HomeMy WebLinkAbout20230601Direct Griffin.pdf
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
OF IDAHO POWER COMPANY FOR
AUTHORITY TO INCREASE ITS RATES AND CHARGES FOR ELECTRIC SERVICE IN THE STATE OF IDAHO AND FOR
ASSOCIATED REGULATORY ACCOUNTING TREATMENT.
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CASE NO. IPC-E-23-11
IDAHO POWER COMPANY
DIRECT TESTIMONY
OF
SARAH GRIFFIN
GRIFFIN, DI 1
Idaho Power Company
Q. Please state your name, business address, and 1
present position with Idaho Power Company (“Idaho Power” or 2
“Company”). 3
A. My name is Sarah Griffin. My business 4
address is 1221 West Idaho Street, Boise, Idaho 83702. I am 5
employed by Idaho Power as Vice President of Human 6
Resources (“HR”). 7
Q. Please describe your educational background. 8
A. I currently hold a Bachelor of Art degree in 9
English from the University of Utah, and an Executive 10
Master of Business Administration degree from Boise State 11
University. I have been a member of the Society for Human 12
Resource Management since 1997 and have held both the 13
Professional and Senior Professional certifications, 14
although these are no longer active. I was appointed to the 15
Idaho Personnel Commission in 2017 and the Idaho Workforce 16
Development Council in 2019 and have been reappointed to 17
both positions. 18
Q. Please describe your work experience with 19
Idaho Power Company. 20
A. I possess nearly 30 years of experience 21
working in HR, with over 15 years of experience in the HR 22
department at Idaho Power. Between 1996 and 2007, I served 23
various HR roles at Delta Dental, Thoratec Corporation, and 24
NPS Pharmaceuticals, culminating in my role as Corporate HR 25
GRIFFIN, DI 2
Idaho Power Company
Manager at Boise Cascade. I began my employment with Idaho 1
Power in October 2007 as an HR Professional where my role 2
was to provide guidance to leaders in managing performance, 3
developing and delivering leader and employee training, and 4
conducting workplace investigations. Since my initial hire, 5
I have served in increasingly broad and expansive roles, 6
including HR Leader, HR Manager, and Director of HR, 7
ultimately moving into my current role of Vice President of 8
HR in October 2019. 9
Q. What is the purpose of your testimony? 10
A. The purpose of my testimony is to provide 11
justification for the labor and total compensation costs 12
included in the Company’s test year. I will describe the 13
Company’s overall compensation philosophy and explain why 14
the level of compensation requested in this case is 15
necessary to provide safe, reliable, affordable electricity 16
to customers. As part of this discussion, I will also 17
provide the justification for the requested increase in 18
cost recovery related to the Company’s pension plan, which 19
serves as a key component of Idaho Power’s overall 20
compensation package. 21
Q. How is the remainder of your testimony 22
organized? 23
A. My testimony consists of seven sections that 24
address the current labor market, the components of Idaho 25
GRIFFIN, DI 3
Idaho Power Company
Power’s total compensation or “Total Rewards” package, and 1
how those components are determined. My testimony then 2
concludes with a summary of costs related to Total Rewards 3
included in the Company’s filing. 4
• Section I: Idaho Power’s Total Rewards 5
Philosophy 6
• Section II: Current Labor Market Challenges 7
• Section III: Base Wage Benchmarking 8
• Section IV: Incentive Compensation 9
• Section V: Benefits Benchmarking 10
• Section VI: Retirement Benefits 11
• Section VII: Total Rewards Costs in 2023 Test 12
Year 13
I. IDAHO POWER’S TOTAL REWARDS PHILOSOPHY 14
Q. Please provide a general discussion of Idaho 15
Power’s Total Rewards philosophy. 16
A. Idaho Power’s Total Rewards philosophy is to 17
provide a balanced, competitive, and sustainable total 18
compensation and benefits package, ensuring it attracts and 19
retains high-quality employees and motivates them to 20
achieve performance goals that benefit customers at a fair 21
and just cost. Maintaining a competitive Total Rewards 22
package allows the Company to recruit and retain a highly 23
skilled workforce that possesses a deep knowledge and 24
understanding of the complex energy business that builds 25
GRIFFIN, DI 4
Idaho Power Company
and becomes more valuable as employees gain more experience 1
over time. The competitiveness of Idaho Power’s Total 2
Rewards package also supports the Company’s intent to 3
maintain a flexible workforce that can easily adjust work 4
duties and assignments to meet changing demands and 5
operational needs. In support of this philosophy, the 6
Company monitors its Total Rewards package, and adjusts it 7
accordingly in order to maintain a market-competitive total 8
compensation package. 9
Q. What are the components of Idaho Power’s Total 10
Rewards package? 11
A. The Total Rewards package is comprised of base 12
wages and “at-risk” incentive pay, as well as competitive 13
benefits programs including health and welfare, retirement 14
and other benefits. 15
Q. How often is the Company’s Total Rewards 16
package reviewed? 17
A. While certain components of the Company’s 18
Total Rewards package are reviewed annually, a 19
comprehensive benchmarking analysis that evaluates the 20
total cost of Idaho Power’s employee benefits (as a 21
percentage of pay) as compared to peer utility companies is 22
performed biennially. Table 1 below summarizes the 23
frequency of review for the various components of the 24
Company’s Total Rewards package, as well as the actions 25
GRIFFIN, DI 5
Idaho Power Company
that are taken based on each review. I will describe each 1
of these review processes in greater detail later in my 2
testimony. 3
Table 1: Total Rewards Review Frequency by Component 4
Total Rewards Component Review Frequency Outcome
Salary Structure Annually
Benefits Programs Annually
Compensation position every 5-7 years or adjustment, up or
5 Q. How does Idaho Power analyze whether it is 6
providing market-competitive compensation and benefits? 7
A. Idaho Power’s compensation benchmarking 8
process evaluates positions on an ongoing basis, with the 9
goal of a comprehensive review occurring approximately 10
every 5-7 years, particularly for positions that have a 11
significant number of incumbents, to ensure that Idaho 12
Power maintains market-competitive compensation levels and 13
remains an employer of choice. 14
Q. What data sources does Idaho Power rely on for 15
these analyses? 16
A. The Company uses a variety of data sources in 17
the compensation benchmarking process. Non-exempt1 trade 18
positions are typically benchmarked against intermountain 19
1 “Exempt” positions refer to non-hourly, salaried positions, while “non-exempt” positions are paid on an hourly basis.
GRIFFIN, DI 6
Idaho Power Company
utility peer contract data. The Company also participates 1
in and purchases data from Willis Towers Watson’s (“WTW”) 2
Energy Services Middle Management, Professional and Support 3
Compensation Survey to benchmark management, professional 4
exempt, office-based non-exempt, and other non-exempt 5
support roles. 6
Q. What is WTW and how does Idaho Power utilize 7
their survey data? 8
A. WTW is a nationally recognized HR consulting 9
firm, and the Energy Services Middle Management, 10
Professional and Support Compensation Survey is the most 11
widely used salary survey in the utility industry. WTW also 12
provides a biennial review of the cost to Idaho Power of 13
providing benefits (as a percentage of pay) compared to the 14
corresponding costs incurred by a peer group of “Energy 15
Services” and “General Industry” companies. Benefits 16
reviewed and benchmarked include health, retirement, and 17
other services, including time off and disability programs. 18
The Company utilizes WTW’s Benefits Online survey data and 19
benchmarking information from Idaho Power’s benefits 20
consulting firm, KPD, when reviewing benefit programs and 21
cost. 22
Q. How does the Company use the Total Rewards 23
benchmarking information to adjust employee compensation 24
and benefit offerings? 25
GRIFFIN, DI 7
Idaho Power Company
A. The Company uses the Total Rewards 1
benchmarking information as the basis for decision-making 2
regarding salary structure adjustments, compensation grade 3
levels and appropriate benefit levels, with the goal of 4
aligning the overall employee total compensation with the 5
market. 6
Q. Does the Company believe that the benchmarking 7
review process for Total Rewards is an effective method for 8
establishing its compensation and benefit levels? 9
A. Yes. The Company believes that the review 10
process for Total Rewards has been successful in 11
maintaining a competitive, cost-effective Total Rewards 12
package that is in line with its industry peers, attracts 13
and retains a quality workforce, and ensures that labor 14
costs included in customer rates are fair, just, and 15
reasonable. 16
II. CURRENT LABOR MARKET CHALLENGES 17
Q. Please generally describe how the labor market 18
has changed since the Company filed its last general rate 19
case (“GRC”) in 2011. 20
A. The electric utility industry is changing at 21
a rapid pace, and along with it so are the needs and 22
expectations of Idaho Power’s employees. In the past, Idaho 23
Power’s compensation and benefits program has been 24
effective in recruiting and retaining talent. However, 25
GRIFFIN, DI 8
Idaho Power Company
recently this has become more difficult, particularly for 1
employees with specialized or high-demand skills, and the 2
Company anticipates this trend will continue. In light of 3
these challenges, which I will describe in more detail 4
later in my testimony, ensuring the Company offers a 5
competitive Total Rewards package that emphasizes long-term 6
employment is increasingly important in order to attract 7
and retain a high-quality workforce. 8
Q. What factors have caused the labor market to 9
become more challenging since 2011? 10
A. Multiple factors have caused a paradigm shift 11
in the labor market since 2011. Primary factors impacting 12
Idaho Power have been increased competition for local 13
workers due to remote work options resulting from the 14
COVID-19 pandemic (“pandemic”), historic increases in 15
housing costs in Idaho Power’s service area, and the need 16
to hire and retain talent to operate in an increasingly 17
complex environment, exemplified by new processes such as 18
participation in the Energy Imbalance Market (“EIM”) and 19
more sophisticated resource modeling and planning within 20
the integrated resource planning (“IRP”) process. 21
Q. How did the pandemic impact the ability to 22
attract and retain qualified employees? 23
A. Due to mandatory remote working conditions 24
that resulted from the pandemic, many companies throughout 25
GRIFFIN, DI 9
Idaho Power Company
the world transitioned to a higher percentage of full 1
remote or hybrid remote job offerings. While certain hands-2
on positions were less impacted by this change, many in-3
office positions in the Company saw a paradigm shift in the 4
labor market, which directly impacts Idaho Power’s ability 5
to attract and retain high-quality employees. 6
Rather than competing strictly in the local job 7
markets, Idaho Power is now competing for employees with 8
any company throughout the world that offers the ability to 9
work remotely, many of whom are paying wage rates that are 10
much higher and often reflective of those offered in much 11
larger cities. This impact – most acutely felt by 12
Information Technology (“IT”) and Cyber Security positions 13
– comes at a time when technology and security have grown 14
increasingly complex. 15
Q. Has Idaho Power’s workforce changed over the 16
last decade with respect to age and proximity to 17
retirement? 18
A. Yes. At the time of the Company’s last GRC, as 19
of December 31, 2011, approximately 39 percent of employees 20
were eligible to retire within five years while 43 percent 21
of employees had fewer than 10 years of service. As of 22
April 2023, the Company now has approximately 30 percent 23
eligible to retire within five years while more than half 24
GRIFFIN, DI 10
Idaho Power Company
of the Company’s employees have fewer than 10 years of 1
service. 2
Q. How have housing costs in Idaho changed since 3
the Company filed its last GRC in 2011? 4
A. According to the most recent House Price Index 5
(“HPI”) Quarterly Report (Q4 2022) issued by the Federal 6
Housing Financing Agency (“FHFA”), Idaho leads the nation 7
in the five-year increase in housing prices, as 8
demonstrated in Figure 1 below. These elevated housing 9
prices serve as an additional hurdle to hiring employees 10
who do not currently reside within the area. 11
Figure 1. 12
Home Price Index Percent Changes, Q4 2022 13
14
Q. How do higher housing costs impact Idaho Power’s 15
ability to hire quality candidates? 16
58.4%
72.8%
104.0%
102.3%
0%20%40%60%80%100%120%
USA
Mountain Division
Idaho
Boise
FHFA Home Price Index
Percent Change in Housing Prices
GRIFFIN, DI 11
Idaho Power Company
A. For candidates external to Idaho Power’s 1
service area, housing costs serve as a key decision point 2
when evaluating whether to accept a job offer. While Idaho 3
Power prefers to and focuses on hiring locally, many 4
specialized positions require broader recruiting sources, 5
especially in light of the recruiting challenges detailed 6
previously in my testimony. Where Idaho Power was 7
historically able to market Idaho as high quality-of-life 8
and low cost-of-living compared to other states, the 9
historic increase in housing costs has degraded the 10
Company’s ability to market Idaho as low cost-of-living. 11
Q. How have changes in the electric utility 12
industry resulted in the need to hire and retain 13
specialized talent since the Company’s last general rate 14
case? 15
A. As discussed further in the Direct Testimony 16
of Company Witness Ms. Lisa Grow, Idaho Power’s business 17
has become increasingly complex for a number of reasons, 18
including unprecedented customer growth and changing 19
technology that requires talented, long-term employees to 20
operate and maintain. While I am not the Company’s 21
technical expert in these areas, from an HR perspective, 22
implementing and maintaining initiatives such as 23
participation in the EIM, the development of long-term 24
capacity expansion modeling for IRP and resource 25
GRIFFIN, DI 12
Idaho Power Company
procurement purposes, and complex billing procedures for 1
increasingly prominent technologies such as rooftop solar 2
all impact Idaho Power’s labor needs. 3
Q. How have the challenges you described impacted 4
Idaho Power’s labor recruitment and retention? 5
A. The challenges above have led to increased 6
difficulty in hiring and retaining employees, as evidenced 7
by the Company’s time-to-fill open positions, the size of 8
qualified applicant pools, and the Company’s employee 9
turnover rates. 10
Q. What does the time-to-fill metric measure? 11
A. Time-to-fill measures the number of days it 12
takes to fill an open position, from the date a job 13
requisition is posted to the date a new hire accepts the 14
position. 15
Q. How have Idaho Power’s time-to-fill open 16
positions and the size of qualified applicant pools changed 17
in recent years? 18
A. The Company has experienced longer hiring 19
times in recent years, with a time-to-fill rate increasing 20
from an average of 38 days in 2019 to 43 days in 2022. 21
Although this change may appear small, the compounded 22
effects of a longer time-to-fill rate and smaller candidate 23
pools for job postings have impacted Idaho Power’s ability 24
to hire qualified candidates in a timely manner. 25
GRIFFIN, DI 13
Idaho Power Company
Q. Can you provide some examples of the smaller 1
candidate pools for job postings, as indicated in the 2
previous response? 3
A. Yes. For example, Idaho Power’s external 4
Journeyman Lineworker postings received an average of 22 5
applicants in 2020 compared to fewer than six in 2022. For 6
more technical positions, this decrease has been even more 7
dramatic. The System Administrator positions that were 8
posted in 2020 had an average candidate pool size of 73, 9
while the same position posted in 2022 had an average 10
candidate pool size of fewer than nine. Further, Engineer 11
postings averaged over 50 candidates in 2020 compared to 12
fewer than 20 in 2022 13
Q. Are these hiring challenges unique to Idaho 14
Power? 15
A. No. In an article dated May 11, 2023, the 16
Idaho Press reported that the City of Boise is experiencing 17
similar hiring challenges and has a 10 percent vacancy 18
rate. The article further states that “in Idaho, there are 19
1.5 jobs per each available person.”2 20
Q. How has increased scarcity in candidate pools 21
impacted Idaho Power? 22
2 'Has not resolved itself': City of Boise still facing job vacancies | Local News | idahopress.com
GRIFFIN, DI 14
Idaho Power Company
A. Due to relatively limited candidate pools, the 1
Company has had to resort to hiring at an entry level for 2
many professional positions where someone with more 3
experience is needed to fill the position but there are no 4
or a limited number of candidates. This has particularly 5
been the case for technical positions where there were not 6
sufficient qualified applicants or the salary requirements 7
of qualified applicants could not be met. This results in 8
additional training resources and time to get candidates up 9
to speed in the position and makes retention of these 10
workers even more critical as they gain valuable knowledge 11
and experience. This further supports the need to emphasize 12
long-term retention in the Company’s Total Rewards package, 13
exemplified by the structure of the Company’s defined 14
benefit pension plan. 15
Q. How has the Company’s turnover rate changed as 16
a result of the current labor market? 17
A. The labor market forces detailed above have 18
resulted in increased turnover rates in recent years. The 19
overall voluntary turnover rate, which includes both 20
regular voluntary terminations and retirements, increased 21
by 49 percent from 2012 to 2022. The Company’s voluntary 22
turnover rate (excluding retirements) as of December 31, 23
2022 nearly doubled compared to prior to 2020. According to 24
exit interview data, 48 percent of these employees left the 25
GRIFFIN, DI 15
Idaho Power Company
Company for more pay and/or additional advancement 1
opportunities. Furthermore, these statistics are not unique 2
to Idaho Power. Within the Idaho Press article referenced 3
previously, the City of Boise HR Director Sarah Borden 4
stated that last January “45 percent of non-retirees said 5
that either compensation or cost of living was driving them 6
to make this decision (to leave).”3 7
Q. Has Idaho Power experienced a corresponding 8
increase in declined job offers? 9
A. Yes. The number of declined offers more than 10
tripled from 2020 to 2022. The majority of these declined 11
offers were situations where either salary requirements 12
could not be met or there were competing offers that were 13
beyond what the Company could provide. 14
Q. How has Idaho Power responded to the changing 15
labor market and the challenges it presents? 16
A. In light of these challenges, Idaho Power has 17
modified its recruiting approach with the ultimate goal of 18
attracting and retaining a talented workforce while keeping 19
costs low for customers. First, where Idaho Power formerly 20
was able to rely solely on local sources for its job 21
postings, the Company has expanded its use of nationwide 22
job boards to help promote and target qualified candidates 23
and has attempted to source candidates through resumé 24
3 Id.
GRIFFIN, DI 16
Idaho Power Company
databases. Additionally, in the post-pandemic era in which 1
many job seekers prioritize remote work opportunities, 2
Idaho Power began offering hybrid work options for 3
qualified positions. 4
Q. How do these challenges impact the Company’s 5
Total Rewards philosophy? 6
A. Given these challenges, now more than ever, 7
offering an attractive Total Rewards package is crucial not 8
only for the hiring of high-quality employees, but for the 9
retention of employees as well. It is vital that Idaho 10
Power’s Total Rewards package can attract quality employees 11
who will serve as long-term productive members of the 12
Company’s workforce. Given challenges in hiring, it is even 13
more crucial that the Company’s Total Rewards package 14
incents long-term employment, highlighting the need for the 15
Company’s defined benefit pension plan that I will detail 16
later in my testimony. In its entirety, the setting of a 17
competitive Total Rewards package is crucial to the ability 18
of Idaho Power to cost-effectively maintain safe and 19
reliable service. Each component of the Total Rewards 20
package - Base Wages, Incentive Pay, Benefits, and Pension 21
– will be detailed in Sections III through VI of my 22
testimony, respectively. 23
III. BASE WAGE BENCHMARKING 24
Q. What are base wages? 25
GRIFFIN, DI 17
Idaho Power Company
A. Base wages are the base level compensation an 1
employee receives as part of the Company’s Total Rewards. 2
For non-exempt employees, base wages are determined by an 3
hourly wage applied to hours worked, while for exempt 4
employees base wages reflect the employee’s annual base 5
salary. 6
Q. How does Idaho Power determine the market-7
based pay structure for a job? 8
A. Base compensation is established when a job is 9
created using peer utility wage data obtained from salary 10
surveys and union contracts, along with similar internal 11
positions already matched to market data. These reviews 12
typically involve at least three years of wage data to 13
ensure that compensation trends are considered and to 14
prevent frequent changes to position wages based on one to 15
two years of data. 16
In addition to market survey data, the job 17
evaluation process includes a review of the basic education 18
and experience requirements, physical requirements, and 19
behavioral competencies for the position. This proactive, 20
comprehensive review ensures the Company has accurate, 21
competitive, and safe job requirements and descriptions. 22
Q. Please describe the standard the Company uses 23
to set base wages. 24
GRIFFIN, DI 18
Idaho Power Company
A. The Company has a grade and step pay system. 1
The highest step in any grade is step 13. Each position is 2
assigned a grade as reflective of the market, and the 3
Company standard for remaining competitive is to set the 4
step 13 pay of each grade to be approximately equal to the 5
median pay for a comparable position in the peer-compared 6
market. Targeting the median of market pay is a 7
compensation-setting best practice. It is a conservative 8
approach that allows Idaho Power to manage costs while 9
ensuring the Company is able to provide competitive pay 10
within the grade and step system. 11
Q. How does Idaho Power ensure its base wages do 12
not exceed the market median over time? 13
A. On an annual basis, the Company reviews a 14
variety of data to determine the appropriate General Wage 15
Adjustment (“GWA”) to remain competitive. The Company 16
reviews market survey data from WTW and peer utility 17
contracts, the Consumer Price Index (“CPI”), and other 18
economic data that ultimately informs the recommendation to 19
the Board of Directors for the Company’s GWA. On a longer-20
term basis, Idaho Power performs a comprehensive job review 21
for individual positions to ensure base wages are 22
competitive and appropriate relative to market. 23
Q. Has the Company’s job review process evolved 24
since the last GRC? 25
GRIFFIN, DI 19
Idaho Power Company
A. Yes. The Company’s 2011 base wage and total 1
compensation benchmarking analysis focused on five specific 2
positions.4 The information and resulting decisions 3
regarding compensation levels were then used to inform 4
decisions for a broader set of jobs with similar functions 5
referred to as a job category or “job family.”5 6
In 2017, the Company developed a process to expand 7
this review from five specific positions and their 8
associated “job family” to performing a review of all jobs 9
on an ongoing proactive basis. This is in addition to the 10
practice of reviewing jobs when there are significant 11
changes in job responsibilities or market conditions 12
resulting in challenges for the Company in recruiting 13
and/or retaining the talent necessary to provide safe, 14
reliable, and affordable energy to customers. 15
Q. Please generally describe the current job 16
review process. 17
A. Positions are evaluated using market data from 18
third-party salary surveys, primarily from WTW. The Company 19
relies on data specific to the energy services industry, 20
with a focus on information from companies with comparable 21
levels of annual revenue and regulation. Where appropriate, 22
4 These five positions represented approximately 11 percent of the total employees at Idaho Power in 2011 and 2012.
5 The combined number of employees in each of the selected jobs represented approximately 22 percent of the total workforce in 2011 and 2012.
GRIFFIN, DI 20
Idaho Power Company
peer utility contracts are also reviewed along with similar 1
internal positions. The Company also reviews job postings 2
of peer utilities. 3
Q. Has the Company made progress in reviewing all 4
jobs at Idaho Power using this job review process? 5
A. Yes. While the job review process slowed in 6
2020 due to the impact of the pandemic on the Company’s 7
workforce and HR staff, Idaho Power is currently 8
progressing through its full review of all positions within 9
the Company. The table below shows the number of jobs that 10
have been reviewed since implementing this new process in 11
2017. When this program was implemented, the Company 12
focused first on jobs with the highest number of 13
incumbents, rather than smaller or single incumbent 14
positions. 15
Figure 2. 16
Job Review Completion Progress, 2017 – Current 17
18
Job Review Completion Progress
Complete In Progress Remaining
GRIFFIN, DI 21
Idaho Power Company
As of 2023, there are 665 total distinct jobs in the 1
Company. Of those, reviews for 417 are complete, 4 are in 2
progress, and 244 remain. 3
Q. What changes have occurred as a result of the 4
Company’s broader job review? 5
A. As shown in the chart below, the majority of 6
the jobs reviewed were on-market, indicating that Idaho 7
Power’s wage-setting process is functioning as intended. 8
For jobs that were found to be above market, employees are 9
placed into a reduction-in-grade program that brings them 10
into alignment with the lower rate of the new reduced grade 11
of the position. When positions are determined to be below 12
market, the incumbents are generally moved to the 13
equivalent step of the position’s new grade. 14
Figure 3. 15
Comprehensive Job Review Results by Category 16
17 0%10%20%30%40%50%60%70%
Above Market
Below Market
On Market
Job Review Results by Category
GRIFFIN, DI 22
Idaho Power Company
Q. What has been the recent trend for wages and 1
salaries in the marketplace? 2
A. Data indicates that wages and salaries are 3
generally increasing in the marketplace. The Company 4
reviews several factors to determine appropriate increases 5
based on what is trending in the market, including salary 6
budget surveys, union contract negotiations, and cost-of-7
living and economic factors. 8
Q. Have you observed any recent trends in salary 9
budget surveys and union contract negotiations? 10
A. Yes. Recent salary survey projections for 11
merit and salary structure movement showed an increase over 12
prior years. Union contract annual adjustments, as well as 13
market adjustments for many positions were negotiated at an 14
all-time high, with several peer utilities granting 15
increases in the double digits for certain roles. As shown 16
in Table 2 below, first year contract wage increases for 17
lineman ranged from 7-18 percent. 18
Table 2: Peer Utility Wage Increases for Lineman 19
Northwest Peer Utilities Old Hourly Rate 1,2 New Hourly Rate1,3
Avista $48.63 $55.39 13.90%
Northwestern $48.24 $51.94 7.70%
NV Energy $52.38 $62.18 18.70%
Pacific Power $48.91 $56.03 14.60%
Rocky Mountain
Power $49.29 $54.40 10.40%
1) All data collected from publicly available job postings or union contracts 20
2) Hourly rate effective final year of old union contract 21
3) Hourly rate effective first year of new union contract 22
23
GRIFFIN, DI 23
Idaho Power Company
Q. Have you observed any changes in cost-of-1
living and economic factors impacting employee 2
compensation? 3
A. With respect to cost-of-living and economic 4
factors, CPI indicates a continued upward trend through 5
2022, as indicated in Table 3 below, with inflation spiking 6
in 2021 and 2022 relative to prior years. In 2022 alone, 7
CPI in the Mountain Division CPI-U (“Urban”) increased 9.6 8
percent. 9
Table 3: Consumer Price Index, 2018–2022 10
Consumer Price Index – CPI-U (12 mo. Change 2018 2019 2020 2021 2022 Average
US City Average 2.30% 1.70% 1.40% 5.40% 8.20% 3.80%
West (Includes AK, AZ, CA, CO, HI, ID, MT, NV, 3.40% 2.60% 1.60% 5.30% 8.30% 4.20%
2.80% 2.30% 2.00% 5.70% 8.30% 4.20%
(Includes AZ, CO, ID, n/a 2.90% 1.80% 6.00% 9.60% 5.10%
11 As discussed earlier in my testimony, housing prices 12
have increased at a historic rate in Idaho. This is further 13
evidenced in Table 4 below, which shows a 37.06 percent 14
increase in housing costs in 2021, and a 19.13 percent 15
increase in 2022. 16
// 17
// 18
19
20
GRIFFIN, DI 24
Idaho Power Company
Table 4: Home Price Index, 2018-2022 1
Home Price Index 2018 2019 2020 2021 2022
2
Q. What is the result of the Company’s general 3
wage benchmarking process in light of these recent trends, 4
and how does this impact the base wage levels reflected in 5
the Company’s filing? 6
A. Since the filing of the Company’s last GRC, 7
Idaho Power has adjusted base wages through annual GWAs, as 8
well as the comprehensive job review process described 9
previously in my testimony. This approach ensures that the 10
Company’s base wages are regularly reviewed, resulting in 11
competitive market-based rates that effectively balance 12
Idaho Power’s ability to attract and retain a quality 13
workforce while keeping costs low for customers. Idaho 14
Power’s annual GWA process has assisted the Company in 15
keeping pace with recent market trends, while the position-16
by-position review has indicated that Idaho Power’s base 17
wages are competitive relative to market for the majority 18
of positions. 19
As shown in the Figure 3 above, for a small 20
proportion of reviewed positions, up or down adjustments 21
have been applied in the event the comprehensive review 22
GRIFFIN, DI 25
Idaho Power Company
indicated an adjustment was warranted. The graph also shows 1
that the number of positions that experienced wage 2
decreases is very similar to the number of positions that 3
experienced wage increases, indicating that on average the 4
Company’s benchmarking process is functioning as intended. 5
This process, combined with the market forces 6
described earlier in my testimony, results in total 7
operations and maintenance (“O&M”) base wage costs included 8
in the 2023 test year of $133.7 million. Company Witness 9
Mr. Matthew Larkin discusses the 2023 test year O&M labor 10
forecast in more detail in his testimony. 11
IV. INCENTIVE COMPENSATION 12
Q. What is incentive pay? 13
A. Incentive pay is an “at-risk” part of Idaho 14
Power’s Total Rewards package that is awarded based on 15
performance goals established by the Compensation Committee 16
of the Company’s Board of Directors. Unlike base pay, which 17
is guaranteed, incentive pay will not be paid unless the 18
Company’s performance meets or exceeds predetermined 19
metrics. 20
Q. How is Idaho Power’s incentive pay designed? 21
A. Idaho Power’s incentive plan consists of three 22
components: 1) an electrical network reliability goal, 2) a 23
customer satisfaction goal, and 3) a profit-sharing goal 24
GRIFFIN, DI 26
Idaho Power Company
based on net income. The intent of the plan is to focus on 1
key areas where employees can have an impact. 2
Q. Please generally describe the incentive 3
metrics. 4
A. The three metrics are intended to motivate 5
employee performance in ways that positively impact 6
customers. The network reliability goal considers the 7
frequency and duration of customer outages. The customer 8
satisfaction goal is based on the 12-month average of the 9
customer relationship index (“CRI”), which details the 10
Company’s performance through the eyes of the customer. The 11
CRI consists of five specific questions asked of Idaho 12
Power’s customers by an independent survey company and 13
addresses issues such as overall satisfaction, quality, 14
value, advocacy, and loyalty. The profit-sharing component 15
is based on achievement against financial targets, 16
motivating employees to work toward the financial health of 17
Idaho Power, which is necessary to provide safe, reliable, 18
and affordable service. 19
Each component has an identified threshold, target, 20
and maximum, or in other words, a low, medium, and high 21
level of payout based on actual results compared to 22
predetermined metrics. The payout levels are set each year 23
by the Board of Directors to ensure they continue to 24
stretch employee performance in service of customers. 25
GRIFFIN, DI 27
Idaho Power Company
Q. Which components of the Company’s incentive 1
plan are included in the Company’s 2023 test year? 2
A. Consistent with prior Commission direction,6 3
Idaho Power has only included the components of incentive 4
pay that the Commission has determined are directly related 5
to identifiable customer benefits, which in this case are 6
network reliability and customer satisfaction. These 7
components are included in the test year at the 2 percent 8
target (medium) incentive level. Idaho Power has excluded 9
any costs related to the profit-sharing component. 10
Q. Has Idaho Power excluded any other components 11
of its incentive pay from its request in this case? 12
A. Yes. Idaho Power has excluded executive 13
incentive pay. This is consistent with Commission treatment 14
of these costs in prior ratemaking proceedings. 15
Q. What is the Company requesting in this case 16
with regard to incentive-related costs? 17
A. As discussed by Mr. Larkin, incentive pay 18
totaling $10.2 million related to the customer satisfaction 19
and reliability components is included in the 2023 test 20
year. 21
V. BENEFITS BENCHMARKING 22
Q. What is Idaho Power’s benefits strategy? 23
6 IPC-E-08-10, Order No. 30722 at 17.
GRIFFIN, DI 28
Idaho Power Company
A. Idaho Power strives to offer its employees a 1
comprehensive and competitive package of health and 2
welfare, retirement, and insurance benefits programs. As 3
with base compensation and at-risk pay, it is important for 4
the Company to offer a cost-competitive benefits package 5
with features that address the needs of employees and is 6
sufficient to attract and retain well-qualified and skilled 7
employees. As discussed previously in my testimony, 8
benefits that incent long-term employment are crucial in 9
today’s environment. 10
Q. What are the major components of Idaho Power’s 11
benefits package? 12
A. Major components of Idaho Power’s benefits 13
package include health and welfare benefits (medical, 14
prescription, dental, and vision programs), other benefits 15
(disability, life insurance, and flexible time off), and 16
retirement benefits. 17
Q. Does Idaho Power benchmark its total benefits 18
and compare overall benefit costs? 19
A. Yes. The Company monitors its benefit programs 20
on an ongoing basis to ensure the appropriate balance 21
between benefit cost and maintaining a competitive position 22
in the market. 23
Q. What is Idaho Power’s annual benefits 24
benchmark review process? 25
GRIFFIN, DI 29
Idaho Power Company
A. On an annual basis, Idaho Power utilizes 1
benchmarking data from WTW’s Benefits Online and the Health 2
Care Financial Report, KPD’s regional and national survey 3
data, and peer utility contracts to address the Company’s 4
benefit plan’s overall cost, offerings, and market 5
competitiveness. For example, medical, dental, and vision 6
premiums are evaluated and generally adjusted each year. 7
Further, the medical plan’s cost-sharing balance target is 8
20 percent employee and 80 percent employer (which is 9
competitive with peer utilities) and annual rates are 10
evaluated and adjusted to align with this target 11
percentage. The results of this review are presented 12
annually to the Board of Directors Compensation Committee 13
and are generally implemented the following year. 14
Q. How does Idaho Power benchmark longer-term 15
benefits? 16
A. Every other year, Idaho Power participates in 17
WTW’s Energy Services “BENVAL" Study. BENVAL is a 18
comparison of benefit values among peer utilities with 19
similar revenues. BENVAL provides a complete competitive 20
analysis of the value of a benefit program, including a 21
comparison of the Company’s benefit plan against utility 22
companies of similar sizes. Benefit plan design that 23
affects medical costs can vary greatly, so BENVAL gathers 24
all relevant information related to a company’s healthcare 25
GRIFFIN, DI 30
Idaho Power Company
and other benefit plan offerings in order to accurately 1
benchmark them against other peers. For consistency of 2
comparison, the results of the study are typically 3
presented as benefits costs as a percentage of pay. 4
In addition to the Energy Services BENVAL study, the 5
Company also contracts WTW to create a custom BENVAL study 6
that uses all industry survey data and provides an in-depth 7
peer utility comparison of the Company’s health and welfare 8
and retirement benefits design. This information is 9
included in the Company’s analysis of its Total Rewards 10
package and is provided to Idaho Power’s Board of Directors 11
Compensation Committee. The results of this report are used 12
to broadly evaluate the total value and cost of the 13
Company’s benefits and market competitiveness. 14
Q. What is Idaho Power’s peer group in the BENVAL 15
study? 16
A. Idaho Power’s BENVAL peer group consists of 17
upwards of 34 similarly situated energy services companies 18
across the nation, as well as a subset of utility companies 19
of similar size. In 2021, there were 663 All Industry 20
companies included in the analysis, as detailed in Table 5 21
below. 22
// 23
// 24
25
GRIFFIN, DI 31
Idaho Power Company
Table 5: BENVAL Survey Participant Composition, 2017-2021 1
Year All Industry Energy
2 Q. According to the most recent BENVAL study, how 3
do Idaho Power’s total benefit costs compare to its energy 4
peer group? 5
A. As can be seen in Figure 4 below, the value of 6
Idaho Power’s total benefits package (health, retirement, 7
and other benefits) for the most recent studies show that 8
Idaho Power’s benefit ratio to pay is 36.3 percent while 9
the Company’s peers are 35.9 percent -- relatively the same 10
total benefit ratio. It is important to note that Idaho 11
Power manages its benefits package as a whole and the 12
BENVAL survey is a useful tool that ensures that the 13
Company’s combined benefit offerings as a percent of pay 14
remain at market even though each component may differ in 15
the peer group. As can be seen in the chart below, Idaho 16
Power’s benefit costs as a percentage of pay are generally 17
consistent with the energy industry. 18
// 19
// 20
21
22
23
GRIFFIN, DI 32
Idaho Power Company
Figure 4. 1
Composite BENVAL Results: 2017, 2019, 2021 2
3
4
Q. What benefit cost trends can be seen from the 5
recent BENVAL survey results? 6
A. A review of the data from the 2017, 2019, and 7
2021 studies shows that total benefit costs are rising 8
across the board. As indicated in the prior figure, 9
percentage of pay has increased between surveys from 2017, 10
2019, and 2021. These trends, coupled with the increase in 11
CPI and overall wages discussed earlier in my testimony, 12
indicate that the costs of maintaining a market-competitive 13
benefits package are increasing over time. 14
Q. What has been the Company’s approach to 15
managing rising health and welfare care costs? 16
A. The Company is continually evaluating trends 17
and actively working with KPD and associated third-party 18
0%
5%
10%
15%
20%
25%
30%
35%
40%
2017 2019 2021
Benefit Costs as a Percent of Pay
IPC Energy All Industry
GRIFFIN, DI 33
Idaho Power Company
administrators on strategies to manage overall healthcare 1
costs. These strategies include prescription benefits and 2
formularies, conservative care strategies, case management, 3
medical policy review, and telemedicine. In addition, there 4
is ongoing vendor evaluation and management to ensure the 5
Company is getting the best service at the lowest cost. 6
Q. Given the upward pressure on health and other 7
benefit costs, what is Idaho Power doing to ensure its 8
total benefit costs remain in line with the market? 9
A. The Company continues to benchmark benefit 10
program offerings and costs on an annual basis to ensure 11
its offerings remain in line with market. 12
Q. Are there any final conclusions that can be 13
drawn from the benefits benchmarking information you have 14
provided? 15
A. Yes. As demonstrated by the BENVAL results 16
provided in my testimony, Idaho Power’s total benefits 17
offered as a percentage of pay are in line with the peer 18
utilities, indicating the Company’s benefits package and 19
its underlying benchmarking process are functioning as 20
intended. Additionally, given the labor market challenges 21
discussed throughout my testimony, Idaho Power believes it 22
is prudent to more heavily weight its benefits package 23
toward components that incent long-term employment (i.e., 24
retirement benefits). In light of recent trends in rising 25
GRIFFIN, DI 34
Idaho Power Company
costs, Idaho Power has actively managed the costs of its 1
benefit programs while simultaneously ensuring its 2
offerings are competitive, to support the hiring and 3
retention of long-term, quality employees. 4
Q. What is the Company requesting in this case 5
with regard to benefits-related costs? 6
A. The O&M benefits-related costs (excluding 7
pension) included in the 2023 test year are approximately 8
$68.1 million. 9
VI. RETIREMENT BENEFITS 10
Q. What are the components of the Company’s 11
retirement benefits package? 12
A. The Company's retirement benefits package 13
includes three components: (1) a defined contribution or 14
401(k) benefit plan, (2) a defined benefit (pension) plan, 15
and (3) a retiree medical benefit plan. 16
Q. Why are retirement benefits important? 17
A. The retirement benefits package is a 18
significant part of the overall Total Rewards desired by 19
employees that have a long-term view of their employment 20
future. As discussed earlier in my testimony, changes in 21
the labor market have made the hiring of quality, 22
experienced employees more difficult, which is exacerbated 23
by the shift to a younger, more transient workforce. 24
GRIFFIN, DI 35
Idaho Power Company
Because of this, retirement benefits that encourage long-1
term employment are more important than ever. 2
Consistent with the high value the electric industry 3
places on long-term planning and reliability, Idaho Power 4
likewise values employees with a long-term perspective as 5
part of its highly skilled workforce. In structuring a 6
retirement benefits package as part of its Total Rewards, 7
the Company strives to have a competitive package that 8
supports employees' financial needs in retirement while 9
appropriately sharing market risk between the Company and 10
its retirees. 11
Q. What is the Company requesting in this case 12
with respect to defined benefit pension plan expense? 13
A. As discussed further in Mr. Larkin’s 14
testimony, the Company seeks approval of $35 million of 15
Idaho jurisdictional pension cost amortization. 16
Q. Why is the defined benefit plan so important 17
to the Company and its employees? 18
A. The Company has placed additional weight in 19
its Total Rewards package on the defined benefit plan 20
because it rewards and incents longevity, which in turn 21
facilitates reduced employee development costs due to the 22
retention of knowledge and expertise. As a result, the 23
Company is able to better maintain the needed skilled 24
GRIFFIN, DI 36
Idaho Power Company
workforce with less time and expense incurred for training 1
and developing new employees. 2
Q. What changes have been made to Idaho Power’s 3
retirement plans? 4
A. The Company's retirement benefits package has 5
evolved over the years. Prior to 1984, the Company had just 6
two components to its retirement benefits package: (1) a 7
defined benefit plan, and (2) a retiree medical benefit 8
plan. 9
In 1984, the Company adjusted the overall retirement 10
benefits package to include the third component of a 401(k) 11
benefit plan. With the addition of this component in 1984 12
and adjustment to the other components, the Company has 13
shifted portions of the overall package cost and benefit 14
risks to retirees in order to maintain a competitive risk 15
sharing balance between the Company and retirees. 16
Simultaneously with the inclusion of a 401(k) component of 17
the retirement benefits package, the Company eliminated 18
cost of living adjustments as part of its defined benefit 19
component, thus shifting inflationary market risk to 20
retirees. 21
In 1999, the Company further reduced its 22
inflationary market risk by: (1) capping the Company 23
contribution expenditures toward retiree medical plan costs 24
for employees hired prior to 1999, and (2) eliminating 25
GRIFFIN, DI 37
Idaho Power Company
Company contributions toward retiree medical plan costs for 1
employees hired in or after 1999. 2
In 2010, the Company reduced the current defined 3
benefit percentage factor for employees hired on or after 4
January 1, 2011, to 1.2 percent per year from the previous 5
factor of 1.5 percent per year. 6
Q. Why does the Company continue to offer a 7
defined benefit plan when many of its peers have closed 8
their defined benefit plan offerings to new entrants and 9
transitioned to alternative retirement plan options such as 10
enhanced defined contribution plans or 401(k) plans? 11
A. On an ongoing basis, the Company considers 12
alternatives that could provide similar retiree benefits, 13
including retention incentives, but continues to find the 14
defined benefit plan is the least-cost way to provide 15
retirement benefits as part of the Company’s Total Rewards 16
package for employees, which I will address in more detail 17
later in my testimony. The Company also believes the 18
defined benefit plan rewards and incents longevity, which 19
in turn facilitates retention of essential knowledge and 20
expertise in the Company’s employees and reduces 21
development and training costs due to turnover, ultimately 22
resulting in savings for customers. 23
GRIFFIN, DI 38
Idaho Power Company
Q. Why does the Company’s defined benefit plan 1
better promote retention relative to a defined contribution 2
plan? 3
A. When an employee separates from the Company 4
before retirement, the defined benefit is frozen and the 5
former employee will not earn any additional benefit from 6
the plan, nor will the value of the earned benefits 7
continue to grow. For a defined contribution plan such as 8
an enhanced 401(k), the result for an employee who 9
separates from the Company before retirement is the 10
opposite of the Company’s defined benefit plan. The growth 11
of a former employee’s 401(k) benefit for work already 12
performed is unaffected by whether they stay with the 13
Company. 14
To state the distinction between the two plans more 15
concisely: a defined pension participant’s already-earned 16
benefits only grow due to staying with the Company and do 17
not grow after separation, while a 401(k) participant’s 18
already-earned benefits at separation from the Company will 19
grow at the same amount as they would have if they had 20
continued employment with the Company due to the growth in 21
the underlying investments. Due to these differences, only 22
the Company’s defined pension plan provides an incentive to 23
remain employed at Idaho Power. 24
GRIFFIN, DI 39
Idaho Power Company
Q. How do defined contribution and defined 1
benefit plans differ with regard to plan costs if employees 2
choose to separate from Idaho Power within the first five 3
years of employment? 4
A. Under Idaho Power’s defined benefit plan, if 5
an employee separates before they reach five full years of 6
service they will not be vested in the plan and the 7
separated employee will leave the Company with no pension 8
benefits, which ultimately results in no cost to customers. 9
The highest voluntary turnover rate at Idaho Power is the 10
0-to-5-year group, which results in lower costs for 11
customers from the defined benefit plan compared to other 12
options. Alternately, a defined contribution plan is 13
portable and is required to vest more quickly, so an 14
employee separating from the Company essentially owns the 15
investments, including any Company contribution once 16
vested. Therefore, this would result in higher costs to 17
customers compared to the defined benefit plan if the 18
employee chooses to separate from the Company. 19
To compound this issue, as previously stated in my 20
testimony, there is less incentive to stay with Idaho Power 21
under the defined contribution plan because at the time of 22
separation the investment will continue to grow over time, 23
which matches the pattern that would occur if the employee 24
were to remain employed by the Company. So, under the 25
GRIFFIN, DI 40
Idaho Power Company
defined contribution plan, there is less incentive for an 1
employee to stay with Idaho Power long-term, while there is 2
more potential harm to customers in terms of elevated labor 3
costs if the employee chooses to separate within five years 4
of service. 5
Q. Does offering a defined benefit plan cause 6
additional costs for Idaho Power’s customers compared to a 7
defined contribution plan? 8
A. No – the opposite is true. Over the career of 9
an employee, the cost for providing a defined contribution 10
benefit that is roughly the equivalent of a defined benefit 11
plan is more expensive. 12
Q. Has Idaho Power procured an analysis that 13
details the comparative long-term costs and benefits of 14
these plans? 15
A. Yes. Idaho Power asked its third-party 16
actuary, Milliman, to prepare an analysis comparing one of 17
Idaho Power’s Northwest regional peer’s recently negotiated 18
retiree benefit program with its union. Under this plan, 19
the utility will offer new hires after December 31, 2023, 20
an enhanced defined contribution plan that roughly provides 21
the equivalent income replacement to Idaho Power’s current 22
1.2 percent defined benefit plan and defined contribution 23
plan to those that work at the company until age 65. The 24
results of this analysis show the financial cost over the 25
GRIFFIN, DI 41
Idaho Power Company
career of a new employee to be roughly 40 percent higher 1
under the enhanced 401(k) plan to provide for the same 2
level of benefits as shown in the following table. 3
Table 6: Employer Cost for Benefit Plans – 4
as a percentage of total pay (salary + bonus) 5
Idaho Power NW Peer Utility
* Based on a hire age of 32, bonus percentage of 6%, and defined contribution investment returns of 6.5% pre-retirement and 5% post retirement
6
Q. Did Idaho Power Perform any analysis in 7
addition to Milliman’s enhanced 401(k) plan comparison? 8
A. Yes. In addition to the enhanced 401(k) plan 9
comparison, Idaho Power asked Milliman to re-perform a 10
similar analysis but with actual data as presented in the 11
Company’s last pension-related case (Case No. IPC-E-10-25). 12
The analysis provided by the Company in that case indicated 13
that under a range of economic conditions and investment 14
return scenarios that could occur over a nine-year period, 15
the Company’s defined pension plan was the lowest cost 16
retirement plan option relative to a defined contribution 17
plan. After reviewing this analysis, the Commission 18
accepted Idaho Power’s 2011 retirement benefits package in 19
Order No. 32239. 20
GRIFFIN, DI 42
Idaho Power Company
To refresh this analysis, Milliman evaluated all new 1
employees hired after Idaho Power reduced the defined 2
benefit percentage factor for employees hired on or after 3
January 1, 2011, to 1.2 percent per year from the previous 4
factor of 1.5 percent. Milliman compared the costs incurred 5
for those employees for the Company’s current defined 6
benefit plan to a defined contribution plan that provides 7
the same estimated income replacement for employees that 8
work at Idaho Power until retirement, with the goal of 9
resulting in the same total retirement benefits for each of 10
those employees hired from January 1, 2011, through 11
December 31, 2022. 12
Q. What was the result of the analysis performed 13
by Milliman? 14
A. Looking at actual Idaho Power employees that 15
were hired on or after January 1, 2011, through December 16
31, 2022, the current defined benefit plan saved an 17
estimated $36 million in required contributions when 18
compared to the modeled cost of the defined contribution 19
plan. 20
Q. What are the primary reasons for these cost 21
savings? 22
A. There are two primary reasons for the 23
difference: 1) asset returns, and 2) differences in 24
termination benefits. 25
GRIFFIN, DI 43
Idaho Power Company
Q. How did expected asset returns differ between 1
defined benefit and defined contribution plans? 2
A. The asset return for the defined benefit plan 3
was assumed to be 7.4 percent, while the defined 4
contribution plan was assumed to earn 6.5 percent during 5
employment and 5 percent during retirement. The defined 6
benefit plan is professionally managed with access to a 7
larger universe of investments, including private illiquid 8
investments that cannot be utilized in a defined 9
contribution plan. 10
In addition, the defined benefit plan can 11
consistently invest for the long-term, resulting in a 12
higher expected long-term rate of return, whereas a defined 13
contribution participant typically chooses to de-risk their 14
investments prior to retirement to avoid short-term market 15
risk. Participants, therefore, typically respond by 16
reducing risk and earnings potential while leading up to 17
and living in retirement. This reduced earnings potential 18
reduces the efficiency of a defined contribution plan as 19
compared with a defined benefit plan and also increases 20
costs to customers. In addition, the defined contribution 21
participant does not have the benefit of sharing longevity 22
risk with all of the other plan participants, so 23
participants will need to save more money prior to 24
retirement. 25
GRIFFIN, DI 44
Idaho Power Company
Q. How do differences in termination benefits 1
cause the defined benefit plan to be less expensive? 2
A. In Idaho Power’s defined benefit plan, 3
employees are not vested in their benefit until they work a 4
full five years with the Company. Defined contribution 5
plans are required by law to have faster vesting schedules. 6
For the comparison prepared for Idaho Power, Milliman used 7
a three-year vesting assumption, which is the maximum cliff 8
vesting allowed by law for a defined contribution plan. 9
The Milliman study confirmed what the Company 10
testified would happen in 20107 and also validated the 11
conclusions reached by the Commission in Order No. 32239. 12
This study confirms that defined contribution plans are 13
more expensive than defined benefit plans in achieving 14
similar levels of benefits. As demonstrated by the Milliman 15
studies, Idaho Power’s defined benefit pension plan will 16
continue to save customers money going forward compared to 17
an enhanced defined contribution plan. 18
Q. What is the requested level of cost recovery 19
associated with pension expense in this case? 20
A. Mr. Larkin quantifies and details the 21
requested level of pension-related cost recovery at $35 22
million. 23
7 Id.
GRIFFIN, DI 45
Idaho Power Company
Q. Do you believe the Company’s current defined 1
benefit plan is in the best interest of the Company, its 2
employees, and customers? 3
A. Yes. Idaho Power’s defined benefit plan serves 4
as a key component of its Total Rewards package. As 5
discussed throughout my testimony, labor recruitment and 6
retention has experienced significant challenges in recent 7
years, and these trends are expected to continue. A defined 8
benefit plan that not only rewards employees at an 9
appropriate level, but does so while encouraging long-term 10
employment, benefits the Company and customers through the 11
retention of a highly skilled workforce and avoided costs 12
associated with hiring, onboarding, and training. 13
VII. TOTAL REWARDS COSTS IN 2023 TEST YEAR 14
Q. What are the expected Total Reward costs for 15
the 2023 test year? 16
A. As shown in Table 7 below, the cost for the 17
Company’s Total Rewards in the 2023 test year is 18
approximately $247.2 million. This is comprised of $133.7 19
million in O&M wages, $68.1 million for O&M benefits, $10.2 20
million for incentive, and $35.2 million for pension. The 21
test year labor costs are discussed more fully in Mr. 22
Larkin’s testimony. 23
// 24
// 25
GRIFFIN, DI 46
Idaho Power Company
Table 7: Total Reward Costs – 2023 Test Year 1
Total Reward Component 2023 Test Year
O&M Wages* $ 133.7
O&M Benefits* $ 68.1
Incentive $ 10.2
Pension $ 35.2
Total $ 247.2
* Includes DSM wages and benefits 2 Q. What has the Company done to manage its Total 3
Rewards costs since the last GRC? 4
A. As discussed in the testimony of Ms. Grow, the 5
Company manages its labor budget carefully, requiring the 6
vice president responsible for each business unit to 7
approve of unbudgeted positions. This careful management of 8
labor costs is evidenced by the fact that even with adding 9
approximately 117,000 customers between 2012 and 2022, 10
employee headcount has decreased by a total of 17 people 11
over the same period. 12
Furthermore, the Company actively manages labor 13
costs by benchmarking each component of its Total Rewards 14
package to make sure it is competitive with the market and 15
makes adjustments when necessary, while balancing its Total 16
Rewards package to ensure it can attract and retain high-17
quality employees and motivate them to achieve performance 18
goals that benefit customers and shareholders. 19
// 20
GRIFFIN, DI 47
Idaho Power Company
Q. Does this conclude your direct testimony in 1
this case? 2
A. Yes, it does. 3
// 4
// 5 6
GRIFFIN, DI 48
Idaho Power Company
DECLARATION OF SARAH GRIFFIN 1
I, Sarah Griffin, declare under penalty of perjury 2
under the laws of the state of Idaho: 3
1. My name is Sarah Griffin. I am employed by 4
Idaho Power Company as Vice President of Human Resources. 5
2. To the best of my knowledge, my pre-filed 6
direct testimony is true and accurate. 7
I hereby declare that the above statement is 8
true to the best of my knowledge and belief, and that I 9
understand it is made for use as evidence before the Idaho 10
Public Utilities Commission and is subject to penalty for 11
perjury. 12
SIGNED this 1st day of June 2023, at Boise, Idaho. 13
14
Signed: ___________________ 15 Sarah Griffin 16 17
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