19900924Keen Direct.pdf

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Idaho Public Utilties Commission
Office of the Secretary
RECEIVED
SEP 241990
Boise, Idaho
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )
OF IDAHO POWER COMPANY FOR A )
CERTIFICATE OF PUBLIC CONVENIENCE )
AND NECESSITY FOR THE RATE BASING )
OF THE MILNER HYDROELECTRIC PROJECT)OR IN THE ALTERNATIVE )
A DETERMINATION OF EXEMPT STATUS )
FOR THE MILNER HYDROELECTRIC )PROJECT )
)
IDAHO POWER COMPANY
DIRECT TESTIMONY
OF
J. LAONT KEEN
CASE NO. IPC-E-90-8
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Please state your name, business address and
present occupation.
My name is J. LaMont Keen. My business address is
1220 Idaho street, Boise, Idaho. I am employed as
Controller at Idaho Power Company.
What is your educational background.
I graduated in 1974 from the College of Idaho in
Caldwell, Idaho receiving a Bachelor of Business
Administration Degree in Accounting.I have also
attended many utility management training programs,
including the stone & Webster utility Management
Development Program and the Uni versi ty of Idaho
Public utilities Executive i s Course where I now
serve on the Advisory Committee.
Please outline your business experience.
In 1974, I was employed by Idaho Power Company and
assigned to the Property Accounting Department. In
1975, I transferred to the Corporate Accounting and
Budgets Department where I worked in the operating
Budgets section. In 1976, I transferred into the
Financial Services section.In 1980, I was
promoted to Supervisor of Financial Services and in
February, 1983, I was promoted to Manager of
Financial Services. In March, 1984, I was promoted
to Manager of Financial and Reporting Services. In
Keen, Di 1
Idaho Power Company
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July, 1988, I was promoted to my present position
as Controller.
What are your duties as Controller at Idaho Power
Company?
I am responsible for the corporate books and
records,regulatory and financial reporting,
budgeting and financial forecasting, and financial
analyses as requested by management.
What is the purpose of your testimony in this
proceeding?
The purpose of my testimony is to explain the
Milner financial agreement between Idaho Power and
the Canal Companies and to provide the Commission
with a range for the projected 50 year levelized
cost per kWh for the Milner Project.
Please state what the financial arrangements are
between Idaho Power and the Canal Companies.
The financial agreements between Idaho Power and
the Canal Companies are set forth in Exhibit 2.
Idaho Power has agreed to provide interim financing
for the rehabilitation of the Canal Companies i dam
and the Canal Companies have agreed to repay this
initial loan including interest from funds obtained
elsewhere at or near the time that the Proj ect and
the dam are completed. Idaho Power has agreed to
Keen, Di 2
Idaho Power Company
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1 guaranty the paYment of complete debt service on
the permanent loan for the Dam to facilitate the2
3 long term financing.Idaho Power will also make
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annual royalty paYments to the Canal Companies, the
present value of which equals the sum of $5,638,000
plus 1/2 of the total cost of repairing the dam,
over the term of the FERC License. Additionally,
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8 the Canal Companies will receive an incentive
9 royalty whenever the annual Project generation is
10 in excess of an agreed upon base of 142,000 MWh.
11 The royalty and incentive royalty paYments are in
consideration of water made available by the Canal12
13 Companies to the Power Plant.
14 The Canal Companies are obligated to pay the
15 debt service on the permanent loan as well as a
portion of the capitalized mitigation costs, annual16
17 mi tigation expenses and mitigation water costs and
18 to repay certain prelicense advances made by Idaho
19 Power. The royalty and incentive royalty paYments
to the Canal Companies will first be applied to20
21 paYment of these costs.Any royal ty amount
22 remaining after paYment of these costs is available
23 to the Canal Companies and any costs in excess of
24 the royalty paYments will be paid by the Canal
25 Companies to Idaho Power.
Keen, Di 3
Idaho Power Company
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1 If Idaho Power i s investment in the proj ect is
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not recognized for revenue requirement purposes by
the Idaho Public utilities Commission, the Canal
Companies may exchange the set royal ty option
described above for 50% of the net benefits derived
from the off system sale of the power after all
costs, including a return on Idaho Power i s equity
investment in the Proj ect, are deducted.
The agreement which includes the financial
arrangements between Idaho Power and the Canal
Companies is subj ect to the approval of the Idaho
Public utilities Commission.
Q.What is the projected cost per kWh for the Milner
project?
A.Depending upon the number of water years utilized
in the computation, the estimated cost per kWh
would range from a maximum of 52.93 mills/kWh based
upon a cost for the powerhouse of $63,350,600, 60
years of water data and a 50 year levelized cost;
to 37.80 mills/kWh based upon a powerhouse cost of
$60,333,900, 20 years of water data and a 50 year
levelized cost (or less if the project is built for
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less than Idaho Power i s present project estimate).
Does this complete your testimony?
A.Yes, it does.
Keen, Di 4
Idaho Power Company