20070928Lanspery direct.pdf

BEFORE THE CEI\'c.rJ
zmn SEP 28 Pit 2: 20
IDAHO PUBLIC UTILITIES CO~MJ,~l~1f;,ll~!\~':"r"JU i iLl! iC.:; v~)L",,"I'.JVI\""'"
IN THE MATTER OF THE APPLICATION OF
PACIFICORP DBA ROCKY MOUNTAIN
POWER FOR APPROVAL OF CHANGES
TO ITS ELECTRIC SERVICE SCHEDULES
CASE NO. PAC-07-
DIRECT TESTIMONY OF BRYAN LANSPERY
IDAHO PUBLIC UTILITIES COMMISSION
SEPTEMBER 28 , 2007
please state your name and address for the
record.
My name is Bryan Lanspery and my business
address is 472 West Washington Street, Boise, Idaho.
By whom are you employed and in what capacity?
I am employed by the Idaho Public Utilities
Commission as a utility rate analyst.
Give a brief description of your educational
background and experience.
I received a Bachelor of Arts degree in
Economics with a social science emphasis from Boise State
University in 2003.I also earned a minor in Geographic
Information Systems from Boise State Uni versi ty in the
same timeframe.I have also earned a Master of Arts in
Economics from Washington State Uni versi ty, received in
2005.My Masters work emphasized Labor Economics and
Quantitative Econometric Analysis.Concurrent to
pursuing my Masters degree, I functioned as an instructor
of Introductory and Intermediate Economics as well as
Labor Economics.
Would you describe your duties with the
Commission?
I was hired by the Commission in late 2005 as a
utility analyst.As such , my duties revolve around
statistical and technical analysis of Company filings.
CASE NO. PAC-07-
09/28/07
LANSPERY, B.
STAFF
(Di)
This includes cost/benefit analysis, resource evaluation,
price forecasting, and weather normalization methods.
What is the purpose of your testimony?
There are several aspects of the rate case that
I will discuss.The first is the Company s Net Power
Cost filing, and my proposed adjustments including the
gas swap correction, the Monsanto interrutibility credit
and the allocation of irrigation load control program
costs.I will also discuss potential improvements in the
Company s class cost of service study, and the results of
the study when all Staff proposed revenue requirement
adjustments are included.I will then discuss the rate
design and rate spread, specifically with regard to
Staff's adj ustments.Finally, I will briefly discuss a
handful of issues that are either not contested by Staff
are alterations in tariff language, or need to be
addressed in a different venue.
NET POWER COST
Gas Swap Adjustment
Have you reviewed the Company s net power costs
as filed in this rate case?
Yes, I have.
Has the Company submitted net power cost
studies other than that included in Company witness
Widmer s testimony?
CASE NO. PAC-E- 07 - 5
09/28/07
LANSPERY, B.
STAFF
(Di)
Yes, it has.Upon review, the Company found
that the computer system that it uses to collect data on
natural gas sales and purchases had not distinguished
between the two, thus coding all transactions as
purchases.
Has the Company rectified this issue?
Yes, it has.In response to Staff Audit
Request 107, the Company filed a revised net power cost
study that corrected the gas swap error.The difference
between the original net power cost and the revised is a
reduction in cost of $34 676,640 on a system basis, and
441 363 reduction for the Idaho Jurisdiction.
Monsanto Interruptibili ty Credit
Do you have any additional adjustments to net
power costs?
The net power cost includes payments madeYes.
to Monsanto for providing interruptible products to the
Company.In Case No. PAC-06-09, the Commission
approved moving Monsanto from a contract standard
contract to a tariff standard contract.The Commission
explicitly stated in Order No. 30197 that Monsanto
rates and it's interruptibility credit are to be
addressed in the context of a general rate case.
Did the Company propose a change in the value
of the interruptibil i ty credit in the case?
CASE NO. PAC-E- 07-
09/28/07
LANSPERY , B.
STAFF
(Di)
No.While Monsanto s rates are increasing due
to the results of the cost of service study, there is no
indication that the Company proposes a change in the
credi t value.
Do you believe the credit value should remain
at its present level?
The value of the products Monsanto offersNo.
are essentially linked to market prices, specifically the
Company s official forward price curves.Market prices
have risen since the two parties negotiated the contract,
thus the value of Monsanto s credit should increase.
How much do you propose to increase the
interruptibility credit?
I propose to increase the Monsanto credit by
roughly 14%.
How did you determine the level of increase?
There are three components of the credit, the
economic curtailment, the system integrity component, and
the operating reserves component.For the economic and
system integrity components, I applied the methods of
valuation approved in the aforementioned case to the
official forward price curves and hourly scalars that the
Company used in thi s f i ing .
For the economic curtailment, I calculated the
800 most expensive hours of market prices at the Palo
CASE NO. PAC-07-09/28/07
LANSPERY, B.
STAFF
(Di)
verde hub , which the Company uses as a reference for
contracts on the east side of its service territory.
Mul tiplying the prices for those hours by the amount of
curtailment offered by Monsanto results in a 14% increase
in the economic curtailment product.
For the system integrity component, I took the
yearly average on-peak price at Palo Verde, multiplied
that by the amount of curtailment offered by Monsanto.
That total is then multiplied by 12 hours, the maximum
amount of curtailment offered under the system integrity
option to produce a credit increase of approximately 17%.
I did not calculate the operating reserve
component due to lack of information.Because it is also
tied to the increase in market prices, as well as
marginal operating costs , I conservatively escalated the
operating reserve value by 14% as well.
Do you believe an increase of 14% in the credit
is reasonably justified?
Yes, I believe that a 14% increase is justified
because the credit value established under the 2006
contract increases in value based on the price curves
used by the Company to establish costs in this rate case.
What is the impact on net power costs of
increasing the interruptibility credit to Monsanto?
The increased credit increases system net power
CASE NO. PAC-E- 07 - 509/28/07 LANSPERY , B.
STAFF
(Di)
supply costs by $1,730,160 over the Company s filing.
That is an increase of $109,112 allocated to Idaho.
Does the gas swap error correction or the
increase in the Monsanto credit affect the determination
of power supply costs wi thin the GRID model?
No.Both values are determined outside the
model, and appear as 1 ine items in GRID.The adjustments
are independent of one another and do not affect any
other net power supply costs determined by the GRID
model.
Irrigation Load Control Cost Allocation
Do you have any additional adjustments to net
power cost?
Yes, regarding the treatment of the Idaho
Irrigation Load Control Program credit payments.
How are the credit payments reflected in the
Company s filing?
Currently, in the case as filed, the Idaho
jurisdiction is directly assigned all of the costs of the
program, including the credit payments.
Do you .believe that this is the proper method
of assigning the credit payments?
Reduced demand resulting from directNo.
payments made to the irrigation customers under the
Irrigation Load Control program constitute a system
CASE NO. PAC-07-
09/28/07
LANSPERY, B.
STAFF
(Di)
resource.The cost of those direct payments should
therefore be allocated as system power costs, as are all
other system resources, rather than directly allocated to
Idaho.
The Revised Protocol allocation methodology
states that " (C) osts associated with Demand-Side
Management Programs will be (directly) assigned to the
State in which the investment is made.Benefits from
these programs, in the form of reduced c?nsumption, will
be reflected through time in the Load-Based Dynamic
Allocation Factors.Is your recommendation contrary to
the guidelines of the Revised Protocol?
No, it is not.
Please explain.
Demand-Side Management Programs " are loosely
defined in Revised Protocol.These programs are defined
as "programs that improve the efficiency of electricity
use by PacifiCorp s system.There are many programs
that easily fit into this category, such as the "See ya
later refrigerator" program, which promotes energy
efficiency.There are other programs, such as Monsanto
curtailible load, that are demand-side measures that
reduce demand under contract.Credits for these demand-
side measures are treated as a system resource for the
purpose of jurisdictional cost allocation.
CASE NO. PAC-07-
09/28/07
LANSPERY , B.
STAFF
(Di)
Are you arguing that the Irrigation Load
Control Program is akin to the Monsanto contract?
In some ways, it is aIn many ways , yes.
better system resource than Monsanto s interruptibility
contract.Irrigators enter into a contract with the
Company prior to the irrigation season in order to
participate.Equipment is in place to prevent the
irrigator from using its pumps during the scheduled block
of time it agreed to in the contract.This is indicative
of a firm contract purchase by the Company, but instead
of purchasing to serve load, the Company pays to not
serve load during some of the most expensive times of the
year.The Company can then use resources previously
required to serve Idaho irrigation load during peak
periods to serve growing demand in other areas of the
Company s service territory.This firm demand reduction
is no different than a firm supply side resource acquired
to serve new load during peak periods and costs should be
similarly allocated.
Can the Company count on the amount of demand
reduction it will contract during the season?
The Company has knowledge of the numberYes.
of potential sites and customers.The Program has
achieved an impressive retention rate from season to
season.According to the 2006 Program Final Report, the
CASE NO. PAC-07-
09/28/07
LANSPERY , B.
STAFF
(Di)
Company had "recorded 50.8 MW (of) firmed scheduled
resource " prior to the dispatch period , and recorded an
average peak avoided of 47.1 MW.This demonstrates that
the Company s expectations on participation have been
qui te accurate, enhancing the nature of the Program as a
firm, scheduled resource.
So you believe the Irrigation Load Control
Program is more akin to a contract purchase or
acquisition of a peaking resource than a traditional
demand-side program?
Through the Program, the Company is ableYes.
to acquire a firm , cost effective resource during times
of high marginal costs to serve load.The nature of the
Program provides the Company with a firm, reliable load
decrement, as predictable as a contract purchase.And in
contrast to demand-side programs as defined in revised
protocol , there is no lost revenue for the Company
according to the end of the year reports filed by the
Company regarding the program.Irrigation load is not
shed , it is shifted to off-peak times.In fact, there is
greater profit for the Company as revenues remain
relatively stable, but the energy is consumed during a
period of lower average cost.
You said in some ways, the contract with the
irrigators is better than the contract with Monsanto.
CASE NO. PAC-07-
09/28/07
LANSPERY, B.
STAFF
(Di)
Please explain.
Irrigators do not have a buy-through option.
Monsanto can buy through the curtailment if it deems it
necessary.The Company therefore must be capable of
serving Monsanto s peak needs even if it would rather
curtai 1 Monsanto.Once the enrollment date for the
Irrigation Load Control Program is final, the Company has
knowledge of what the firm needs of the irrigators in
Idaho are.The Irrigation load is firm , and cannot be
bought-through' .If an irrigator leaves the program
the payments are reduced.The load is properly reflected
for allocation purposes since this is a load-shifting
program.
Would this argument change if the Irrigation
Load Control Program were offered in another state?
Provided the contract with irrigators isNo.
binding and reduces system load requirements.It does
not matter what state it is located in.It is a purchase
power agreement, and should be treated as such.
What is the impact on the Idaho jurisdiction
and the Irrigation class of the Company s proposed situs
allocation of the Irrigation Load Control Program?
Program costs at or near the marginal cost of
new resources are directly assigned to the Idaho
jurisdiction.Idaho s allocation of average system costs
CASE NO. PAC-07-
09/28/07
LANSPERY, B.
STAFF
(Di)
are reduced by Irrigator reduced demand, as well as the
Irrigation class costs.
Is it true then that Idaho and irrigators
receive a benefit from the program through cost
allocation?
It is true that the irrigation class does see a
benefit in the form of reduced demand during coincident
peaks for the months the program is in effect.As doe
Idaho.As does the system.However , unlike a contract
purchase that is allocated system wide, this particular
cost is directly assigned to Idaho , to all customer
classes, including the irrigators.
Please expound on the direct assignment to
Idaho of the Irrigation Load Control Program costs.
As a result of the Program being identified as
tradi tional DSM by the Company, all costs are directly
assigned to the State.The Program reduces peak demand
during the summer.The payments made to irrigators are
based on marginal power costs in the summer, when these
costs are at their highest.As a result, the Idaho
jurisdiction is directly assigned the cost of 35-50 MW of
peak power at or near marginal costs.
From the benefit side, Idaho s jurisdictional
allocation of average system embedded costs decline by
the 35-50 MW of peak reduction.But again, this is at an
CASE NO. PAC-07-
09/28/07
LANSPERY , B.
STAFF
(Di)
average, embedded cost, a mixture of the highest and
lowest costs for power.Therefore , Idaho is allocated
the average costs associated with a block of load, and is
directly assigned the higher marginal cost for that same
block.
Is this treatment of the Program costs
consistent with the treatment of other contract
purchases, specifically the Monsanto curtailment credits?
Under a typical system power purchase,No.
which is made at the margin, allocation is to all
jurisdictions at the embedded rate.The Irrigation Load
Control Program credit payments are also closer to the
margin however they are assigned situs to Idaho, and
allocated to all classes.This is inconsistent treatment
of the credit payment.
The payments to Monsanto are allocated across
the system, and are included in the Company s power
supply model.The payments are further allocated to all
customer classes.This treatment consistently allocates
costs to all customers equally and should be similarly
applied to recover credit payments to irrigators.
What is your recommendation for treating the
Irrigation Load Control Program Credit consistently with
other contract purchases?
Similar to the Monsanto contract, and similar
CASE NO. PAC-07-09/28/07
LANSPERY , B.
STAFF
(Di)
to other power purchase contracts, I recommend that the
Irrigation Load Control Program Credit be allocated as a
system cost to all jurisdictions, and further allocated
to all Idaho customer classes.
Do you believe all of the costs associated with
the program should be allocated on a system basis?
No, only the credit payments to irrigators.
The credit payment is akin to a power purchase, and
should be treated as such.The equipment and
administrative expenses that facilitate the program are
currently deferred expenses to be paid by Idaho
customers.This is similar to the expenses incurred by
Monsanto in order to provide its interruptibility
product s The Company does not remove the equipment at
the end of the irrigation season , which helps curb costs
associated with the program as many irrigators choose to
participate in subsequent years.While program costs do
not necessarily change with participation , the credit
payment is directly linked to the amount of contracted
load reduction the Company acquires.
So could you please summarize your position
wi th regard to the treatment of the Irrigation Load
Control Program credit payment?
The credit payment constitutes a firmYes.
contract purchase between the Company and participating
CASE NO. PAC-07-09/28/07
(Di)LANSPERY, B.
STAFF
Idaho irrigators.This is similar to the contract the
Company has with Monsanto to provide its curtailment
options.It is essentially indistinguishable from other
firm contract purchases the Company includes in its net
power costs.I propose that the Company treat the
payment in the same fashion it treats other contract
purchases.
For the test year, what is the amount of
payments made to irrigators participating in the program?
According to the Company s Jurisdictional
Allocation Model , the payments total to $996,370, all of
which was allocated to Idaho on a situs basis.
Have you quantified the effect of treating the
Irrigation Load Control Credit as a system resource
rather than situs?
Yes, and the treatment of the credit in the
jurisdictional allocation model is quantified and
included in Staff witness Harms ' testimony and exhibits.
The result of the adjustment is a reduction in the
Company s requested revenue requirement for Idaho of
$933,534.
Do you have any further adj ustments to the
Company s proposed revenue requirement?
No.
Please summarize your recommendation for net
CASE NO. PAC-07-09/28/07
LANSPERY, B.
STAFF
(Di)
power costs and Staff's revenue requirement in this case?
I recommend that system power supply cost be
reduced by $33 million from the $861,066,125 filed by the
Company to $828,119,646.The resulting power supply
costs allocated to Idaho are therefore reduced by
approximately $2.4 million , from $57.8 million to $55.
million.
In addition, my recommendation to allocate
Irrigation Load Control Credit payments on a system basis
rather than directly to Idaho results in a reduction of
Idaho revenue requirement of $933,534.Therefore, my
proposed adjustments reduce revenue requirement by a
total of approximately $3.3 million.
CLASS COST OF SERVICE
Have you reviewed the Company s Cost of Service
study?
Yes.
Do you believe that the study adequately
represents the cost to serve the various classes in
Idaho?
However , Staff believes PacifiCorp shouldYes.
enhance its load sampling data to assure proper cost
assignment to the various classes.
What is the problem you see in the load
sampling data?
CASE NO. PAC-07-09/28/07 LANSPERY, B.
STAFF
(Di)
Staff initiated an informal query earlier this
year to the three electric utilities regarding each
Company s load sampl ing methods.Through this query, it
was apparent that PacifiCorp does not adequately sample
load for customer classes that are not demand metered.
What led you to the conclusion that
PacifiCorp s load sampling was inadequate?
Through the Company s responses in that query
and reinforced in this case through it's response to
Staff Production Request 25, the Company indicated that
it currently has 97 sampling meters for the two
residential classes, 52 for Schedule 1 and 45 for
Schedule 36.That is approximately 0.1% of the
population for Schedule 1 , and 0.3 % of Schedule 36
customers.
Has the Company acknowledged this issue?
The Company indicated that a limitedYes.
number of sampling meters are installed for Schedule 1
and Schedule 36 customers.These meters were placed in
service in 2001, with no additional deployment since
then.In addition , the Company has agreed in the
Supplemental Response to Staff production Request No. 25
to increase its deployment of sampling meters for the
residential classes by 24 by the end of the year.Each
of the new meters, 12 for Schedule 1 and 12 for Schedule
CASE NO. PAC-E- 07 - 5
09/28/07
(Di)LANSPERY, B.
STAFF
36, will be located on homes built since 2001.
Addi tionally, the Company plans to rotate the locations
of the meters periodically, beginning in 2010.
Are there other classes of customers that the
Company plans to modify its load sampling methodology?
Yes.The Company indicated in the supplemental
response that it would begin rotating the location of the
irrigation sample meters in 2008.
What impact can limited load sampling data have
on class cost of service?
Sampling data may have an impact on each
class s coincident and non-coincident peak measurements,
which is used to derive the demand related allocation
factors in the allocation of service costs.
What can be accomplished by improving sampling
data in the residential class?
Staff believes that improved sampling would
help justify the cost allocation and rate differential
between Schedules 1 and 36.
Both Idaho Power and Avista have embarked on
Advanced Meter Reading (AMR) programs to reduce costs and
investigate time-of -use rates.Should PacifiCorp
investigate AMR deployment?
Perhaps.First, AMR could provide accurate
data for the class cost of service study, thereby
CASE NO. PAC-E- 07 - 5
09/28/07
LANSPERY , B.
STAFF
(Di)
removing much of the concerns regarding the inadequate
load sampling data.Also, AMR would facilitate expansion
of energy efficiency programs to include such options as
critical peak pricing or real-time pricing.AMR al so
allows customers to actively manage their energy
consumption by providing access to usage on a more real-
time basis, as opposed to waiting until their bill
arrives.Finally, AMR could verify and justify time-of-
use rate differentials between the two residential
classes.
Does the Company s cost of service study treat
the two residential groups as separate classes or as a
single residential class?
The cost of service study distinguishes between
the two residential groups, and assigns costs
accordingly.The only instance I noticed of lumping the
two classes together was the treatment of metering costs.
The Company averages the metering costs and associated
billing costs for the classes to use as a benchmark for
developing the allocation factors for the other customer
classes.
Are there any other issues with respect to the
class cost of service study that you want to address?
Based on Monsanto Data Request No.9. 6,Yes.
it is apparent that Monsanto s coincident peaks for the
CASE NO. PAC-07-
09/28/07
LANSPERY, B.
STAFF
(Di)
months of September , November and December had been
overstated by 67 MW in the cost of service study.
Why did this occur?
PacifiCorp curtailed Monsanto s load during
these three months, and Monsanto exercised its option to
buy-through for replacement energy.The metered sales
reflected the buy-through replacement energy, but the
Company mistakenly added the replacement energy on top of
the metered sales, effectively double-counting 67 MW for
the three periods.
What is the effect on class cost of service of
removing Monsanto s buy-through energy from metered
sales?
The effect on Monsanto compared to the
Company s initial filing is a reduction in the Monsanto
demand allocation and a decrease in Monsanto s cost of
service from 24.13% to 20.92%.
Conversely, the cost of service for other Idaho
customer classes increases to make up for the Monsanto
reduction.Staff Exhibit No. 117 shows the cost of
service results before and after the reduction in the
Monsanto demand allocation.On average, the other
customer classes witness increase in cost of service
results of 1.2%
Have you conducted a cost of service study that
CASE NO. PAC-07-
09/28/07
LANSPERY, B.
STAFF
(Di)
include the revenue requirement adjustments proposed by
Staff?
Yes.Staff Exhibit No. 118 shows cost of
service results that includes all of my adjustments and
those detailed in the testimonies of Staff witnesses
Harms, Carlock, Leckie, and Nobbs.
The results indicate that certain customer
classes are below cost of service, while some are
currently above cost of service.Specifically, the
general service classes are slightly above cost of
service.The adj ustments to revenue requirement reduce
the revenue adj ustments necessary to bring the
residential , irrigation, street lighting, and contract
customers to full cost of service.Monsanto s demand
allocator adjustment results in slight increases to the
revenue adj ustment for all other classes.
RATE DESIGN
What is the Staff's recommendation on the rate
increase for all Idaho customers?
Staff proposes an average increase in rates of
29%
The Company has proposed to move the two
contract customers and street lighting classes to full
cost of service.Do you agree wi th the Company
proposal?
CASE NO. PAC-E- 07 - 5
09/28/07
LANSPERY , B.
STAFF
(Di)
I propose moving the street lighting classes to
full cost of service.I further propose increasing the
rates for the special contract customers to place them
near full cost of service.Under the terms of the
contracts entered into by Agrium and Monsanto , they are
to be treated as tariff customers, whose rates are
subj ect to change should the cost of service study show
that a rate change is warranted.
What is the Staff's proposed revenue
requirement increase for Agrium and Monsanto?
Staff proposes that Agrium s annual revenue
requirement be increased by $411,882, or 10.3%, and
Monsanto s annual revenue requirement be increased by
$7,470,650, or 15.35%.
The Company has proposed that customer classes,
slightly above cost of service receive no decrease in
rates.Do you support the Company s proposal?
These classes are shown to be relativelyYes.
close to cost of service and do not warrant a rate
reduction given the imprecise nature of the cost of
service results.Cost of service results vary over time
and there is not sufficient evidence to support a
decrease in rates for a service that is experiencing ever
increasing costs.
The Company proposes a uniform increase for the
CAS E NO. PAC - E - 0 7 - 509/28/07 LANSPERY, B.
STAFF
(Di)
two residential classes and the irrigation class.Do you
agree with the Company s proposal?
The Commission has traditionallyYes.
supported a uniform increase in rates.Based on the
Staff proposed revenue requirement the increase suggested
by the cost of service study to bring all classes to full
cost of service vary from 3.92% for Schedule 36 to 6.02%
for Schedule Staff believes that a uniform increase
is simple and reasonably achieves cost of service while
recognizing that cost of service is not an exact science.
Therefore, in conj unction with our recommendation to
maintain existing rates for those customers identified by
the study to be below cost of service, Staff is
recommending a uniform lncrease of 3.42% for each of the
other three classes to generate the Staff recommended
revenue requirement.
What increase in annual revenue does Staff
recommend for the residential and irrigation classes?
Staff recommends that the annual revenue for
Schedules 1 and 36 be increased by $1 014 145 and
$730 588, respectively.Staff also recommends that
Schedule 10 annual revenue increase by $1 347,640 per
year.The resulting uniform increase for each class is
therefore 3.42 %
Do you believe that this proposed revenue
CASE NO. PAC-07-09/28/07
LANSPERY , B.
STAFF
(Di)
increase adequately reflects Staff's cost of serVlce
study?
As seen in Staff Exhibit No. 119, theYes.
proposed revenue increase would bring the two residential
classes, the irrigation class, and the two special
contract customers to 98% of the respective cost of
service as proposed by Staff.
Do you agree wi th the Company s proposal to
keep the on-peak and off-peak rate differentials for
Schedule 36 at the same level?
At this time, yes.Should the Commission
direct the Company to investigate AMR, and should the
Company implement an AMR system, Staff will evaluate the
rate differentials to ensure that they properly reflect
the cost to serve during various hours of the year.
Have you prepared an exhibit demonstrating that
Staff's proposal will provide the Company with the
opportuni ty to collect Staff's target annual revenue?
Staff Exhibit No. 119 demonstrates thatYes.
the proposed increases allow the Company to recover
Staff's recommended revenue requirement.
Are you proposing any changes to rate design?
No.
Has the Company submitted revised tariffs to
reflect the proposed rates?
CASE NO. PAC-07-
09/28/07
LANSPERY , B.
STAFF
(Di)
Yes.
Do you propose any modifications to tariff
language beyond reflecting the new rates?
I do not have a specific recommendation, but
do believe that the Company needs to clarify the
differences between Schedules 6 and 23, small general
service and large general service.
Why do you believe that the Company should
clarify Schedules 6 and 23?
The tariff has no language to determine what
the eligibility criteria are for these classes.The
schedules are essentially the same, except for the
pricing.I would recommend that the Company file revised
tariffs that contain language that would contain the
eligibility criteria that the Company presumably uses to
discern which schedule a potential customer would fall
under.
OTHER ISSUES
Are there any other issues you would like to
address in your testimony?
Yes.I wish to address the elimination of
Schedule 94 , the Rate Mitigation Adj ustment, the contrast
of costs of wind facilities assumed by the Company in its
IRP with actual costs paid through RFPs, and Company
witness Rockney s testimony regarding proposed changes to
CASE NO. PAC-07-
09/28/07
LANSPERY , B.
STAFF
(Di)
Regulation No. 12, the line extension policy.
What is the Company s proposal regarding
Schedule 94?
As stated on page 4 of Company witness
Griffith's testimony, the Company proposes to eliminate
the Rate Mitigation Adjustment upon implementation of the
proposed rates.
What is the Company s justification for
eliminating the Rate Mitigation Adjustment (RMA)?
Commission Order No. 29034 states that the RMA
could be subject to termination upon the earlier of "(1)
the expiration of the current electric service Schedule
34 BPA Exchange Credi t; or (2) the adopt i on by the
Commission of a cost-of-service study for PacifiCorp and
the subsequent implementation for all customers of the
approved cost of service study by any lawful method.
The intent of the RMA was to mitigate rate shock to the
irrigation class as the Company moved it to cost of
service.After the adj ustments Staff has made to revenue
requirement and the cost of service study, the rate
design I propose moves the irrigation class sufficiently
close to cost of service.
Do you believe the RMA is still necessary?
I support the Company s request toNo.
eliminate Schedule 94.
CASE NO. PAC-07-
09/28/07
LANSPERY , B.
STAFF
(Di)
In regard to new resource acquisition,
PacifiCorp selected the 64.5 MW Wolverine Creek, the
100.5 MW Leaning Juniper, and the 140.4 MW Marengo wind
proj ects through a Request for Proposal (RFP) process.
Has Staff reviewed the process used to select the winning
bids under the RFP?
Yes.
Do you have any comments or concerns about the
process?
I do not have any concerns about the proj ects
that were selected or the manner in which bids were
compared against each other , but I do have concerns about
the fact that no comparisons were made between the bids
and the costs for new resources that were assumed in the
Company s Integrated Resource Plans (IRPs).In response
to Staff production requests (IPUC Request No. 15), the
Company admits that the capital costs to acquire the
Leaning Juniper , Marengo and Goodnoe Hills proj ects are
higher than the capital cost assumptions in PacifiCorp
2003 and 2007 IRPs.
The IRP process compares various generation
alternatives and serves as a guide to future acquisition
of new resources.The decision to pursue acquisition of
new wind generation is based on the cost and risk
analysis included in the Company s IRPs.When decisions
CASE NO. PAC-07-
09/28/07
LANSPERY, B.
STAFF
(Di)
are made to acquire specific wind projects, I believe it
is important to insure that the prices being paid to
acquire those resources are still consistent with the
prices assumed in the IRP, and that wind generation still
represents the best new resource al ternati ve.I f bid
prices exceed IRP assumptions, then the IRP cost
assumptions for all new resource types - wind, coal , and
natural gas - should be refreshed to make sure that the
IRP analysis is still valid.
The 94 MW Goodnoe Hills wind proj ect has also
recently been selected by the Company, although not
through the RFP process.Do you have the same concerns
about the process used to select this proj ect?
Yes, all of the same concerns regarding the
other wind proj ects apply to this one as well.
Does the Company propose to make changes to the
line extension policy?
Yes.Company witness Rockney describes several
changes to Electric Service Regulation No. 12 , Line
Extensions.
Briefly describe the modifications proposed by
the Company.
The Company proposes to make what it considers
housekeeping changes " to Regulation 12.The Company
proposes to clarify language that defines an "Extension
CASE NO. PAC-07-
09/28/07
LANSPERY, B.
STAFF
(Di)
language that addresses the relocation of facilities,
standardizing the language regarding allowances and
advances for developers with respect to the Company
regulations in other states, and refunds for backbone
facilities.
The Company also seeks to change the refund
methodology for planned developments, allowing the
developer to waive small refunds in anticipation of
larger refunds based on load size.Also, the proposal
would affect refunds to residential customers.The
Company proposes that the contract remain with the
initial customer for five years or four successive
customers rather than each successive customer assuming
the contract.This would impact the method in which the
ini tial customer receives its refund.
The Company also proposes to change the
allowance for customers receiving service at 44,000 volts
or greater, or transmission delivery customers.Under
the proposal , these customers will receive an allowance
for metering only.
Do you believe that the Company has correctly
characteri zed these as "housekeeping changes
The Company proposes to restructure theNo.
methods of allocating refunds and allowances, going well
beyond adding clarification to existing regulations.The
CASE NO. PAC-07-
09/28/07
LANSPERY, B.
STAFF
(Di)
Company s proposal will modify current regulation, which
I believe constitutes more than simple housekeeping
changes.
Do you believe that the Commission should
approve the said changes proposed by the Company?
No, not at this time.
Please explain.
I believe that this is not the proper venue to
address changes to the line extension rule.This should
be addressed in a separate filing and not be ruled upon
in a general rate case.I propose that the Commission
direct the Company to submit its revisions to the line
extension regulations as an autonomous case.
Why should the Commission compel the Company to
file for line extension revisions in a separate filing
rather than rule on it wi thin this rate case proceeding?
Wi thin a rate case setting, these revisions are
relegated to a minor side note.The interveners in this
case represent parties that are focused on the Company
revenue requirement and class cost of service.There has
been no indication that Company s proposal has received
ei ther support or opposition by affected parties.
Staff believes the proposed revisions to line
extension policies are not trivial, and will not receive
the attention in this setting that it deserves.
CASE NO. PAC-07-
09/28/07
LANSPERY, B.
STAFF
(Di)
Furthermore, parties that are affected by line extension
revisions are not represented in this case.It is my
opinion that a separate filing would facilitate the
opportuni ty for a more thorough analysis by Staff and
parties that would be affected by the Company s proposed
changes.
Does this conclude your direct testimony in
this proceeding?
Yes, it does.
CASE NO. PAC-07-
09/28/07
LANSPERY, B.
STAFF
(Di)
Class Impact of Reducing Monsanto Demand on Cost of Service
Schedule Description
Company
Original Filing
Percentage
Change from
t R
Original Filing
with Monsanto
Load Adjustment
Percentage
Change from
t R
Percentage
Difference
Between Original
Filing and Monsanto
Load Adjusted
urren evenues urren evenues ling
Residential 83%96%12%
Residential - TOD 36%52%16%
General Service - Large 05%67%38%
General Service - Medium Voltaqe 87%0.40%1.47%
General Service - Hiqh Voltaqe 13%66%1.47%
I rriqation 84%10.97%13%
Street & Area Liqhtinq 82.15%82.37%22%
Traffic Siqnals 11.00%10.16%84%
Space HeatinQ 03%72%31%
General Service - Small 11 %99%11%
SPC Contract 1 14.51%16.24%73%
SPC Contract 2 24.13%20.92%20%
Total State of Idaho -10.34%10.34%00%
Exhibit No. 117
Case No. PAC-07-
B. Lanspery, Staff
9/28/07
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Annual Revenue by Class Under Staff Proposed Revenue Requirement and Rate Spread
Total Current Target Percentage
Schedule Description Cost of Annual Staff Proposed Annual of Cost
No.Service Revenue Rate Increase Revenue of Service
Residential 31,437 931 653 369 3.42% $30,667 514 98%
Residential - TOO 200 169 362 235 3.42%092 823 100%
General Service - Large 533 675 609,425 00%609,425 106%
General Service - Medium Voltage 124 393 130 255 00%130 255 105%
General Service - High Voltage 575 798 061 143 00%061 143 111%
Irrigation 392 999 39,404 679 3.42%752 319 98%
Street & Area Lighting 587 565 326 298 80.06%587 532 100%
Traffic Signals 13,788 526 00%526 113%
Space Heating 575 578 635 620 00%635 620 110%
General Service - Small 819 228 711 252 00%711 252 109%
SPC Contract 1 504 286 998 852 10,30%4,410 734 98%
SPC Contract 2 048 574 668 727 15,35%139 377 98%
Total State of Idaho -189 813 985 178 577 ,381 29%189 813 520 100%
Exhibit No. 119
Case No. PAC-O7-
B. Lanspery, Staff
9/28/07
CERTIFICATE OF SERVICE
HEREBY CERTIFY THAT I HAVE THIS 28TH DAY OF SEPTEMBER 2007
SERVED THE FOREGOING DIRECT TESTIMONY OF BRYAN LANSPERY, IN
CASE NO. PAC-07-, BY MAILING A COpy THEREOF, POSTAGE PREPAID
TO THE FOLLOWING:
mSTIN BROWN
ROCKY MOUNTAIN POWER
201 S MAIN ST STE 2300
SALT LAKE CITY UT 84111
MAIL: iustin.brown~pacificorp.com
DATA REQUEST RESPONSE CENTER
P ACIFICORP
825 NE MULTNOMAH STE 2000
PORTLAND OR 97232
E- MAIL: datarequest~pacificorp. com
(ELECTRONIC COPIES ONLY)
JAMES R SMITH
MONSANTO COMPANY
PO BOX 816
SODA SPRINGS ill 83276
MAIL: iim.r.smith~monsanto.com
ERIC L OLSEN
RACINE OLSON NYE BUDGE & BAILEY
PO BOX 1391
POCATELLO ill 83201-1391
MAIL: elo~racinelaw.net
CONLEY E WARD
MICHAEL C CREAMER
GIVENS PURSLEY LLP
PO BOX 2720
BOISE ill 83701-2720
MAIL: cew~givenspurslev.com
BRIAN DICKMAN
MANAGER, ill REGULATORY AFFAIRS
ROCKY MOUNTAIN POWER
201 S MAIN ST STE 2300
SALT LAKE CITY UT 84111
MAIL: brian.dickman~j)acificorp.com
RANDALL C BUDGE
RACINE OLSON NYE BUDGE & BAILEY
PO BOX 1391
POCATELLO ill 83201-1391
MAIL: rcb~racinelaw.net
MAURICE BRUBAKER
KATIE IVERSON
BRUBAKER & ASSOCIATES
1215 FERN RIDGE PARKWAY
SUITE 208
ST LOUIS MO 63141
MAIL: mbrubaker~consu1tbai.com
ki verson~consul thai. com
ANTHONY Y ANKEL
29814 LAKE ROAD
BAY VILLAGE OH 44140
MAIL: tony~yanke1.net
DENNIS E PESEAU, Ph.
UTILITY RESOURCES INC
1500 LIBERTY ST SE STE 250
SALEM OR 97302
MAIL: dpeseau~excite.com
CERTIFICATE OF SERVICE
BRAD M PURDY
ATTORNEY AT LAW
2019 N 17TH STREET
BOISE ID 83702
MAIL: bmpurdy~hotmai1.com
KEVIN B HOMER
ATTORNEY AT LAW
1565 SOUTH BOULEVARD
IDAHO FALLS ID 83404
MAIL: kbh~khomerlaw.com
TIMOTHY SHURTZ
411 S. MAIN
FIRTH ID 83236
MAIL: tim~idahosupreme.com
~fZ~SECRETARY
CERTIFICATE OF SERVICE