Delivered
_U.S. Mail
Overnight Mail
_FAX_FTP SiteX Email [e-mail]
Idaho lrrigation Pumpers Association, lnc.
Eric L. OIsen
ECHO HAWK & OLSEN, PLLC
505 Pershing Avenue, Suite 100
P.O. Box 6119
Pocatello, ldaho 83205
_Hand Delivered
_U.S. Mail
_Overnight Mail
_FAX_FTP SiteX Email [e-mail]
Lance Kaufman, Ph.D
4801 W. Yale Ave.
Denver, CO 80219
_Hand Delivered
_U.S. Mail
Overnight Mail
_FAX_FTP SiteX Email [e-mail]
IDAHO POWER COMPANY'S REPLY COMMENTS - 33
City of Boise
Mary Grant
Deputy City Attorney
Boise City Attorney's Office
150 North Capitol Boulevard
P.O. Box 500
Boise, ldaho 83701-0500
_Hand Delivered
_U.S. Mail
Overnight Mail
_FAX_FTP SiteX Email [e-mail]
bo isecitvatto rnev@citvofboise. o ro
Wi! Gehl
Energy Program Manager
Boise City Dept. of Public Works
150 N. Capitol Blvd.
PO Box 500
Boise, ldaho 83701-0500
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-[ Email [e-mail]
lndustria! Customers of ldaho Power
Peter J. Richardson
RICHARDSON ADAMS, PLLC
515 North 27th Street (83702)
P.O. Box 7218
Boise, ldaho 83707
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_U.S. Mail
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_FAX_ FTP SiteX Email [e-mail]
Dr. Don Reading
6070 Hill Road
Boise, ldaho 83703
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_U.S. Mail
_Overnight Mail
_FAX_ FTP SiteX Emai! [e-mail]
Micron Technology, lnc.
Austin Rueschhoff
Thorvald A. Nelson
Austin W. Jensen
Holland & Hart, LLP
555 Seventeenth Street, Suite 3200
Denver, Colorado 80202
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U.S. Mail
Overnight Mail
_ FAX
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tnelson@ holland ha rt.com
awiensen@holland hart.com
Jim Swier
Micron Technology, lnc.
8000 South FederalWay
Boise, Idaho 83707
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Overnight Mail
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_,L Email [e-mail]
aclee@holland ha rt. com
IDAHO POWER COMPANY'S REPLY COMMENTS - 34
Clean Energy Opportunities for ldaho
Kelsey Jae
Law for Conscious Leadership
920 N. Clover Dr.
Boise, ldaho 83703
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U.S. Mail
Overnight Mail
_ FAX
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Michael Heckler
Courtney White
Clean Energy Opportunities for ldaho
3778 Plantation River Dr., Suite 102
Boise, lD 83703
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_FAX_FTP SiteX Emai!
courtnev@c leanenerovoooortu n ities. com
miketOclea nnortrrnities com
Richard E. Kluckhohn, pro se
Wesley A. Kluckhohn, pro se
2564W. Parkstone Dr.
Meridian, lD 83646
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[e-mail]
Idaho Solar Owners Network
Joshua Hill
1625 S. Latah
Boise, lD 83705
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[e-mail]
ABC Power Gompany, LLC
Ryan Bushland
184 W. Chrisfield Dr.
Meridian, lD 83646
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[e-mail]
\t"""&rst.
Stacy Gust, Regulatory Administrative
Assistant
IDAHO POWER COMPANY'S REPLY COMMENTS - 35
BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
GASE NO. IPC-E-22-22
IDAHO POWER COMPANY
ATTACHMENT 1
IN TIIE MATTER OF IDAIIO POWER COMPAI\TY'S APPLICATION TO COMPLETE
THE STUDY REVIEW PHASE OF THE COMPREHENSIVE STUDY OF COSTS AI\iD
BENEFITS OF ON.SITE GENiERATION & FOR AUTHORITY TO IMPLEMENT
CHANGES TO SCTIEDITLES 6,8, AND 24
Case No.IPC-E-22-22
BEFORE:
THE IDAHO PUBLIC UTILITIES COMMISSION
AIT'IDAVIT OF KURT G. STRTII\K
ON BEHALF OF
IDAHO POWER COMPAI\TY
October 12,2022
Affdavit of Kurt G. Strunk -
Page 1
I.
il.
UI
ry
TABLE OF CONTENTS
INTRODUCTION AND QUALIFICATIONS
PURPOSE OF AFFIDAVIT...........
SUMMARY OF CONCLUSIONS
IDAHO POWER'S TREATMENT OF AVOIDED TRANSMISSION AND
DTSTRIBUTION IN THE VODER STI.JDY TS REASONABLE AND
CONSISTENT WITH ESTABLTSHED TECHMQUES IN MARGINAL
COSTING
V. CROSSBORDER'S CHARACTERIZATION OF THE NERA REGRESSTON
METHOD IS MISLEADTNG ...........
VI CROSSBORDER'S TMPLEMENTATION OF THE REGRESSION METHOD
CONTAINS MULTIPLE FLAWS AND LEADS TO OVERSTATEMENT OF
AVOIDED TRANSMISSION AND DISTRIBUTION COSTS
ATTRIBUTABLE TO DISTRIBUTED ENERGY RESOURCES
A. Crossborder is using a long-run costing approach, not one that necessarily
captures the current state of the grid ........ l0
B. Crossborder overstates avoided transmission and distribution costs by
including replacement proj ects
C. Crossborder overstates avoided distribution costs by including customer-
specific costs.......... .........12
D. Crossborder inappropriately relies on system loads when estimating
avoided distribution investment. ......l2
E. Crossborder offers no intuitive explanation of its regression results ....... 12
Affidavit of Kurt G. Strunk -
Page2
2
J
4
6
8
9
Kurt G. Strunk, being duly swom, deposes and says:
L INTRODUCTION AIID OUALIFICATIONS
l. I have personal knowledge of the facts herein and if calledtotestiff could andwould
testiff competently hereto.
2. My name is Kurt G. Strunk. I am a Managing Director at National Economic Research
Associates ('NERA"). My business address is I166 Avenue of the Americas, New York,
NY, 10036.
3. I have nearly thirty years of experience consulting with energy sector clients, governments,
and regulators on energy-sector matters. In my work, I routinely support public utilities on
costing and pricing, including the performance and review of marginal cost studies, the use
of marginal cost studies for ratemaking and for pricing services provided by behind+he-
meter generators.
4. I currently lead NERA's Marginal Cost Working Group, founded in 1982, which offers
utilities a forum to analyze critical costing issues and ratemaking. While the group's
original objective was to advance marginal cost estimation techniques and pricing
applications, the focus of the meetings has expanded over time to include planning for
renewable resources, strategies for smart metering infrastructure, alternative regulatory
methods for distribution, transmission cost allocation, and design of pilots for innovative rate
design and implementation - such as critical peak pricing and peak time rebates.
5. My work for electric utilities has included the estimation of avoided costs attributable to
distributed energy resources. For example, as part of New York's Reforming the Energy
Vision ("REV") program, I implemented a marginal-cost based approach to determining
appropriate compensation to distributed energy resource owners for avoided (or deferred)
transmission and distribution investment. Exhibit A contains a more detailed statement of
my qualifications.
Affidavit of Kurt G. Strunk -
Page 3
U. PURPOSE OF AFFIDAVIT
6. Idaho Power Company ("ldaho Power" or the "Company") asked that I review a portion of a
study carried out by Crossborder Energy ("Crossborder"), which purports to rely on the
'NERA regression method" to estimate avoided transmission and distribution costs
attributable to distributed energy resources. The Idaho Conservation League included
Crossborder's analysis as part of its comments filed in this docket on September 21,2022.
Crossborder is critical of Idaho Power's approach to calculating avoided transmission and
distribution costs in its Value of Distributed Energy Resources Study ("VODER Study") and
calculates avoided costs that are significantly higher than those in the Idaho Power VODER
Study.
7. The purpose of this affidavit is to address Crossborder's regression approach that it attributes
to NERA. In addition to addressing the Crossborder analysis, I offer general comments on
the approach taken by Idaho Power. My affidavit is structured as follows:
. In Section III, I summarize my conclusions.
In Section IV, I describe the approach taken by Idaho Power to identi$ any avoidable or
deferrable transmission and distribution investment associated with the addition of
distributed energy resources in the Company's service territory. I describe how the
approach taken by Idaho Power is consistent with NERA's established marginal cost
estimation techniques.
In Sections V and VI, I offer my opinions on the analysis performed by Crossborder
purporting to rely on NERA methods. I describe how the approach taken by Crossborder
is inconsistent with NERA's established marginal cost estimation techniques and
overstates avoided transmission and distribution costs associated with exports from
distributed energy resources.
Affidavit of Kurt G. Strunk -
Page 4
III. SUMMARY OF CONCLUSIONS
8. My conclusions are as follows:
The regression method employed by Crossborder is one of several methods suggested
by NERA in the "Grey Books" prepared in the 1970s as part of a nationwide effort by
the Electric Power Research Institute, the Edison Electric Institute, the American
Public Power Association, and the National Rural Electric Cooperative Association,
for the National Association of Regulated Utility Commissioners.l
The regression method was developed nearly fifty years ago in connection with
ratemaking based on long-run marginal costs, when the topic of marginal cost pricing
for electric utilities was fairly new. The regression method was not designed for
measuring the specific avoided costs of specific load reductions and does not fit all
situations well. It was suggested as a tool for estimating the long-run marginal cost of
distribution investment but was not suggested for use in long-run marginal costing of
transmission investment.2
I
The regression method is not a technique that has been used in the last three decades
by me, the current director ofNERA's Marginal Cost Working Group, or by any
NERA experts in the United States, including. Dr. Hethie Parmesano, former director
of NERA's Marginal Cost Working Group. During this period, NERA's experts
have not relied on the regression method in marginal cost analyses presented to state
regulatory commissions in the United States as part of general rate cases or in
connection with pricing for behind+he-meter generation.
Idaho Power has developed and presented a method of quantifying the specific impact
of solar installations on planned investment and relating those impacts to specific
quantities of exported energy. It is reasonable for Idaho Power to use an analysis that
I See, for example, Electric Utility Rale Design Study,"How to Quanti$ Marginal Costs: Topic 4," National
Economic Research Associates, Inc. March 10, 1977.
2 " .. . the lumpy nature of transmission investment . . . seems not to lend itself to a time series regression analysis."
ld,p.66.
Affidavit of Kurt G. Strunk -
Page 5
r
models explicit savings to price a specific program; this approach is more targeted
than a generalized measure of incremental cost captured in the Crossborder regression
analysis. Furthermore, as I detail below, the Crossborder regression analysis contains
significant flaws.
Crossborder relies on a simple regression of load versus investment to attribute
transmission and distribution investments to load growth. Replacement projects
should not be incorporated in marginal costing as replacements are not avoidable due
to exports from behind-the-meter generation. An old transmission or distribution line
that needs to be replaced will need to be replaced irrespective of how much additional
export energy is injected into the grid. Crossborder overstates avoided costs by
including all transmission and distribution investments reported in the Form I filed
with the Federal Energy Regulatory Commission ("FERC") and by relying on a very
simple time-series regression to attribute only load-growth related investment as a
marginal cost. Given that replacement investments and load both grow over time
and will be correlated with each other, this is an unreliable method of removing
replacement-related costs from marginal cost estimation.
The planned investment projects that ldaho Power identified as deferrable are projects
specifically tied to load growth or reliability projects with a growth element inherent
in them. Idaho Power's analysis appropriately excludes replacement projects,
consistent with NERA's preferred approach to marginal costing for transmission and
distribution.
It is unreasonable for Crossborder to apply the regression analysis in the manner it
was applied to distribution. A large amount of FERC Form I distribution plant is
associated with customer-related costs. While NERA developed a variety of options
for measuring demand-related distribution marginal costs, all excluded customer-
related costs. Crossborder's distribution cost analysis cannot be used as it does not
exclude customer-related costs from the regression. Additionally, Crossborder does
not control for growth in the number of customers when applying the regression
method.
Aftidavit of Kurt G. Strunk -
Page 6
In its analysis of avoided distribution cost, Crossborder inappropriately relies upon
system loads as inputs to its regressions. Such an approach does not properly capture
the causal relationship between load and investment. NERA typically examines the
distribution substation loads (not system loads) when analyzing marginal distribution
investment. We do so because it is load on the distribution substation that triggers the
need for new investment in the distribution system.
9. In sum, although Crossborder Energy relies on one of the approaches documented by NERA
in the 1970s for estimating distribution marginal costs, the implication that the regression is
NERA's preferred marginal cost technique is incorrect. I find that Crossborder Energy's
estimates of Idaho Power's avoided transmission and distribution investment attributable to
behind-the-meter solar exports are not accurate, are overstated, and are based on an
inappropriate implementation of marginal costing techniques.
ry.IDAHO POWER'S TREATMENT OF AVOIDED TRANSNflSSION AND
DISTRIBUTION IN TIIE VODER STUDY IS REASONABLE AI\D
CONSISTENT WITII ESTABLISHED TECHNIOUES IN MARGINAL COSTING
10. I have reviewed Idaho Power's approach to estimating avoided transmission and distribution
capacity costs as part of the VODER study.3 My review indicates that:
Idaho Power analyzes historical and planned transmission and distribution capacity
projects from 2007-2026,which includes l5 years of historical data and 5 years of
forecast data.
Idaho Power appropriately focuses on transmission projects that are undertaken to meet
load growth or reliability projects with an inherent growth element.
Idaho Power's approach relies on identifying transmission and distribution capacity
project deferral based on revised peak loads that are determined based on coincident
hours from variable energy resources' expected output at peak times.
3 Idaho Power Company,2022 Value of Distributed Energy Resources Study, p. 53. (*VODER Study")
Affidavit of Kurt G. Strunk -
Page 7
a
I
. The deferral value is calculated based on the deferred project cost and the number of
years of deferral.a
I l. NERA considers Idaho Power's approach to be valid, reasonable, and consistent with
established NERA marginal costing practices as it evaluates incremental transmission and
distribution capacity projects against coincident hours variable energy resource exports to
defer planned transmission and distribution capacity projects. NERA observes that Idaho
Power has developed and presented an analysis of the specific impact of distributed energy
resources on planned investment and relates those impacts to specific quantities of exported
energy.
12. Idaho Power's approach, which uses a specific analysis to price a specific program, is the
most targeted analysis possible and is most consistent with the established goal that pricing
should reflect cost causation. Crossborder Energy's suggested use of a generalized measure
of long-run marginal cost is not needed, particularly in light of the substantial problems in
the implementation of the study.
13. NERA understands Idaho Power's approach relies significantly on the utility's engineering
team that has examined transmission and distribution projects in the capital plan to determine
which projects are associated with load growth and also includes reliability projects with a
growth element to them. Idaho Power has appropriately excluded replacement projects. Such
an approach is consistent with NERA's preferred approach to marginal costing.
14. Crossborder complains that Idaho Power evaluates its avoided transmission and distribution
investments using the level of penetration of distributed resources that currently exists on the
system. Crossborder seems to suggest that Idaho Power should assume a much higher level
of penetration and a confluence of potential distributed energy resource types that work
together to reduce demand. This is speculation and would result in an Export Credit Rate
that does not reflect the current realities of the grid. As is customary, Idaho Power will be in
a Id.,pp.55-56.
Affidavit of Kurt G. Strunk -
Page 8
a position to update its analysis if and when it observes materially higher levels of distributed
resource penetration in its service territory.
15. Crossborder complains that Idaho Power assumes distributed energy resources are spread
evenly across its system. It was reasonable for ldaho Power to allow distributed energy
resources to have an equal potential impact on the grid even in locations that may to date
have had no exposure to distributed energy resources.
v CROSSBORDER'S CHARACTERIZATION OF TIIE NERA REGRESSION
METHOD IS MISLEADING
16. A reader of the Crossborder report might reasonably infer that the regression method
Crossborder uses is NERA's current preferred method and is in widespread use by NERA
experts. This is not the case. The regression method is not a technique that has been used in
in the last three decades by me, the current director of NERA's Marginal Cost Working
Group, or by any NERA experts working on regulatory matters in the United States,
including Dr. Hethie Parmesano, former director of NERA's Marginal Cost Working
Group.
17. The regression method is one of several methods suggested by NERA in the "Grey Books"
prepared in the 1970s.5 It is a method developed for estimating marginal demand-related
distribution investment nearly fifty years ago in connection with ratemaking based on long-
run margital costs, when the topic of marginal cost pricing for electric utilities was fairly
new
18. The regression method was not designed for measuring the specific avoided costs of specific
load reductions and does not fit all situations well. It is preferable in the context of a
VODER Study to measure the specific avoided costs and price the program based on those
costs.
s See, for example, Electric Utility Rate Design Study,"How lo Quantifr Marginal Costs: Topic 4," National
Economic Research Associates, Inc. March 10,1977.
Affidavit of Kurt G. Strunk -
Page 9
19. NERA does have a preferred approach to marginal costing of transmission and distribution,
and I have applied that approach in a number of states. The Idaho Power approach, focusing
on specific projects that are either growth-driven projects or reliability-driven projects with a
growth component aligns with NERA's preferred method.
20. Crossborder's approach is not NERA's preferred method.
vI.CROSSBORDER'S IMPLEMENTATION OF THE REGRESSION METHOD
CONTAINS MULTIPLE FLAWS AI\ID LEADS TO OVERSTATEMENT OF
AVOIDED TRANSI\{ISSION AND DISTRIBUTION COSTS ATTRIBUTABLE
TO DISTRIBUTED EIYERGY RESOURCES
21. Intervenor Idaho Conservation League retained Crossborder Energy ("Crossborder") to carry
out an independent critique of Idaho Power's VODER Study.6 tdaho Conservation League
includes the written Crossborder review in its Initial Comments filed on September 21,2022.
22. Crossborder finds that Idaho Power "...reports very low avoided costs for transmission and
distribution capacity deferrals on IPC's grid.- Crossborder's concerns regarding Idaho
Power's approach relate to their use of what Crossborder terms a "'bottom up' method,"
what it claims is Idaho Power's assumption of no growth in solar exports in future years and
deferrals only taking place in the near future.7
23. As an alternative approach, Crossborder uses what it terms a "'top down approach that U.S.
utilities have long used to calculate marginal T&D capacity costs for ratemaking."
Crossborder refers to this alternative approach as a NERA regression method, which uses
long-term data to calculate marginal transmission and distribution capacity costs by
regressing incremental transmission and distribution investment costs on peak load.8
Crossborder justifies its approach by noting that transmission and distribution infrastructure
must expand to serve peak demands as load grows in addition to potential infrastructure
6 Independent Review of the Idaho Power Company's Value of Distributed Energt Resources Study. Crossborder
Energy, September 21, 2022. ("Crossbonder Report")
7 1d.,p.4.
8 ld.,p.5.
Affidavit of Kurt G. Strunk -
Page 10
upgrades related to reliability concerns.e Using data from 1996 to 2025, Crossborder fits a
simple linear regression model with cumulative transmission additions as the dependent
variable and system peak load as the independent variable.lo
A.Crossborder is using a long-run costing approach, not one that necessarily
captures the current state of the grid
24. As noted, the approach used by Crossborder is a technique that was suggested in connection
with long-run marginal cost ratemaking. In the Grey Books, NERA made clear that the
objective of the analysis was focused on the long run: "it is important in designing rates for
an individual utility to use its long-run marginal cost of supplying electricity as a cost
standard."ll (emphasis added.) In my work at NERA since the early 1990s, we have focused
on short-run costs in order to recognize situations where the system is not in equilibrium
conditions. In these situations, short-run marginal cost estimation leads to the most efficient
price signal to consumers of electricity. In practice, however, the most common use of
marginal cost studies is to influence rate design. Marginal cost studies do not affect revenue
requirements and do not interfere with a utility's opportunity to recover prudently-incurred
costs under Hope and Bluefield and the protections that are provided to consumers of
electricity through the implementation ofjust and reasonable rates.12
25. Importantly, even if long-run were the right approach in the instant matter, the
implementation of the model by Crossborder does not lead to reasonable estimates of long-
run marginal transmission and distribution costs. Furthernore, the Crossborder analysis does
not yield estimates that represent costs that can currently be avoided as a result of exports
from behind-the-meter distributed energy resources.
e lbid.
to Id.,pp.5-6. Note that on p. 5, Crossborder states that it uses data on o'...peak load growth" but in Figure 2 on p.
6, the x-axis is labelled with "Peak Load (MW)". In addition, the workpaper provided by Crossborder uses peak
load, as measured in MW, not peak load growth, as measured year-on-year in percentage terms, as stated in the
text ofthe Crossborder Report.
rr NERA Grey Books, Topic 1.3, p 100.
t2 Federql Power Commission et al v. Hope Natural Gas Co., 320 U.S. 591 (1944) and Bluefield Water Works &
Improvement Co. v. Public Service Comm'n, 262 U.S. 679 (1923).
Affdavit of Kurt G. Strunk -
Page 1 1
B.Crossborder overstates avoided transmission and distribution costs by
including replacement projects
26. Crossborder uses all transmission and distribution plant additions as reported by tdaho Power
to the FERC on its Form l. The Form I data incorporates all types of investment in plant
and is not limited to demand-related investment. Crossborder's estimated avoided costs
include the costs of replacing old equipment with new equipment, a process that cannot be
deferred or avoided as a result of more behind-the-meter solar generation.
27. Crossborder argues: "Even replacement projects are demand-related in that they are
necessary to keep the grid's capacity from declining."" Yet, this is not the correct
perspective for marginal costing. Marginal cost identifies investment needed to serve
incremental loads. Replacement projects cannot serve incremental loads. Particularly with
respect to additional exports from behind-the-meter solar facilities, no quantity of new
behind-the-meter solar can trigger an avoided cost for replacement projects.
28. NERA's Grey Book documents that it is inappropriate to include replacement projects
... expenditures not related to increased demand, such as expenditures for the
replacement of retirements or road widenings, must not be included when calculating
marginal demand-related distribution investment. la
29.\n relying on FERC Form I data, Crossborder is unable to delineate which transmission and
distribution investments are driven by load growth, by reliability, or by a need for
replacement. As noted, the NERA marginal cost method does not incorporate replacement
projects, and only incorporates reliability projects when they have a growth element. NERA
understands that ldaho Power's approach appropriately focuses on load-growth-related
projects and reliability projects with a growth element.
30. The fact that Crossborder includes replacement projects and relies on a simple regression to
identiff the relationship between investment and load leads to an overstatement in its
estimation of avoided transmission and distribution costs.
13 Crossborder Report, p. 5.
14 NERA Grey Books, Topic 4, p. 8.
Afftdavit of Kurt G. Strunk -
Page 12
Crossborder overstates avoided distribution costs by including customer-
specific costs
31. As noted, Crossborder uses the FERC Form I distribution plant balances over 25 years to
identiff avoided demand-related distribution investment. This is problematic because the
FERC Form I data on distribution plant include customer-related costs. Although NERA
developed a variety of options for measuring demand-related distribution marginal costs, all
exclude customer-related costs. Crossborder's distribution cost analysis cannot be used as it
does not exclude customer-related costs from the regression.
32. Additionally, Crossborder does not control for growth in the number of customers when
applying the regression method. Because a large amount of distribution cost is associated
with customer growth, it is important to understand how much of the Form I plant balances
are driven by customer growth. The Crossborder analysis ignores these details. A
specification that controls for customer growth would need to be structured carefully to avoid
issues of multicollinearity that may make the model's results unusable.
D.Crossborder inappropriately relies on system loads when estimating avoided
distribution investment
33. In its regressions, Crossborder inappropriately uses system loads to represent the causal
driver of distribution investment. Such an approach does not properly capture the causal
relationship between load and investment at the distribution level. NERA typically examines
the distribution substation loads (not system loads) when analyzing marginal distribution
investment. We do so because it is load on the distribution substation that triggers the need
for new investment in the distribution system. System peak load cannot be coincident with
all of the peak loads on the substations and distribution lines that require investment. It is
therefore more appropriate to use the substation-specific load data.
E. Crossborder offers no intuitive explanation of its regression results
34. The Crossborder regressions are based on the relationship between cumulative investment
and system peak load. Crossborder's results for both transmission and distribution predict
Affidavit of Kurt G. Strunk -
Page 13
C
negative values of investment at load levels below 2,400 megawatts. Crossborder offers no
intuitive explanation for this negative investment value and the associated negative y-
intercept in its linear model.
35. For the reasons outlined herein, the Crossborder regressions do not yield a valid estimate of
the specific costs that can be avoided as a result of exports from behind-the-meter distributed
energy resources. Rather, the Crossborder results represent an overstatement of avoided
costs because Crossborder includes costs that should be excluded for marginal costing
purposes.
Further affiant sayeth naught.
lWJL
Executed on October 12,2022
Affdavit of Kurt G. Strunk -
Page 14
NERA Kurt G. Strunk
Managing Direclor
ECONOMIC CONSULTING NERA Economic Consulting
1 166 Avenue of the Arnericas
NewYork, NewYork 10036
fel: [phone]
[e-mail]
vrrvvw.nera.com
KURT G. STRUNK
Managing Director
Mr. Strunk is an expert in applied finance and energy maffers with over 25 years of experience in
international arbitration, complex commercial litigation, and regulatory proceedings. Mr. Strunk
is recommended as a leading energy expert by Who's V[ho Legal. He has been retained as an
expert to testiff in arbitrations, before the Federal Energy Regulatory Commission, US Tax
Court, US Federal Court, and US Bankruptcy Court, the National Energy Board in Canada, as
well as state and provincial public utilities boards in the US and Canada. His testimonies have
addressed construction delay, asset and contract valuation, breach-of-contract damages, the
proportionality of stipulated liquidated damages provisions, cost of capital and discount rates,
just and reasonable rates, regulatory accounting, prudence, cost of service, regulatory reform,
pipeline access, retail market issues, as well as trading and risk management.
In the oil and gas sectors, Mr. Strunk has consulted on rate matters, mergers and acquisitions,
restructurings, contract disputes, valuation, trading, risk management, and product pricing. He
has valued oil and gas assets and contracts in litigated disputes on behalf of major firms in the
petroleum soctor. He advised sellers of LNG in disputes with buyers (prior to international
arbitration) and performed extensive quantitative analysis around appropriate prices and damages
in the event of breach. He has served as an expert in regulatory hearings relating to pipeline
tariffs in Canada and the United States. He has also carried out studies of the reasonableness of
gas supply agreements in various jurisdictions and quantified damages in connection with the
early termination of such agreements.
ln electric power, Mr. Stnrnk has advised governments, regulators, and energy companies on
industry structure, regulation, and sector reform in North America, South America, Europe,
Australia, Asia and Africa. In generation, his assignments often involve analysis of new power
generation resources and contracts. He has advised on the development of independent power
contracts, fuel supply arangements and competitive solicitations across the globe. He served as
a key member of NERA's team advising on electric sector reform and power market design in
Mexico, a project he carried out in the Spanish language. He routinely values electricity sector
companies and assets in the context of disputes and advisory assignments.
Mr. Strunk's assignments often require that he determines the appropriate return on equity
capital for energy firms. He has calculated and supported required rates of return for power
generators, gas distribution utilities, electric distribution and transmission companies, and other
energy firms in the context of traditional tariffreviews for regulated entities, litigation and
advisory work. Mr. Strunk frequently collaborates with NERA's Securities and Finance Practice.
He has addressed liability and damages in broker-dealer disputes, and in securities class actions.
Page | 1
Education
1997
1993
Gareer Details
1993-precent
1992
Languages
ctrEnlrn DE BANeTIE
Research Assista,nt, Brussels
Kurt G. Strunk
INSEAD (fhe Eurcpean Institute of Buginess Administration),
Fontainebleau, f'rance
MBA, with Distinction, 1997
vAssAR CoLLEGE,
New York, USA
B..4,., Economics, General and Departnental Honors
NERA ECONONfiC CONSTILTING
Current position Managing Director. New York
English:
French:
Spanish:
mothortongue
fluent
fluent
@ NERA Economic Gonsultlttg Page | 2
Project Experience
EXPERT TESTIMONY
2022
2022
2022
2022
2022
2022
Kurt G. Strunk
NV Energy
Cost of Capital
Oral Testimony before the Nevada Public Utilities Commission, on behalf
of NV Energy, on the cost of capital. September 28,2022.
NV Energy
Cost of Capital
RebuttalTestimony before the Nevada Public Utilities Commission, on
behalf of NV Energy, presenting analysis on the cost of capital.
September 21,2022.
NV Energy
Cost of Capital
Direct Testimony before the Nevada Public Utilities Commission, on
behalf of NV Energy, presenting analysis on the cost of capital. June l,
2022.
Federal Energy Regulatory Commission
Affidavit addressing the proposed resolution of the Buy-down Payment
methodology for terminating the Wholesale Electric Service Contract
between Tri-State Generation and Transmission Association and its
members and the initiation of a new partial-requirements contract. May 18,
2022.
Federal Energy Regulatory Commission
Oral Testimony before the Federal Energy Regulatory Commission
addressing just and reasonable Contract Termination Payments under the
Wholesale Electric Service Contract between Tri-State Generation and
Transmission Association and its members. May ll-12,2022.
Federal Energy Regulatory Commission
Deposition Testimony before the Federal Energy Regulatory Commission
addressing just and reasonable Contract Termination Payments under the
@ NERA Economic Consulting Page | 3
2022
2022
2022
2022
2022
2022
Kurt G. Strunk
Wholesale Electric Service Contract between Tri-State Generation and
Transmission Association and its members. April 5,2022.
Federal Energy Regulatory Commission
Rebuttal Testimony on behalf of United Power, Inc. before the Federal
Energy Regulatory Commission, addressing just and reasonable Contract
Termination Payments under the Wholesale Electric Service Contract
between Tri-State Generation and Transmission Association and its
members. March 25, 2022.
Federal Energy Regulatory Commission
Oral Testimony before the Federal Energy Regulatory Commission
addressing Order 888 unbundling and Mansfield and 7-factor tests for direct
assignment of downstream delivery facilities. March 18,2022.
NV Energy
Gas Trading / Prudence
Direct Testimony before the Nevada Public Utilities Commission, on
behalf of Nevada Power Company, examining whether the trades in its
natural gas trading book were prudent. March 1,2022.
NV Energy
Gas Trading / Prudence
Direct Testimony before the Nevada Public Utilities Commission, on
behalf of Sierra Pacific Power Company, examining whether the trades in
its natural gas trading book were prudent. March 1,2022.
Federal Energy Regulatory Commission
Answering Testimony on behalf of United Power, [nc. before the Federal
Energy Regulatory Commission, responding to a proposed mark-to-market
approach to determine Contract Termination Payments underthe Wholesale
Electric Service Contract between Tri-State Generation and Transmission
Association and its members. February 4,2022.
Federal Energy Regulatory Commission
Direct Testimony on behalf of United Power,Inc. before the Federal Energy
Regulatory Commission, presenting a Balance Sheet Approach to
determine Contract Termination Payments under the Wholesale Electric
@ NERA Economic Consulting Page | 4
2021
2021
2021
2021
2021
2021
Kurt G. Strunk
Service Contract between Tri-State Generation and Transmission
Association and its members. January 7,2022.
Confidential Electric Cooperative
Deposition testimony before the lnternational Institute for Conflict
Prevention & Resolution regarding the valuation of a bespoke call option.
November 30,2021.
PennEnergy Resources
Expert Report on behalf of PennEnergy presenting a quantum of upstream
oil and gas damages in American Arbitation Association (AAA) Case
Number 0 I 2 1 00025943, September 23, 2021.
Federal Energy Regulatory Commission
Affidavit on behalf of United Power, Inc. before the Federal Energy
Regulatory Commission, presenting a Balance Sheet Approach to
determine Contract Termination Payments under the Wholesale Electric
Service Contract between Tri-State Generation and Transmission
Association and its members. September 22,2021
Federal Energy Regulatory Commission
Affidavit on behalf of United Power, [nc. before the Federal Energy
Regulatory Commission, presenting analysis of the appropriate fee to be
paid by United Power to terminate its wholesale supply contract with Tri
State Generation and Transmission Cooperative, [nc. and to liquidate its
equity interest in Tri-State. August 3,2021.
Public Service Commission of South Carolina
Oral Testimony on behalf of Cherokee County Cogeneration Partners, LLC
before the Public Service Commission of South Carolina, presenting
analysis on avoided cost calculations and economic and policy goals of
PLTRPA. July 26, 29-30, 2021.
Nova Scotia Utilities Review Board
Oral Testimony on behalf ofthe Alternative Resource Energy Authority and
the Berwick Electric Commission addressing policies toward the
@ NERA Economic Consulting Page | 5
2021
2021
2021
2021
2021
Kurt G. Strunk
competitive power market and interaction with utility system planning and
ratemaking. June 17 -18, 2021.
Public Service Commission of South Carolina
Rebuttal Testimony on behalf of Cherokee County Cogeneration Partners,
LLC before the Public Service Commission of South Carolina addressing
contracts with Qualifuing Facilities under the Public Utility Regulatory
Policies Act. June 14, 2021.
Nova Scotia Utilities Review Board
Rebuttal Testimony on behalf ofthe Alternative Resource Energy Authority
and the Berwick Elechic Commission examining NSPI's application and
the specific policies it proposes for the Backup and Top-Up ("BUTU")
rate. June 2,2021.
Federal Energy Regulatory Commission
Direct Testimony on behalf of United Power, [nc. before the Federal
Energy Regulatory Commission, outlining the ratemaking principles and
policies that should govern the rates of Tri-State Generation &
Transmission Association.
May 20,2021.
Public Service Commission of South Carolina
Direct Testimony on behalf of Cherokee County Cogeneration Partners,
LLC before the Public Service commission of South Carolina, presenting
analysis on avoided cost calculations and economic and policy goals of
PURPA.
May 3,2021.
Backup/Top-up Tariff Testimony, Nova Scotia Municipal Utilities
Expert witness in connection with the application of Nova Scotia Power
lncorporated to amend its Wholesale Market Backup / Top-up Service
O NERA Economic Consulting Page | 6
2021
2021
2020
2020
2020
Kurt G. Strunk
Tariff.
April16,2021
NVEnergy
Gas Trading / Prudence
Direct Testimony before the Nevada Public Utilities Commission, on
behalf of Nevada Power Company, examining whether the trades in its
natural gas trading book were prudent. March 1,2021.
NV Enerry
Gas Trading / Prudence
Direct Testimony before the Nevada Public Utilities Commission, on
behalf of Sierra Pacific Power Company, examining whether the trades in
its natural gas trading book were prudent. March 1,2021.
Wisconsin Public Service Commission
Return of Equity
Surrebuttal Testimony before the Wisconsin Public Service Commission
on behalf of Verso Corporation and Verso Minnesota Wisconsin LLC
addressing the fair return on equity for Consolidated Water Power
Company. October 26, 2020.
Wisconsin Public Service Commission
Return of Equity
Rebuttal Testimony before the Wisconsin Public Service Commission on
behalf of Verso Corporation and Verso Minnesota Wisconsin LLC
addressing the fair return on equity for Consolidated Water Power
Company. October 20, 2020.
Wisconsin Public Service Commission
Return of Equity
Direct Testimony before the Wisconsin Public Service Commission on
behalf of Verso Corporation and Verso Minnesota Wisconsin LLC
@ NERA Economic Consulting Page | 7
2020
2020
2020
2020
2020
2019
Kurt G. Strunk
addressing the fair return on equity for Consolidated Water Power
Company. October 6, 2020.
NV Energy
Cost of Capital
Rebuttal Testimony before the Nevada Public Utilities Commission, on
behalf of NV Energy, presenting analysis on the cost of capital.
September 18,2020.
North Carolina Utilities Commission
Regulatory Policy
Oral Testimony before the North Carolina Utilities Commission, on behalf
ofApple, Facebook and Google, presenting analysis on various regulatory
matters. August 28, 2020.
NV Energy
Cost of Capital
Direct Testimony before the Nevada Public Utilities Commission, on
behalf ofNV Energy, presenting analysis on the cost of capital. June l,
2020.
NV Energy
Cost of Gas / Prudence
Direct Testimony before the Nevada Public Utilities Commission, on
behalf of Nevada Power Company, presenting analysis on whether its
natural gas commodity trading was consistent with prudent utility practice.
March 1,2020.
NV Energy
Cost of Gas / Prudence
Direct Testimony before the Nevada Public Utilities Commission, on
behalf of Sierra Pacific Power Company, presenting analysis on whether
NV Energy's natural gas commodity trading was consistent with prudent
utility practice. March 1,2020.
Municipal Light & Power, Chugach Electric Association, Inc.
Acquisition
Oral Testimony before the Regulatory Commission of Alaska on behalf of
Chugach Electric Association, Inc., addressing the acquisition of
Municipal Light & Power by Chugach Electric and post-acquisition tariff
structures. November 5, 2019.
@ NERA Economic Consulting Page | 8
2019
2019
2019
2019
2019
2019
Kurt G. Strunk
Southwestern Electric Power Company
Prudence of Investment in Power Generation Facilities
Sur-Surrebuttal testimony before the Arkansas Public Service Commission
on behalf of Southwestern Electric Power Company addressing the
prudence of certain investments in coal-fired power generation facilities.
October 2,2019.
Central Maine Power Company
Marginal Cost Study
Oral Testimony before the State of Maine Public Utilities Commission on
behalf of Central Maine Power Company in its 2018 Distribution Rate
Case, addressing time-of-use pricing, marginal cost estimation and cost
recovery for distribution network investment. October 2,2019.
NV Energy
Cost of Capital
Rebuttal Testimony before the Nevada Public Utilities Commission, on
behalf of Sierra Pacific Power Company, addressing the cost of capital for
the Company's electric division. September 19,2079.
Municipal Light & Power, Chugach Electric Association, Inc.
Acquisition
Oral Testimony before the Regulatory Commission of Alaska on behalf of
Chugach Electric Association, Inc., addressing the acquisition of
Municipal Light & Power by Chugach Electric. September 5 & 6,2019.
Corporate Commission of Arizona
Oral Testimony on behalf of Grand Canyon State Electric Cooperative
Association, Inc. before the Corporate Commission of Arizona towards
contracts with Quali$ring Facilities. August 27,2019.
Central Maine Power Company
Cost Study for Electric Distributor
Surrebuttal Testimony before the State of Maine Public Utilities
Commission on behalf of Central Maine Power Company in its 2018
Distribution Rate Case, addressing the theory of elechic utility costing and
the implementation of a cost study for the distribution network. August
22,2019.
O NERA Economic Consulting Page | 9
2019
2019
2019
2019
20t9
2019
Kurt G. Strunk
Municipality of Anchorage (ML&P), Chugach Electric Association
Reasonableness of Proposed Merger
Reply Testimony Before the Regulatory Commission of Alaska addressing
the acquisition of Municipal Light & Power by Chugach Electric. August
2,2019.
Chugach Electric Associate Inc.
Cost of Capital
Oral Testimony Before the Regulatory Commission of Alaska addressing
the cost of capital for Chugach Electric. July 15, 2019.
NV Energy
Cost of Capital
Direct Testimony before the Nevada Public Utilities Commission, on
behalf of Sierra Pacific Power Company, addressing the cost of capital for
the Company's electric division. June 3, 2019.
Avangrid NY
Marginal Cost Study
Direct Testimony before the New York State Public Service Commission
on behalf of New York State Electric & Gas Corporation, providing
marginal cost estimates for purposes of informing reasonable electric and
gas distribution rates. May 20,2019.
Avangrid NY
Marginal Cost Study
Direct Testimony before the New York State Public Service Commission
on behalf of Rochester Gas & Electric Corporation, providing marginal
cost estimates for purposes of informing reasonable electric and gas
distribution rates. May 20,2019.
Central Maine Power Company
Marginal Cost Study
Rebuttal Testimony before the State of Maine Public Utilities Commission
on behalf of Central Maine Power Company in its 201 8 Distribution Rate
Case, addressing time-of-use pricing, marginal cost estimation and cost
recovery for distribution network investment. April 25, 2019.
O NERA Economic Consulting Page | 10
2019
2019
2019
2019
2018
2018
Kurt G. Strunk
Municipality of Anchorage (ML&P), Chugach Electric Association
Reasonableness of Proposed Merger
Pre-filed direct testimony on behalf of Chugach Electric Association, [nc.
before the Regulatory Commission of Alaska supporting Chugach's
proposed acquisition of ML&P from the Municipality of
Anchorage. Testimony addresses the valuation of ML&P, the
reasonableness of the purchase price, forecast synergy savings, market
pricing for a related Power Purchase Agreement, and the tangible benefits
that will accrue to ratepayers as a result of the merger. April l, 2019.
Public Seruice Company of New Mexico
Reasonableness of Power Purchase Agreement
Affrdavit before the Federal Energy Regulatory Commission including a
benchmarking analysis of a solar power purchase agreement under
FERC's Edgar and Ocean States standards. March 15, 2019.
NV Energy
Cost of Gas / Prudence
Direct Testimony before the Nevada Public Utilities Commission, on
behalf of NV Energy, addressing the reasonableness of the Company's
natural gastrading. March 1,2019.
Southwestern Electric Power Company
Prudence of Investment in Power Generation Facilities
Direct Testimony before the Arkansas Public Service Commission on
behalf of Southwestern Electric Power Company addressing the prudence
of the company's investments in the Dolet Hills Power Plant. February
28,2019.
PacifiCorp
Cost of Capital
Rebuttal Testimony before the California Public Utilities Commission, on
behalf of PacifiCorp, on the cost of capital in the Company's rate case,
November 20,2018.
LS Power Company
Generation Capacity Market Design
Reply Affrdavit (w/Willis Geffert), on behalf of LS Power Associates,
L.P., before the Federal Energy Regulatory Commission, addressing flaws
@ NERA Economic Consulting Page | 11
2018
2018
2018
2018
2018
Kurt G. Strunk
in the existing capacity market construct in the PJM Interconnection.
November 6,2018
LS Power Company
Generation Capacity Market Design
Affidavit (w/Willis Geffert), on behalf of LS PowerAssociates, L.P.,
before the Federal Energy Regulatory Commission, addressing flaws in
the existing capacity market construct in the PJM Interconnection. October
2,2018.
Maui Electric Company
Power Generation Costs, Incentives, Fuel Adjustment Clauses
Rebuttal Testimony before the Hawai'i Public Utilities Commission on
behalf of Maui Electric Company, Inc., addressing matters pertaining to its
fuel costs and Energy Cost Adjustment Clause, June22,2018.
PaciliCorp
Cost of Capital
Direct Testimony before the Califomia Public Utilities Commission, on
behalf of PacifiCorp, on the cost of capital in the Company's rate case,
April 12,2018.
Hawaiian Electric Company
Power Generation Costs, Incentiveso Fuel Adjustment Clauses
Affidavit before the Hawai'i Public Utilities Commission on behalf
of Hawaiian Electric Company,Inc., addressing matters pertaining
to Hawaiian Electric's Energy Cost Adjustment Clause, April 10,
201 8.
North Carolina Utilities Commission Raleigh
Tax, Regulatory and Utility Financial Matters
Supplemental testimony before the State of North Carolina Utilities
Commission Raleigh, presenting opinions on various tax, economic,
O NERA Economic Consulting Page | 12
2018
2018
2018
2017
2017
Kurt G. Strunk
regulatory and financial matters in the Duke Energy Carolinas General
Rate Case, March 20,2018.
Hawaiian Electric Company
Power Generation Costs, Incentives, Fuel Adjustment Clauses
Supplemental Testimony before the Public Utilities Commission of
Hawaii, presenting opinions on fuel costs and energy cost adjustment
clauses, February 14, 2018.
North Carclina Utilities Commission Raleigh
Regulation and Utility Finance
Pre-filed testimony before the State ofNorth Carolina Utilities
Commission Raleigh, presenting opinions on various economic, regulatory
and financial matters in the Duke Energy Carolinas General Rate Case,
January 23,2018.
Ilawaiian Electric Company
Power Generation, Incentive Ratemaking, Fuel Adjustment Clauses
Rebuttal Testimony before the Public Utilities Commission of Hawaii,
addressing fuel costs and the appropriateness ofthe current and proposed
Energy CostAdjustment Clause (*ECAC"), January 05,2018.
Nevada Power Company
Cost of Capital
Oral testimony before the Public Utilities Commission ofNevada on
behalf of Nevada Power Company presenting his analysis and conclusions
on the cost of capital. November 1,2017.
Energia Limpia de Guatemala, S.A.
EPC Contracts, Liquidated I)amages, Power Industry Practices
Oral Testimony before the ICC Court ofArbination, ICC Case No.
21361/RD, on behalf of Energfa Limpia de Guatemala, S.A., addressing
O NERA Economic Consulting Page | 13
2017
2017
2017
2017
2017
2017
Kurt G. Strunk
the proportionality of liquidated damages in a turnkey EPC contract
October 25,2017.
Nevada Power Company
Cost of Capital
Rebuttal testimony before the Public Utilities Commission of Nevada on
behalf of Nevada Power Company presenting on the cost of capital,
September 26,2017.
Energfa Limpia de Guatemala, S.A.
EPC Contracts, Liquidated Damages, Power Industry Practices
Pre-filed Expert Report before the ICC Court ofArbitration (w/Willis
Geffert), ICC Case No. 21361/RD, on behalf of Energia Limpia de
Guatemala, S.A., addressing the proportionality of liquidated damages in a
turnkey EPC contract, September 15,2017.
Hawai'i Electric Light
Power Generation, Incentive Ratemaking, Fuel Adjustment Clauses
Rebuttal Testimony before the Hawai'i Public Utilities Commission, on
behalf of Hawai'i Electric Light, addressing alternative incentive
mechanisms for the Company's power generation fleet, fuel costs, and the
reasonableness of the Company's proposed ECAC, June 23, 2017.
Southwestern Electric Power Company
Prudence of Investment in Power Generation Facilities
Oral Testimony before the Public Utility Commission of Texas on behalf
of Southwestern Electric Power Company addressing the prudence of the
company's investments in the Dolet Hills Power Plant, June 15, 2017.
NV Enerry
Cost of Capital
Direct Testimony before the Nevada Public Utilities Commission, on
behalf of Nevada Power Company, addressing the cost of capital for the
Company, June 5, 2017.
Southwestern Electric Power Company
Prudence of Investment in Power Generation Facilities
Rebuttal Testimony before the Public Utilities Commission of Texas, on
behalf of Southwestern Electric Power Company, addressing the prudence
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2017
2017
2016
2016
2016
2016
Kurt G. Strunk
of retrofit investments in certain electricity generation facilities, May 19,
2017.
North Carolina Utilities Commission
Power Contract Design, Financing New Power Plants
Direct Testimony before the North Carolina Utilities Commission, on
behalf of North Carolina Sustainable Energy Association, addressing the
biennial determination of avoided cost rates for electric utility purchases
from qualiffing facilities, March 28,2017.
IYV Energy
Cost of Gas / Prudence
Direct Testimony before the Nevada Public Utilities Commission, on
behalf ofNV Energy, addressing the reasonableness of the Company's
natural gas trading, March 1,2017.
NV Energy
Cost of Capital
Rebuttal Testimony before the Nevada Public Utilities Commission, on
behalf of Sierra Pacific Power Company, addressing the cost of capital for
the Company's electric and gas divisions, September 23,2016.
Hawai'i Electric Light
Power Generation, Incentive Ratemaking, Fuel Adjustment Clauses
Direct Testimony before the Hawai'i Public Utilities Commission, on
behalf of Hawai'i Electric Light, addressing alternative incentive
mechanisms for the Company's power generation fleet, fuel costs, and the
reasonableness of the Company's proposed ECAC, September 19,2016.
NV Energy
Cost of Capital
Certification Testimony before the Nevada Public Utilities Commission,
on behalf of Sierra Pacific Power Company, addressing the cost of capital
for the Company's electric and gas divisions, August 2,2016.
NV Energy
Cost of Capital
Direct Testimony before the Nevada Public Utilities Commission, on
behalf of Sierra Pacific Power Company, addressing the cost of capital for
the Company's electric and gas divisions, June 6, 2016.
@ NERA Economic Consulting Page | 15
2016
2016
2016
2016
2016
2016
2015
Kurt G. Strunk
PacifiCorp
Cost of Capital
Oral Testimony before the Washington Utilities and Transportation
Commission, on behalf of PacifiCorp, or the cost of capital in the
Company's expedited rate filing (Docket UE-152253), May 2,2016.
Confidential Client
Damages under Wind Power Purchase Agrcement
Expert Report in arbitration on the valuation of damages under a PPA
backed by a wind farm, with a particular focus on the reasonableness of
the liquidated damages cap, April 25,2016.
Municipality of Anchorage (ML&P), Chugach Electric Association
Valuation of Gas Field and Reasonableness ofAcquisition Price
Oral Testimony before the Regulatory Commission ofAlaska on the
reasonableness of the proposed acquisition of ConocoPhillips' working
interest in the Beluga River Unig April 19,2016.
PacifiCorp
Cost of capital
Rebuttal Testimony before the Washington Utilities and Transportation
Commission, on behalf of PacifiCorp, on the cost of capital in the
Company's expedited rate filing @ocket W-152253), April 7,2016.
NV Energy
Cost of Gas / Prudence
Direct Testimony before the Nevada Public Utilities Commission, on
behalf of NV Energy, addressing the reasonableness of the Company's
natural gas purchases, March 1,2016.
Alliance to Protect Nantucket Sound
Financing of off-shore wind farm
Oral Testimony before the Energy Facilities Siting Board of the
Commonwealth of Massachusetts on the financeability of the Cape Wind
project, January 25, 2016.
PaciliCorp
Cost of capital
Direct Testimony before the Washington Utilities and Transportation
Commission, on behalf of PacifiCorp, oo the cost of capital, November
24,2015.
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20r5
2015
2015
2015
20ts
2015
2015
Kurt G. Strunk
Chugach Electric Association, Inc.
Regulatory principles for cost allocation
Oral testimony before the Regulatory Commission ofAlaska, addressing
the regulatory treatment of gas found by Cook lnlet Natural Gas Storage
Alaska LLC, August 31, 2015.
Baltimore Gas & Electric Company
Risks and rate of return for retail electricity business
Oral Testimony before the Maryland Public Service Commission, tn the
Matter of Baltimore Gas & Electric's Application to Recover Cash
Working Capitalfor Stondard Offer Service, Case No. 9221, August 5,
2015.
Baltimore Gas & Electric Company
Risks and rate of return for retail electricity business
Rebuttal Testimony before the Maryland Public Service Commission, in
the Matter of Balttmore Gas & Electric's Application to Recover Cash
Working Capitalfor Standard Offer Service, Case No. 9221, July 22,
2015.
Chugach Electric Association, Inc.
Regulatory principles for cost allocation
Pre-filed testimony before the Regulatory Commission ofAlaska,
addressing the regulatory treatment of gas found by Cook Inlet Natural
Gas Storage Alaska LLC, June 5, 2015.
ATX Southwest, LLC.
Cost of Capital
Direct Testimony before the Federal Energy Regulatory Commission, on
behalf ofATX Southwest, addressing return on equity, May 28,2015.
Chugach Electric Association, Inc.
Cost of Capital
Responsive Testimony before the Regulatory Commission ofAlaska,
addressing return on equity for the Enstar Natural Gas Company, May 15,
2015.
Baltimore Gas & Electric Company
Risks and rate of return for retail electricity business
Testimony before the Maryland Public Service Commission, in the Matter
of Boltimore Gas & Electric's Application to Recover Cash Working
Capitalfor Standard Offir Service, Case No. 9221, April22,20l5.
@ NERA Economic Consulting Page | 17
2015
2014
2014
2014
20t4
2015
2013
Kurt G. Strunk
NV Energy
Cost of Gas / Prudence
Direct Testimony before the Nevada Public Utilities Commission, on
behalf of NV Energy, addressing the reasonableness of the Company's
natural gas purchases, March 1,2015.
PacifiCorp
Cost of capital
Oral Testimony before the Washington Utilities and Transportation
Commission, on behalf of PacifiCorp, oD the cost of capital in the
Company's general rate case, December 16,2014.
PacifiCorp
Cost of capital
Rebuttal Testimony before the Washington Utilities and Transportation
Commission, on behalf of PacifiCorp, oh the cost of capital in the
Company's general rate case, November 21,2014.
PacifiCorp
Cost of capital
Direct Testimony before the Washington Utilities and Transportation
Commission, on behalf of PacifiCorp, oh the cost of capital in the
Company's general rate case, including the effects of transitioning away
from coal, April 30, 2014.
Nevada Power Company
Cost of capital
Direct Testimony before the Nevada Public Utilities Commission, on
behalf of Nevada Power Company, on the cost of capital in the Company's
general rate case, April 30, 2014.
NV Energy
Cost of Gas / Prudence
Direct Testimony before the Nevada Public Utilities Commission, on
behalf of NV Energy, addressing the reasonableness of the Company's
nafural gas purchases, March 1,2014.
Sierra Pacific Power Company
Cost of capital
Oral testimony, before the Nevada Public Utilities Commission, on behalf
of Sierra Pacific Power Company, on the cost of capital for the gas and
electric divisions in the Company's general rate case, Octob er 7 , 2013 .
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2013
2013
2013
2013
2013
2013
2012
Kurt G. Strunk
Sierra Pacific Power Company
Cost of capital
Rebuttal Testimony before the Nevada Public Utilities Commission, on
behalf of Sierra Pacific Power Company, on the cost of capital for the gas
and electric divisions in the Company's general rate case, September 25,
2013.
MarketArea Shippers
(Gaz M6troo Union Gas and Enbridge Gas Distribution)
Contract Renewal Alternatives for Regulated Pipeline Service
Pre-filed Expert Report, with JeffMakholm, before the National Energy
Board of Canada, in the Matter of TransCanada's Application for Tariff
Amendments, Hearing Order RH-001-2013, July 26,2013.
Sierra Pacific Power Company
Cost of capital
Direct Testimony before the Nevada Public Utilities Commission, on
behalf of Sierra Pacific Power Company, on the cost of capital for the gas
and electric divisions in the Company's general rate case, June 4,2013.
NV Energy Operating Companies
Cost of capital
Direct Testimony before the Federal Energy Regulatory Commission, on
behalf of NV Energy Operating Companies, on the appropriate rate of
return for the consolidated transmission system, May 3 I , 20 I 3.
Public Intervenor
Wholesale Margins for Regulated Motor Fuels and Heating Oil
Oral testimony before the New Brunswick Energy and Utilities Board,.Iz
the Matter of an Application by lrving Oil Marketing GP and lrving Oil
Commercial GP requesting an increase in the wholesale marginsfor
motorfuels and heating oil,lanuary 29,2013.
Public Intervenor
Power sector modelling, deferral account policy, Iinancial analysis
Oral testimony before the New Brunswick Energy and Utilities Board, 1n
the Matter of the Point Lepreau Nuclear Generating Station Deferral
Account and Section 143.1 of the Electricity Act, January 15,2013.
Baltimore Gas & Electric Company
Potomac Electric Power Company
Power Purchase Agreements, Retail electric competition
Oral testimony before the Maryland Public Service Commission In the
Matter of Whether New Generation Resources Are Needed to Meet Long-
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2012
2012
2012
2012
2012
2011
20tt
Kurt G. Strunk
Term Demandfor Standard Offer Service, Case No. 9214, November 26,
2012.
Public Intervenor
Modelling of coal and oil plants, deferral account, financial analysis
Pre-filed Expert Report before the New Brunswick Energy and Utilities
Board In the Matter of the Point Lepreau Nuclear Generating Station
Deferral Account and Section 143.1 of the Electricity Acl, November 26,
2012.
Nevada Power Company
Cost of capital
Pre-filed testimony before the Federal Energy Regulatory Commission in
the Nevada Power Company's Transmission Rate Case, October 31,2012
Public Intervenor
Wholesale margins for regulated motor fuels and heating oil
Pre-filed Expert Report before the New Brunswick Energy and Utilities
Board In the Matter of an Application by Irving Oil Marketing G.P. and
lrving Oil Commercial G.P. Requesting an Increase in the Wholesale
Margins for Motor Fuels and Heating Oil, October26,2012.
Nevada Power Company
Prudence ofgas costs for 2012
Pre-filed Expert Report before the Nevada Public Utilities Commission.In
the Nevada Power Company's 2012 Deferued Energt Filing, March l,
2012.
Sierra Pacific Power Company
Prudence ofgas costs for 2012
Pre-filed Expert Report before the Nevada Public Utilities Commission 1n
the Nevada Power Company's 2012 Defened Energt Filing, March l,
2012.
Public Intervenor
Power system loss factors, OAIT, transmission regulatory policy
Pre-filed Expert Report before the New Brunswick Energy and Utilities
Board In the Matter of a Review of the Proposed Change to the New
Brunswick System Operator's Real Power Loss Factor, October 31, 201I
John Hancock
Risk analysis of European power plant leveraged lease
Oral Testimony before the U.S. Tax Court, on behalf of plaintiffinJohn
Hancock Life Insurance Company and Subsidiaries v. Commissioner of
Internal Revenue, October 24, 2011.
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20tl
20tl
20tt
20tl
2011
2010
2010
Kurt G. Strunk
John Hancock
Risk analysis of European power plant leveraged lease
Rebuttal Expert Report before the U.S. Tax Court, on behalf of plaintiffin
John Hancock Life Insurance Company and Subsidiaries v. Commissioner
of Internal Revenue, August 19, 201 l.
John Hancock
Risk analysis of European power plant leveraged lease
Pre-filed Expert Report before the U.S. Tax Court on behalf of plaintiff in
John Hancock Life Insurance Company and Subsidiaries v- Commissioner
of Internal Revenue, July 8, 2011.
Public Intervenor
OAIT, transmission regulatory policy
Pre-filed Expert Report before the New Brunswick Energy and Utilities
Board, in the Review of the Proposed Changes to the New Brunswick
System Operator's Open Access Transmission Tariff, February 21,2011.
Public Intervenor
Power system loss factor, OAIT, transmission regulatory policy
Pre-filed Expert Report before the New Brunswick Energy and Utilities
Board, in the Review of the New Brunswick System Operator's Proposed
Change to its Loss Factor, February 3,2011.
Baltimore Gas & Electric Company
Risks and rate of return for retail electricity business
Oral testimony before the Maryland Public Service Commission, in the
Matter of Baltimore Gas & Electric's Application to Recover Cash
Working Capitalfor Standard Offer Service, Case No. 9221, January 20,
2011.
Baltimore Gas & Electric Company
Risks and rate of return for retail electricity business
Pre-filed Expert Report before the Maryland Public Service Commission,
in the Matter of Baltimore Gas & Electric's Application to Recover Cash
Working Capitalfor Standard Offer Service, Case No. 9221, September
17,2010.
Public Intervenor
Greenfield gas distributor, cost of service, just and reasonable rates
Oral testimony before the New Brunswick Energy & Utilities Board, in
the Enbridge Gas New Brunswick Rate Case, March 30,2010.
@ NERA Economic Consulting Pagel2l
2010
2009
2009
2009
2009
2009
2009
Kurt G. Strunk
Public fntervenor
Greenfield gas distributor, cost of service, just and reasonable rates
Pre-filed Expert Report before the New Brunswick Energy and Utilities
Board, in the Matter of Enbridge Gas New Brunswick Rate Case, March
12,2010.
Public Intervenor
Greenfield gas distributor, cost of service, just and reasonable ratm
Oral testimony before the New Brunswick Energy & Utilities Board, in
the Review of Matters related to the Regulation of Enbridge Gos New
Brunsw ick, October 23, 2009.
Public Intervenor
Greenfield gas distributor, cost of seruice, just and reasonable rates
Pre-filed Expert Report before the New Brunswick Energy and Utilities
Board, in the Matter of the Annual Financial Review of Enbridge Gos New
Brun sw i c k L im it e d P ar tner s hip, August 21, 2009 .
Public Intervenor
Greenlield gas distributor, cost of service, just and reasonable rates
Oral testimony before the New Brunswick Energy and Utilities Board, in
the Matter of the Annual Financial Review of Enbridge Gas New
Brunsw ick Limite d P artner ship, September I 5, 2009 .
Public Intervenor
Greenfield gas distributor, cost of service, just and reasonable rates
Pre-filed Expert Report before the New Brunswick Energy and Utilities
Board, in the Matter of a Review of Matters Related to the Regulation of
Enbridge Gas New Brunswick Limited Partnership, September 21,2009.
The City of New York
Cost of service, incentives and taxi lease rates
Oral testimony in the District Court for the Southem District of New York
in Metropolitan Tacicab Board of Trade et al. v. The City of New York et
al., onthe issue of whether the Taxi and Limousine Commission's new
maximum lease rates constifute a fuel efficiency and emissions mandate
that would be preempted by Federal law, May 20,2009.
The City of New York
Cost of seruice, incentives and taxi lease rates
Pre-filed expert Report in the United States District Court for the Southern
District of New York in Metropolitan Taxicab Board of Trade et al. v. The
City of New York et al., onthe issue of whether the Taxi and Limousine
Commission's new maximum lease rates constifute a fuel efficiency and
emissions mandate that would be preempted by Federal law, May 18,
2009.
@ NERA Economic Consulting Pagel22
2009
2009
2009
2009
2008
2008
2008
Kurt G. Strunk
Public Intervenor
Greenfield gas distributor, cost of service, just and reasonable rates
Oral testimony before the New Brunswick Energy and Utilities Board, .[n
the Matter of the examination of theformulafor Enbridge Gas New
Brunsw ick's market-b ase d r ate, April 23, 2009 .
Public Intervenor
Greenfield gas distributor, cost of service, just and reasonable rates
Pre-filed Report before the New Brunswick Energy and Utilities Board,ln
the Matter of the examination of theformulafor Enbridge Gas New
Brunsw ick's market-b ase d rote, March 26, 2009.
Public Intervenor
Cost of servicer lSO management, OATT transmission policy
Oral testimony before the New Brunswick Energy and UtilitiesBoard, In
the Matter of the application of the New Brunswick System Operatorfor
changes to its Charges, Rates and Tolls, March 18, 2009.
Public Intervenor
Cost of service,ISO management, OATT transmission policy
Pre-filed Report before the New Brunswick Energy and Utilities Board,Ie
the Motter of the application of the New Brunswick System Operatorfor
changes to its Charges, Rates and Tolls, February 24,2009.
Allegheny Power, Baltimore Gas & Electric
Integrated resounce planning, competitive retail electric markets
Oral testimony before the Maryland Public Service Commission, in the
Matter of the Commission's Investigation Of Investor-Owned Electric
C ompanie s' Standar d Offer Serv i ce for Re s i dential and Small Commerc ial
Customers in Maryland, Case No. 9l I 7, December I 5, 2008.
Allegheny Power, Baltimore Gas & Electric
Integrated resource planning, competitive retail electric markets
Pre-filed Report before the Maryland Public Service Commission, in the
Matter of the Commission's Investigation Of Investor-Owned Electric
C ompanie s' Standard Offir Sertti ce for Re sidential ond Small Commerc ial
Customers in Maryland,Case No. 9117, October 1,2008.
Public Intervenor
Ratemaking for greenlield gas distributor
Oral testimony before the New Brunswick Energy and Utilities Board,ln
the Motter of on application by Enbridge Gas New Brunswickfor changes
to its Charges, Rates and Tolls, March 27,2008.
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2008
2007
2007
2007
2007
2007
2006
Kurt G. Strunk
Public fntervenor
Ratemaking for greenfield gas distributor
Pre-filed Report before the New Brunswick Energy and Utilities Board,1lr
the Matter of an application by Enbridge Gas New Brunswickfor chonges
to its Charges, Rates and Tolls, March 10, 2008.
Public Intervenor
Prudence, just and reasonable standard, affiliate transactions
Oral testimony before the New Brunswick Energy and Utilities Board, In
the Matter of an application by the NBP Distribution & Customer Service
Corporation (Disco) for changes to its Charges, Rates and Tolls,
December 18,2007.
Public Intervenor
Nuclear power plant Cost of Service
Pre-filed Report before the New Brunswick Board of Commissioners of
Public Utilities, In the Matter of an application by the NBP Distribution &
Customer Service Corporation (Disco) for changes to its Charges, Rates
and Tolls, December 7 ,2007 .
Public Intervenor
Prudence of power generation costs
Pre-filed Report before the New Brunswick Board of Commissioners of
Public Utilities, In the Matter of an application by the NBP Distributton &
Customer Service Corporation (Disco) for changes to its Charges, Rates
and Tolls, November 5, 2007 .
Public Intervenor
Prudence of power generation costs
Oral testimony before the New Brunswick Energy and Utilities Board,.In
the Matter of an application by the NBP Distribution & Customer Service
Corporation (Disco)for changes to its Charges, Rates andTolls, June 21,
2007.
Public Intervenor
Prudence of power generation costs
Pre-filed Report before the New Brunswick Energy and Utilities Board,ln
the Matter of an application by the NBP Distribution & Customer Service
Corporation (Disco) for changes to its Charges, Rates and Tolls, June 14,
2007.
Brooklield Energy Marketing Inc.
Valuation of power purchase agreement and power plant
O NERA Economic Consulting Pagel24
2006
2006
2006
2006
2005
2005
2005
Kurt G. Strunk
Deposition testimony before the United States Bankruptcy Court for the
District of Maryland, on behalf of Brookfield Energy Marketing lnc.,In
re: USGen New England, Inc., Debtor, Case No. 03-30465, May 22,2006.
Brooklield Enerry Marketing Inc.
Valuation of power purchase agreement and power plant
Rebuttal Report before the United States Bankruptry Court for the District
of Maryland, on behalf of Brookfield Energy Marketing lnc., In re:
USGen New England, Inc., Debtor, Case No. 03-30465, May 5, 2006.
Brookfield Energr Marketing Inc.
Valuation of power purchase agreement and power plant
Expert Report before the United States Bankruptcy Court for the District
of Maryland, on behalf of Brookfield Energy Marketing lnc., In re:
USGen New England, Inc., Debtor, Case No. 03-30465, March 29,2006.
Public Intervenor
Application of the prudence standard to affiliate transactions
Oral testimony before the New Brunswick Board of Commissioners of
Public Utilities, In the Matter of an application by the NBP Distribution &
Customer Service Corporation (Disco) for changes to its Charges, Rates
and Tolls, March 14, 2006.
Public Intervenor
Application of the prudence standard to afliliate transactions
Pre-filed Report with Eugene Meehan before the New Brunswick Board of
Commissioners of Public Utilities, In the Matter of an application by the
NBP Dtstribution & Customer Service Corporation (Disco) for changes to
its Chorges, Rates and Tolls, January 31,2006.
Dayton Power & Light Company
Retail pricing for default service customerc and option valuation
Oral testimony at hearings in Ohio Public Utilities Commission Case No
05-276-EL-A[R, November 8 and 142005.
Dayton Power & Light Company
Retail pricing for default service customers and option valuation
Deposition testimony in Ohio Public Utilities Commission Case No. 05-
27 6-EL- AlR" November 8, 2005.
Dayton Power & Light Company
Retail pricing for default service customers and option valuation
Testimony in Ohio Public Utilities Commission, in Support of Stipulation
filed in support of Dayton's proposed settlement Case No. 05-276-EL-
AlR, November 4,2005.
@ NERA Economic Consulting Page | 25
2005
2004
Kurt G. Strunk
Dayton Power & Light Company
Retail pricing for default service customers and option valuation
Rebuttal testimony in Ohio Public Utilities Commission, application of
financial options pricing techniques to assess the reasonableness of
Dayton's proposed provider-of-last-resort charges, Case No. 05 -27 6-EL-
AIR, October 31, 2005.
Board of Public Utilities
Cost of capital
Pre-filed testimony with Cindy Ma before the Board of Public Utilities,
Newfoundland and Labrador, Canada, on "The Cost of Capital for
Automobile lnsurance Firms," October 13, 2004.
@ NERA Economic Consulting Page | 26
Kurt G. Strunk
CONSULTING EXPERT EXPERIENCE
2020-present
2019-present
2019-2020
2019
2019
2016
2014
2014
Confidential Client
Exit from Generation & Transmission Cooperative
Expert on appropriate buyout payment for a member to leave its
transmission and generation cooperative.
United Power
Exit from Generation & Transmission Cooperative
Expert on appropriate buyout payment for United Power to leave the Tri-
State Transmission and Generation Cooperative.
Confidential Client
Decommissioning of coal-fired power plant
Expert addressing the net cost of decommissioning a coal-fired power
plant and regulatory cost recovery mechanisms.
Conlidential Client
Cost of Capital
Expert in dispute related to the financial structure and cost of capital for a
FERC-regulated pipeline.
Confidential Client
Financial Structure Analysis
Expert in dispute related to the financial structure of assets owned by a
midstream oil and products company.
Confidential Client
Valuation of Solar Generation Facilities
Expert in dispute related to the valuation of rooftop solar facilities.
Provided valuation options to counsel to evaluate the reasonableness of the
claimed tax basis and Section 1603 cash grant.
GazProm
Dispute over Value of Gas Fields
Expert in dispute related to the value of development and production of
gas in Russia for export to the US and re-gasification via an import facility
in Corpus Christi, TX.
Confidential Client
Offshore Exploration and Production Permit Arbitration
Expert in dispute related to an agreement between two firms to develop an
offshore gas field in New Zealand in arbitration at the ICC International
Court of Arbitration.
@ NERA Economic Consulting Page 127
2014
2013-2016
2014-2015
2014-2015
2014-2015
2014
2014
Kurt G. Strunk
Confidential client
Breach of contract damages valuation for gas supply agreement
Valued damages in a breach-of-contract dispute regarding gas supply in
Western Australia.
Gaz M6tro
Cost Recovery of Gas Distribution System Upgrade
Advised client on regulatory merits of ratemaking for distribution system
upgrade. Performed survey of ratemaking policies for similar upgrades in other
jurisdictions in connection with proceeding before Provincial regulator.
Confidential Client
Gas Supply Agreement Negotiation
Advise on cost of service and LNG contract price issues in Western
Australia.
Alliance Pipeline
Restructuring of services and tolls
Advised on Alliance's restructuring proposal in a matter before the
National Energy Board. Supervised modelling of pipeline tolls and
assessment of natural gas pipeline market power.
Gazprom OAO
Civil dispute involving gas field development and LNG importation
Supervised modelling of LNG netback prices and damage calculations in
preparation for a jury trial before a Thrrant County, Texas District Court.
Consulted with respect to a dispute between a U.S oil company and
Russian oil company regarding ownership of a Russian gas field, tortious
interference, and trade secret misappropriation with regards to a plan to
import LNG into the United States in the mid-2000s.
FortisBC Energy Inc
Tolling for pipeline in Canada
Analyzed toll methodology and advised on regulatory issues related to a
tolling proposal of NGTL's North Montney Mainline, an extension of the
existing NGTL Alberta System.
Royal Bank ofCanada
Gas Supply Agreement Dispute
Served as consulting expert in a gas supply agreement dispute between
RBC and three municipal gas distributors in Nevada and Iowa. Case
involved analysis of Basel III regulations, capital requirements,
commodity swaps and interest rate swaps.
@ NERA Economic Consulting Page | 28
2013
2012-2014
2012-2013
2012-2013
20tt-2013
20tt-2012
201r
2010'-2011
2010
Kurt G. Strunk
Confidential client
Valuation and pricing analysis
Performed valuation and pricing analysis for oil pipeline dispute in Texas
Provided advice to outside counsel throughout litigation.
ATCO Gas & ATCO Electric
Cost of Service / Capital Trackers
Provided expert review of ATCO Gas and ATCO Elecffic's capital tracker
proposals, including a survey ofcapital trackers in otherjurisdictions.
Confidential client
Valuation of oil pipeline company and its hedging positions
Performed valuation of oil pipeline company and its hedging positions in
litigation involving an alleged breach of fiduciary duty. Provided advice
to outside counsel throughout litigation.
Confidential client
Approaches to regulatory accounting and cost-of-service regulation
Contributed to study assessing benefits of various approaches to
regulatory accounting and cost-of-service regulation for pipelines.
Confidential client
Possible outcomes of power contract (PPA) disputes
Analyzed potential litigation and settlement outcomes in a series of power
contract disputes. Provided advice to outside counsel.
Confidential client
Oil pipeline cost of service and depreciation policies
Advised counsel to a shipper in an intrastate oil pipeline company rate
case before the Kansas Corporation Commission.
Confidential client
Antitrust aspects of a proposed pipeline merger
Analyzed antitrust aspects of oil pipeline combinations in connection with
a proposed merger. Provided advise to outside counsel.
Confidential client
Valuation of generation assets
Performed valuation of power plant in context of alleged expropriation.
Hydro Qu6bec, Canada
Grid connection and upgrade cost policy
Analyzed grid connection and upgrade cost policy. Evaluated existing
policy to allocate costs ofgrid upgrades to generation developers and
system users. Suggested modifications to policy. Prepared benchmarking
O NERA Economic Consulting Page | 29
2008
2007
2006
2003-2004
2003
2002
2002-2003
2002-2003
Kurt G. Strunk
analysis comparing the company's practices to those of over a dozen other
entities in North America.
Confidential client
Allegations of energy market manipulation
Advised on the evaluation of allegations of energy market manipulation in
the context of electricity trading in RTO-managed markets.
Confidential client
Valuation of valuation of long-dated oil warrants
Performed valuation of long-dated oil warrants priced off Venezuelan
crude oil in context of damages calculation.
Confidential client
Damages valuation in securities class action
Valued damages in a securities class action related to the bankruptcy of an
energy retailer.
Confidential client
Bid process advantages: generation pricing and transmission costs
Contributed to testimony on behalf of a large electric utility regarding an
affiliate transaction that resulted from a competitive solicitation.
Testimony before FERC focused on whether the affiliate was advantaged
during the bid process, both with respect to generation pricing and electric
transmission cost.
Conlidential client
Valuation, economic, accounting, and hedging analysis
Performed valuation, economic, accounting, and hedging analysis of a
gas-fired power plant in an international arbitration matter.
Confidential client
Prudence of forward power purchases
Contributed to testimony on behalf of an electric utility regarding the
prudence of forward power purchases during the Western power crisis.
Pacific Gas & Electric
Valuation of Damages Due to Gas Pipeline Capacity Withholding
Performed analyses of damages from withheld pipeline capacity into
California. Analyses led to $l billion settlement.
Confidential client
Prudence of forward power purchases
Contributed to testimony regarding the prudence of Department of Water
Resources's forward power purchases during the Western power crisis.
@ NERA Economic Consulting Page | 30
2002
2001-2002
2001-2002
2001
2001
199E
r99s-1996
199+1995
Kurt G. Strunk
Confidential client
Electric and gas hedging strategies for its generation assets
Contributed to testimony on behalf of an energy marketing and trading
firm regarding electric and gas financial hedging strategies for its
generation assets, including an examination of the nature of competition
among energy marketing and trading firms and strategies.
Pacific Gas & Electric Company
FERC refund and other related proceedings
Analysis and support to a California utility in the context of the FERC
refund and other related proceeding s, 2001 -2002.
Pacilic Gas & Electric Company
Value of a long-term afliliate power sales agreement
Contributed to testimony before FERC relating to the value of a long-term
affiliate power sales agreement. lnvolved analysis and valuation of over
100 long-term power contracts (PPAs) in the context of this benchmarking
analysis.
Confidential client
Valuation of a passive equity interest
Contributed to testimony on behalf of a leading US energy company
regarding the valuation of a passive equity interest in an IPP project in El
Salvador.
Baltimore Gas & Electric Company
Business separation of Constellation Energy Group
Contributed to testimony submiued to the Public Service Commission of
Maryland on the business separation of Constellation Energy Group.
Baltimore Gas & Electric Company
Valuation of generation assets
Performed valuation of Baltimore Gas & Electric Company's hydro,
nuclear, coal and gas-fired generation assets in the context ofstranded cost
calculations during restructuring, I 998.
Confidential client
Analysis of market concentration
Performed HHI analyses to support testimony presenting a competitive
assessment of the Western electric generation market in the US, 1995-
1996.
Confidential client
Damages valuation in securities class action
Estimated losses and alleged damages for several mutual funds that
invested in derivative securities.
@ NERA Economic Consulting Page | 31
t99Lt99s
1994
1994
1993
Kurt G. Strunk
Confidential client
I)amages valuation in securities class action
Estimated losses and alleged damages for several mutual funds that
invested in derivative securities.
Goldman Sachs
Default risk studies on fixed income instruments
Prepared default risk studies on fixed income instruments for counsel to
Goldman Sachs in a broker/dealer arbitration.
Confidential client
Damages valuation in securities class action
Consulted to counsel for an infomercial company on materiality, liability,
and damages in a shareholder class action suit.
Conlidential client
Damages valuation in securities class action
Assessed materiality and damages in a 10b-5 class action against a major
pharmaceutical company.
@ NERA Economic Consulting Page | 32
ADVISORY PROJECTS
2020
2020
2017-2019
2017
2017
2017
2016
2016
Kurt G. Strunk
Offshore Wind Auction
Due Diligence for Bidder
Provided strategic advice and due diligence relating to the competitive
landscape for past and upcoming offshore wind auctions.
Acquisition of Gas LDC
Due Diligence for Investor Group
Provided strategic advice and due diligence relating to the financial
valuation of a gas LDC and prospective acquisition.
Valu ation of Vertically-Integrated Electric Utility
Due Diligence for Prospective Acquirer
Retained by an electric utility to advise on valuation of a target utility
acquisition. Assisted client in developing reasonable offers to acquire the
target electric utility. Advised utility during negotiations.
fnvestment in Coal-Fired Power Plant
Due Diligence for Owner
Retained by a confidential owner. Provided strategic advice and due
diligence relating to the financial valuation of owners interest and
prospective sale.
Marginal Cost Study forValue of Distributed Resource
Due Diligence for Prospective Acquirer
Retained by NYSEG and RG&E to perform a marginal cost study to
estimate key components of the value stack, to be paid to solar and other
distributed energy resources,
Leveraged Lease tied to Coal-Fired Power Plant
Due Diligence for Prospective Acquirer
Retained by a confidential acquirer to evaluate atargetutility-related
investment. Provided strategic advice and due diligence relating to the
financial valuation and post-acquisition benefits.
Utility Merger
Due Diligence on Merger Benefits
Retained by a confidential acquirer to evaluate merger benefits in the
context of the combination of two adjacent electric utilities. Provided
strategic advice and due diligence relating to merger benefits.
Wind PowerTransaction
Due Diligence for Prospective PPA Offtaker
@ NERA Economic Consulting Page | 33
2016
2015
2015
2015
2015
2015
2014
Kurt G. Strunk
Retained by a confidential offtaker to evaluate the costs, benefits and risks
associated with a prospective long-term power purchase transaction
backed by a wind farm.
Electric Utility Acquisition
Due Diligence for Prospective Acquirer
Retained by a confidential equity investor to evaluate key inputs for the
acquirer's valuation model of an electric utility. Advised investor on key
elements of the valuation.
Ministry of Energy, Mexico
Restructuring of the Mexican power and gas sectors
Served as leader for several work streams performed on behalf of the
Mexican Ministry of Energy implementing energy sector restructuring.
Advice included the design of a competitive spot market, the development
of green power auctions (solar and wind), basic service supply pricing,
electicity transmission pricing, upstream gas pricing, pipeline rates and
the development of a regulatory framework for the sector.
Southern Star Central Gas Pipeline
Due Diligence for Prospective Acquirer
Retained by a confidential equity investor to evaluate regulatory and
investment risk associated with the prospective acquisition of an interest in
Southern Star. Analyzed likely outcomes in the pipeline's upcoming rate
case, and their implications for the valuation of the target.
Independent Electricity System Operator (IESO)
Reasonableness of 61300 MW Power Transaction
Retained by IESO in Ontario, Canada, to prepare, together with a team of
NERA experts, an Opinion as to the Fairness of the Amended and
Restated Bruce Power Refurbishment Implementation Agreement.
ESKOM, South Africa
Regulatory Strategy for Cost Recovery
Retained by ESKOM to advise on regulatory strategy, treafinent of coal-
plant operation and associated fuel costs, delays in unit online dates,
prudent utility practice, and other regulatory issues.
Bermuda Electric, Bermuda
Regulatory Strategy, Cost of Service, and Tariffs
Advised on regulatory strategy. Developed costing and pricing model for
Bermuda Electric.
Hawaiian Electric Company
Fuel Adjustment Clause and Oil lledging
O NERA Economic Consulling Page | 34
2014
2012t2013
2013
2013
2012t2013
2012
2012
Kurt G. Strunk
Retained by Hawaiian Electric Company to provide analysis regarding the
efficiency incentives embedded in the company's fuel adjustment clause
(ECAC). Analyzed the possibility of hedging oil price volatility through
commercially-available contracts.
Confidential Client
Pricing Principles for Domestic Gas Reservation Policy
Formulated a methodology to determine a schedule of reasonable prices
using a cost of service approach for gas that the company is obligated to
market under the domestic gas supply policy in Western Australia.
Atlantic Path 15
Due Diligence Study for Confidential Potential Buyer
Performed regulatory due diligence in connection with the potential
acquisition of Atlantic Path l5 transmission assets. Evaluated the
regulatory climate at FERC andanalyzed FERC decisions from prior rate
cases, with a focus on allowed rate of return. Used NERA rate-of-return
models to replicate the FERC methodology and to predict the rate-of-
return to be allowed by FERC in the next rate case.
Energy trading entity
Price risks and electricity transmission development
Retained by energy trading entity to perform an independent study of price
risks and electricity transmission development in the ERCOT market.
Electric industry client
Reactive power compensation
Retained by electric industry client to analyze electricity transmission
tariffs and reactive power compensation in competitive electric markets.
New Mexico Natural Gas Company
Due Diligence Study for ConfidentialAcquirer
Performed regulatory due diligence in connection with the potential
acquisition of New Mexico Natural Gas. Assessed hurdles to getting the
transaction approved by regulatory authorities. Analyzed recent rate
actions by the state commission and the likely outcomes of future cases.
Advised on key inputs into the acquirer's financial model.
Oil industry client
Regulation benchmarking in downstream oil sector
Retained by oil industry client to advise on margins and to perform an
international benchmarking of the regulation of the downstream oil sector.
Ilawaiian Electric Company
Iledging and rate stabilization
@ NERA Economic Consulting Page | 35
20tt
2010
2010
2009
2009
2009
2008
Kurt G. Strunk
Retained by Hawaiian Electric Company to provide analysis regarding
hedging of fuel oil and diesel fuel purchases in order to stabilize customer
rates.
Conlidential client
Implications of CFTC proposed definition of swap dealer
Advised on margin, capital and reporting implications of CFTC proposed
definition of swap dealer under Dodd Frank.
Confidential client
Leveraged lease transaction
Provided litigation support services with respect to a dispute over a
leveraged lease transaction.
Confidential client
Valuation, risk assessment and analysis of offtake contract options
Performed detailed valuation, risk assessment and analysis of offtake
contract options for a hydroelectric power plant.
Potomac Edison Company
Capital investment planning
Performed least-cost capital investment planning on behalf of the Potomac
Edison Company.
Government of New Brunswick, Canada
Advised on electric utility valuation
Advised Government ofNew Brunswick on the valuation of the vertically-
integrated, provincially-owned electric utility, NB Power, in connection
with the potential sale to Hydro Qu6bec. Developed a financial and rate
model reflecting the New Brunswick regulatory system and performed
valuations for a stand-alone and merged case and performed numerous
valuations of the benefits to the acquirer. Developed key inputs for the
valuation, including the Point Lepreau Nuclear Generation Station.
Coordinated development of fairness opinion.
Enerry East
Cost of capital
Advised on rate-of-return issues for electricity distributors in New York
State.
Confidential client
Contract design
Advised on design of structured contract for new renewable power plant,
new electricity transmission lines and associated RFPs.
@ NERA Economic Consulting Page | 36
2008
2008
200G2009
200+2010
2004-Present
1999-2008
1999-2008
Kurt G. Strunk
Commission for Energy Regulation
Review of SOLR tariffs
Advise the Commission for Energy Regulation on the review of SOLR
tariffs in the Republic of lreland.
Comisi6n Nacional de Energia
Market mechanisms for distributions to serve default customers
Advised on design and implementation of market mechanisms by which
Spanish electric utilities buy energy to serve default customers.
Hawaiian Electric Company
Hedging options for fuel
Performed economic and accounting analysis of hedging options for low
sulfur fuel oil, diesel and fuel oil on behalf of Hawaiian Electric Company
Commonwealth Edison and Ameren's Illinois utilities
Competitive procurement for power supply
Advised Commonwealth Edison and Ameren's Illinois utilities on the
design of a competitive procurement for short- and long-term power
supply, including the contractual framework for energy purchases, 2004 to
2010.
New Jersey and Maryland distribution utilities
Mark-to-market issues and credit policies
Advised several utilities in the Eastern Interconnection on mark-to-market
issues and credit policies.
New Jersey distribution utilities
Contract design and implementation
Worked with credit representatives of New Jersey distribution utilities on
contract design and implementation of the contract credit terms.
Coordinated the utilities' responses to changes to the forms of letters of
credit proposed by bidders; oversaw bidder credit qualification process;
managed approval process for alternate guaranty instruments, and served
as advisor to utilities when contract interpretation issues arose, 1999 to
2008.
FirstEnergy Companies
Competitive procurement for power supply
Advised the FirstEnergy Companies on the design of a competitive
procurement for intermediate term power supply, including the contractual
framework for energy purchases, 2004-2005.
@ NERA Economic Consulting Page | 37
2003
2002
2000
2000
1998-2000
1998-1999
1999
Kurt G. Strunk
Commission for Energy Regulation
Hedging agreement and a power plant construction agreement
Advised the Commission for Energy Regulation in Ireland on the structure
of a long-term hedging agreement and a power plant construction
agreement; assisted with the development of the hedging contract and the
tender documentation; performed bid evaluation.
Sierra Pacific Resources
Risk management strategies
Advised a major west coast utility in the US on the development of its risk
management policy and procedures; reviewed past trading and risk
management strategies; and performed an assessment of its risk
measurement and reporting techniques, including credit risk management
policy.
Ministry of Energy, M6xico
Mexican IPP solicitation program
Advised on the development of the Mexican IPP solicitation program,
including transaction structure (IPP v. BLT v. BOT), credit risk
management, model contracts, and bid evaluation (the Comisi6n Federal
de Electricidad has procured as much as 2000 MW per year of long-term
power supply from IPPs).
Comisi6n Federal de Electricidad, Mexico
Credit and collateral rcquirements for a power purchase agreement
Advised the Comisi6n Federal de Electricidad in Mexico on credit and
collateral requirements for an-asset backed power purchase agreement
with an IPP based in Mexico, including advice on the development of
comparable credit and collateral requirements for an import tansaction
that was to be made on a firm basis with liquidated damages.
Ministry of Energy, Mexico
Restructuring and privatization of the Mexican electricity sector
Consulted to the Mexican Ministry of Energy on the restructuring and
privatization of the Mexican electricity sector, the design of a competitive
spot market, and the policy of IPP solicitations, electricity transmission
pricing, upstream gas pricing and the development of a regulatory
framework for the sector.
Ministry of Energy, Mexico
Assessing competition in restructured Mexican electric generation
Contributed to study assessing competition in restructured electric
generation market in Mexico.
Swiss Re
Novel insurance packages to hedge electric price and operations risk
@ NERA Economic Consulting Page | 38
1998
1998
1998-2000
1998-1999
1998
1996
1996
1996
Kurt G. Strunk
Assisted Swiss Re in the development of the modeling for the creation of
novel insurance packages to hedge electric price and operations risk, 1999.
Iberdrola S.A., Spain
Seminars on the deregulated markets for gas and electricity in the US
Designed and conducted a series of three training courses for
representatives of Iberdrola S.A. (Spain's principal private utility), which
consisted of seminars on the deregulated markets for gas and electicity in
the US, followed by a series of interviews with Iarge utilities, IPPs, and
energy marketers. Courses were designed to provide the European traders
with an understanding of best practices employed by energy traders in the
US, with respect to risk management (credit, market, and operational),
1998.
C.E.L.P.E, Brazil
Risk management and energy trading
Assisted in training senior management of Iberdrola's Brazilian subsidiary
C.E.L.P.E. in the area of risk management and energy trading.
Baltimore Gas & Electric Company
Sector restructuring
Consultant to Baltimore Gas & Electric Company on sector restructuring.
Baltimore Gas & Electric Company
Valuation of electric power assets
Assisted in developing market value estimates of Baltimore Gas &
Electric Company's generation fleet, including Calvert Cliffs Nuclear
Power Plant.
Confidential Client
Generation and fuel strategy
Participated in the development of a generation and fuel strategy for a
large merchant generator and energy trader.
Iberdrola, S.A, Spain
Restructuring of the electricity sector
Consultant to Iberdrola, S.A. on issues relating to the restructuring of the
electricity sector in Spain.
Confidential client
Investment strategy
Consultant to a major southeastern electric utility on investment strategy
in the US including valuation of various targets.
Confidential client
Competitive analysis of electric generation
@ NERA Economic Consulting Page | 39
1996
199!1996
1995
Publications and Presentations
2019
2019
2019
2019
Kurt G. Strunk
Performed competitive analysis of electric generation market for utilities
in eastern US.
New York State Electric and Gas Company
Restructuring of the electricity market in New York State
Consultant to the New York State Electic and Gas Company on issues
relating to the restructuring of the electricity market in New York State.
New York Power Authority
Sector restructuring
Consultant to senior management of the New York Power Authority on
issues relating to the New York Competitive Opportunities Docket.
Southern California Edison Company
Proposed restructuring of California's electric services industry
Consultant to Southern California Edison Company on issues relating to
the California Public Utilities Commission's Proposed Policies Governing
Restructuring California's Electric Services Industry and Reforming
Regulation.
Republic of Indonesia
Presentations to Perusahaan Gas Negara, BHP Migas (regulator), and the
Ministry of Energy and Mineral Resources of the Republic of Indonesia
addressing the design and solicitation of natural gas distribution
concessions. October, 2019.
Republic of Indonesia
Presentations to Perusahaan Gas Negara and BHP Migas (regulator)
addressing connection policies and market development strategies for
greenfi eld natural gas distributors. Octob er, 2019.
Florence School of Regulation
Specialised Training on the Regulation of Gas Markets
Gas Sector Regulation: The US Experience
March 2019.
Electricity Journal
Could Mexico's Capacity Market Design Lead to Gaming by Generators?
March 2019.
@ NERA Economic Consulting Page | 40
2018
2018
2018
2017
20tt
2017
24rc
2016
2016
Kurt G. Strunk
Perusahaan Gas Negara
Specialized Training
Conducted specialized training course on the design and award of energy-
sector concessions.
December 2018.
Center for Research in Regulated Industries
Eastern Conference
Mexican Capacity Market Design and Market Power Potential
June 2018.
Florence School of Regulation
Specialised Tiaining on the Regulation of Gas Markets
Gas Sector Regulation: The US Experience
March 2018.
Electricity Journal
Beyond net metering: A model for pricing services provided by and to
distributed generation owners, such as rooftop solar.
April2017.
Law Seminars International Electric Utility Rate Case Conference
Beyond Net Metering: Ratemaking Challenges from Distributed
Generation.
Las Vegas, March 16 2017.
Public Utilities Fortnightly
Interest Rates After the Election: What They Mean for Public Utility
Returns.
January 2017.
Perusahaan Gas Negara, Jakarta, Indonesia
Provided in-depth training on regulatory practice and tariffdesign for gas
pipelines and distribution companies.
December 2016,
Electricity Journal
Low interest rates and unprecedented stock market volatility: What they
mean for your next rate case.
January-February 2016.
An Economic Analysis of the Acquisition of ConocoPhillips' Interest in
the Beluga River Unit, A Report Prepared for Chugach Electric
Association, [nc. and Anchorage Municipal Light and Power, March 11,
2016.
@ NERA Economic Consulting Page | 41
2016
2016
2015
2015
2015
2015
2014
2014
2012
2012
2012
Kurt G. Strunk
Law Seminars International, l2th Annual National Conference on
Current fssues in Electric Utility Ratemaking
Policy Options to Address Cross Subsidies from Self Generation, March
14,2016
International Arbitration Group of International Law Firm
Applications of Economic Analysis in International Arbitration (with a
focus on the Energy Sector)
New York, January 12,2016
The Electricity Journal
Low interest rates and unprecedented stock market volatility
What they mean for your next rate case
December 2015
Utility Regulation Conference: Rate Case, ROE, and Reliability
Brave New World for Return on Equity
Washington DC, December l 0-l 1, 2015
Law Seminars International, Energy in the Northeast
Energy Sector Developments and the Cost of Capital
Boston, September 29, 2015
Law Seminars International, Rate Case Conference
A Brave New World for Return on Equity
Las Vegas, March 5,2014
Law Seminars International, Rate Case Conference
Current Challenges in DeterminingAppropriate Rates of Return for Public
utilities
Las Vegas, February 28,2014
National EnerryAgency (China) and representatives of the State Grid
RegulatoryAccounting and the FERC Uniform System ofAccounts
Beijing, January 16, 2014
Agencia Nacional de Petroleo, Gas Natural e Combustiveis (Brazil)
Natural Gas Pipeline Regulation in the United States (training course)
Rio de Janeiro, September 18-19,2012
Center for Research in Regulated Industries Eastern Conference
Optimal Capital Structures for Regulated Public Utilities: When Does an
Imputed Debt Ratio Make Sense for Ratemaking Purposes?
Eastern Conference, Delaware May 18,2012
Energy Policy Briefing Note
O NERA Economic Consulting Pagel42
2012
2012
20tl
20tt
20tt
20tt
2011
2010
2009
Kurt G. Strunk
The Real Costs of Eliminating Unsecured Credit Lines and Requiring
Cash Collateral in OTC Swaps Markets
Co-author: Sharon Brown-Hruska, March 13,2012
Law Seminars International, Electric Utility Rate Case Conference
Marginal Cost Pricing for Rate Design
Las Vegas, February 2,2012.
Center for Research in Regulated Industries
Advanced Workshop in Regulation and Competition
Gas Pipeline Overearning Investigations
Newark, New Jersey, January 13,2012.
Working Group of Commercial Energy Firms
Cost-Benefit Analysis of the CFTC's Proposed Swap Dealer Definition
December 20,2011.
Law Seminars International, Renewable Energ5r in the Pacilic
Northwest
Abundant Low-CostNatural Gas? A Driver of Market Activity
August 4,2011.
Public Utilities Fortnightly
Zone of Reasonableness: Coping with Rising Profitability a Decade after
Restructuring
July 201l.
Law Seminars International, Electric Utility Rate Case Conference
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BEFORE THE
IDAHO PUBLIC UTILITIES COMMISSION
GASE NO. IPC-E-22-22
IDAHO POWER COMPANY
ATTACHMENT 2
IPC-E-22-22 - ICL's Response to ldaho Powe/s Second Production Request
REQUEST FOR PRODUCTION NO. 22: Please explain the fue! hedging value that
exists under each of the following avoided energy inputs for an Export Credit Rate
("ECR"):
a) lntegrated Resource Plan - ldaho Power Price
b) lCE Mid-C lndex Price
c) Energy lmbalance Market Load Aggregation Point ("ELAP") Price
Response
a-c) A fue! hedging value exists for any supply source whose cost that is not linked
directly to volatile natural gas prices. Thus, for each of the electricity market-based
export credit rates listed above, which 4 dependent on natural gas market prices,
there is little or no fuel hedge value. Electrici$ market prices are directly impacted by
natural gas market prices. Rather, it is the behind the meter solar generation serving
the customer's load that provides a hedge against the gas-cost sensitive utility supply
costs that otherwise would have to be incurred by lPC. To be conservative, and to
recognize that IPC proposed export credit rates willfluctuate with natura! gas prices, we
removed exports from the fuel hedge value.