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HomeMy WebLinkAbout19911018Willmorth Direct.pdf) IN THE MATTER OF THE APPLTCATION OF IDAHO POWER COMPANY FOR APPROVAL OF AN INTERCONNECTION TARIFF FOR NON UTTLITY GENERATION _ SCHEDULE 72 o .-..-1,::-,. i:,i..'.. r!,'..... t"r -i -l i*l fl. 0[i 18 rn I 53 ..,,,j iu*uit-,, :' . - I t-'- !..4:.,lf-.' l' tr CASE NO. IPC-E_90_20 o BEFORE THE IDAHO PUBLIC UTILITIES COMMISSTON ) ) ) ) ) ) IDAHO POWER COMPANY DIRECT TESTTMONY ON RECONSIDERATION OF .JOHN H WILLMORTH ao 1 2 3 4 5 6 7 8 9 l-0 1l_ 1,2 1_3 L4 15 t6 L7 18 1_9 20 2t 22 23 24 O A O A Please state your name and occupation for the record. My name is ,.lohn H. Willmorth. I am employed as Manaqer, Resource Planning by Idaho Power Company. Please describe your educational background and professional experience. I received my undergraduat,e education from Princeton University, where I graduated in 1-957 with a major in Electrical Engineering. In addition I have received t.he degrees of Master of Science in El-ectrical Engineering and Doctor of Philosophy from the University of Washington. From l-959 to L975 I was a member of the faculty in the Physics Department, of t.he College of Idaho. In August, t975 L joined the staff of the Idaho Public Utilities Commission and was employed by the Commission until April, 1981 when I began work with Idaho Power. I am a Registered Professional Engineer in the StaLe of Idaho. Please summarize your duties as Director, Resource Planning for Idaho Power Company, especially as they pertain to the Company's WiIlmorth, Oi-Rec. Idaho Power Company O ) I o o 1 2 3 4 5 6 7 8 9 10 11 T2 13 T4 1_5 16 L7 18 t9 20 2T 22 23 24 25 A O A purchase of cogeneration and small power production from PURPA qualifying facilities. Since assuming direction of Resource Planning in 1981, I have been responsible for the preparation of resource studies including Idaho Power's long range resource p1an, rate case net power supply cost determinations, and marginal resource cost studies. fn connection with cogeneration and smal1 power product.ion, r am responsible f or preparation of the Company's resource avoided cosLs and avoided cost rates, and have testified in Case No. IPC-E-89-11 and prior avoided cost proceedings. What is the purpose of your testimony in this proceeding? My testimony addresses (1) t.he avoided interconnection costs payable to PURPA qualifying facilities (QEs) from which rdaho Power purchases power, and (2) the recommendation of Staff witness Thomas Fau11 to " delevel ize" t.he Operation and Maintenance (O&M) costs charged to QFs under Idaho Power's proposed tariff Schedule 72. Please summarize your testimony on avoided int.erconnection cost . Willmorth, Di-Rec. Idaho Power Company o 3 oo 1 2 3 4 5 5 7 8 9 10 11 t2 13 L4 15 1-6 L7 18 19 20 2L 22 23 24 25 A A O The PubIic Utility Regulat.ory Policies Act (PURPA), dS implemented by the FERC and this Commission, provides that the costs of interconnecting a QE to the utility system are not the responsibility of the utility, but of the QF. The purchasing utility assumes the obligation to pay an avoided resource cost to the QF which includes the cost of interconnecting avoided alternative utility generation to the utility's system. In the case of Idaho Power's purchases from QFs in fdaho, that. alternative generation is the coal-fired surrogate avoided resource (Sanl established by this Commission for setting QF raLes. By Commission order, SAR interconnection costs are currently paid to QFs by Idaho Power through the Company's approved avoided cost rates. Please summarize your comment.s on Staff witness Fau11's proposal t.o "delevelize" t.he 0.72 and 0.42 interconnection O&M charges proposed by the Company in Schedule 72. The O&M costs proposed to be charged to QFs through Schedule 72 do not reflect levelized costs, but the current average O&M costs for Idaho Power's distribution and transmission Willmorth, Di-Rec. Idaho Power Company 4 o O 1 2 3 4 5 6 7 8 9 10 11 L2 1_3 L4 t-5 16 T7 18 L9 20 2t 22 23 24 25 facilities. Schedule 72 proposes a monthly O&M charge for distribution faciliEies of 0.72 per month multiplied by the actual interconnection investment. This percentage charge is subjecE to change as Idaho Power's system-wide distribution O&M costs change. Implementing Mr. Fau11's recommendat.ion to "de1eveI)-ze" t,he 0 .72 and 0 .48 charges would require separate O&M accounting for every Qr based upon their individual on-1ine dates, contract lengths and the Schedule 72 rate in effect at the t.ime of the interconnection. To avoid this unnecessary admj-nistrative complexity, Mr. Faul1's recommendation should not be adopted. INTERCONNECTTON COSTS O. Have you read the direct testimony of Staff witness Thomas Faull in this case? A. Yes, I have. O. Do you agree with Mr. Fau1l's testimony and conclusions related Lo the inclusion of interconnection costs in Idaho Power's CSPP rates? A. Yes, I do. I aqree with Mr. Fau11's testimony and Exhibit. No. L02, which show that Valmy interconnection costs were fu11y represenLed in Ehe calculation of SAR costs for avoided cost QF Willmorth, Di-Rec. Idaho Power Company 5 oo a rates in Case No. U-1500-170. From his tesLimony, I understand t.hat a smaIl portion of Coalstrip interconnect.ions may have been omitted from the calculation. This notwithstanding, I agree with Mr. Faull's conclusion that the interconnection cost component of the generic avoided costs det.ermined in Case No. U-1500-170 (and carried forward into Idaho Power's QF rates in Case No. IPC-E-89-11) is a just and reasonable representation of total SAR interconnection costs. O&M CHARGES IN SCHEDULE 72 O. Have you read the testimony of the Staff witnesses related to the O&M charges for QF interconnection facilit.ies proposed in Schedule 72? A. Yes. Mr. Hattaway and Mr. Faul1 both conclude that Lhe methodologry and results of the Company's proposed Schedule 72 are reasonable. However, Mr. Faull recommends a "delevelization" of the Schedule 72 O&M percentage rat.e so that. each QF, assuming a 0.7% monthly distribution O&M rate in Schedule 72, would pay at a rate l-ess than 0.72 per month at the beginning of the contract term and above 0.72 per month in later contract years. Willmorth, Di-Rec. Idaho Power Company o 1 2 3 4 5 6 7 8 9 10 11 t2 13 t4 15 1_6 t7 18 1,9 20 2L )) 23 24 25 6 oo o My underst.anding of his rationale is t.hat, while the Schedule 72 rate may be expected to remain relatively flat over time because it. is based on Idaho Power's Lotal distribution faci-1ities, the O&M costs for the QF's specific interconnection facility should be lowest at the beginning when the equipment is new and increase above 0.7* as time goes on. The "delevelization" which he recommends appears to be an attempt to charge O&M costs to each QF somewhat in a manner consistent with the expected increasing O&M needs of t.hat QF's own interconnection facility, while maintaining consistency with Schedule 72 over the fuI1 contract term. Do you disagree with l,tr. Faul1's recommendation? In principle, Idaho Power would be revenue- neutral if gradually escalating O&M charges were adopted Ee lono Ag the 1eve1 of those escalating charges results in equivalence with the charges proposed by fdaho Power in Schedule 72 over the fu11 contract term. In practice, however, Mr. Fau11's proposed delevelization of O&M charges would be difficult and costly to administer. First., separate accounting would be required to maintain Willmorth, Di-Rec. Idaho Power Company o 1 2 3 4 5 6 7 8 9 10 11 1,2 13 T4 15 L6 L7 18 1,9 20 21, 22 23 24 25 o A 7 oo o o 1 ) 3 4 5 6 7 I 9 10 11 L2 13 L4 15 16 1"7 18 19 20 2L 22 23 24 25 individualized O&M charges for each QF. The initial contract year, the contract term and the "leve1" percentage O&M charge in effect at the time of the interconnection would each affect the "delevelized" monthly O&M amounL to be charged. Second, because the O&M rate in Schedule 72 is not a levelized number or one that can necessarily be expect,ed to remain constant over the life of a QF contract, complicated adjustments to the individual O&M charges to each QF could be required by future changes in Schedule 72 in order to maintain overall consistency with the original Schedule 72. rn summary, Mr. Faull's proposal negates much of the administrative benefj-ts of placing the O&M charge in a tariff by requiring individualized accounti-ng for each QF which could be difficult to maintain consistent wi-th Schedule 72. rn my opinion, the administrative burden associated with maintaining separate Schedule 72 O&M accounts for each Qn' is unnecessary and would outweigh any perceived benefits of delevelization to the QF. The ability of QFs to pay O&M charges at the current system averagre rate required by Schedule 72 is enhanced by the fact that Idaho Willmorth, Di-Rec. Idaho Power Company 8 o to 1 2 3 4 o A Power's avoided cost rates paid themselves substantially levelized. Does this conclude your testimony? Yes, it, does. to QFs are Willmorth, Di-Rec. fdaho Power Company 9 oo