19911018Willmorth Direct.pdf

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IN THE MATTER OF THE APPLTCATION OF
IDAHO POWER COMPANY FOR APPROVAL
OF AN INTERCONNECTION TARIFF
FOR NON UTTLITY GENERATION _
SCHEDULE 72
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CASE NO. IPC-E_90_20
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BEFORE THE IDAHO PUBLIC UTILITIES COMMISSTON
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IDAHO POWER COMPANY
DIRECT TESTTMONY
ON RECONSIDERATION
OF
.JOHN H WILLMORTH
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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
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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
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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
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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
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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
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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
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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
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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
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