20101116Duvall Reb.pdf

RECE r:
lßJOHOV i 6 AM 10: 18
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE
APPLICATION OF ROCKY
MOUNTAIN POWER FOR
APPROVAL OF CHANGES TO ITS
ELECTRIC SERVICE SCHEDULES
AND A PRICE INCREASE OF $27.7
MILLION, OR APPROXIMATELY
13.7 PERCENT
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) CASE NO. PAC.E.10.07
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) Rebuttal Testimony of Gregory N. Duvall
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ROCKY MOUNTAIN POWER
CASE NO. PAC.E.10.07
November 2010
1 Q.Please state your name, business addres and present position with Rocky
2 Mountain Power Company (the Company), a division of PacifiCorp.
3 A.My name is Gregory N. DuvalL. My business address is 825 NE Multnomah, Suite
4 600, Portland, Oregon, 97232. My present position is Director, Long Range
5 Planning and Net Power Costs.
6 Qualifications
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Briefly describe your education and business experience.
I received a degree in Mathematics from University of Washington in 1976 and a
Masters of Business Admnistration from University of Portland in 1979. I was
first employed by PacifiCorp in 1976 and have held varous positions in resource
and transmission planning, regulation, resource acquisitions and trading. From
1997 though 2000 I lived in Australia where I maaged the Energy Trading
Deparment for Powercor, a PacifiCorp subsidiar at that time. After retuing to
Portand, I was involved indiect access issues in Oregon and was responsible for
directig the analytical effort for the Multi-State Process ("MSP"). Curently, I
diect the work of the integrted resource planning group, the load forecasting
group, the net power cost group, and the renewable compliance area.
Did you file diect testimony is thi proceeding?
No.
20 Sumar of Testimony
21 Q.
22 A.
What is the puros of your rebutta testimony?
I wil respond to Mr. Brian Colls and Ms. Kathn Iverson's testimony that was
23 fied on behal of Monsanto. Speifically my testimony wil rebut:
Duvall, Di-Reb - 1
Rocky Mounta Power
1 . Mr. Collns' comments regarding the treatment of Monsanto's load and
2 interrptible products in the Company's Integrated Resource Planning (IRP);
3 . Ms. Iverson's comments regarding the interrptible natue of Monsanto's
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5 . The appropriate regulatory treatment of Monsanto.
6 IRP treatment of Monsanto
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Is it true that Rocky Mountain Power models Monsanto's load as non. fim
for integrated resource planning purposes?
No. Monsanto's load is treated as firm load and their interrptible products are
treated as fum resources. If Monsanto's interrptible products were no longer
economic, the Company would find other means to meet its fir load obligations
and would have an obligation to serve Monsanto's entire load. If Monsanto's load
were non-fir, the Company would be able to interrpt it at any tie for any
reason with no limitations, and would only provided power on an as, if and when
available basis.
Mr. Collns states that Rocky Mountain Power is now deducting 157
megawatts 1 of Monsanto's interrptible load for purpose of determining its
plannig reserve obligation. Is thi correct?
No. The Company conducte a review of the Monsanto contract for peak
capacity planning puroses subsequent to the 2008 IRP Update. Based on that
review for the 2011 IR, the Company IR plans on 116 MW of the 162
megawatts tota fuace capacity wil be avaiable on a fum basis at the tie of
i Collins, dirt page 3 lines 23-24 and pae 4 lies 1-11.
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Rocky Mounta Power
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the annual system coincident peak, and thus serves as a resource for peak capacity
planing purposes. These 116 megawatts are composed of 67 megawatts for the
economic curailment portion of the contract, plus 49 megawatts of non-spin
reserves. The remaining 47 megawatts of the 162 megawatt tota interrptible
product are not considered to be available as a firm resource durng the system
peak because this capacity can only be called upon during a double contingency
event. This planning assumption was highlighted on slide 44 of the slide
presentation2 that was discussed at the October 5,2010, IRP public input meeting,
which included the following bullet:
"Modeling change to Monsanto curlment/reserves contract: 47 MW
reduction in non-spin contingency reserves avaiable for the peak hour;
this amount now assumed to be non-fir (avaiable only in the event of
double-contingency outages)"
What do you mean by a double contingency event?
As defined in the energy service agreement a double contingency event is the
forced outage of two or more PacifiCorp generating units totang 500 megawatt
or more of capacity. To qualify these outages must have occured within forty-
eight hours of each other and must overlap for at least one hour. It would not be
reasonable to assume that a double contigency would occur at the time of the
Company's system coincident peak for planning puroses.
Doe the Company include Monsanto in its load requirements when making
long term capacity planning decisions?
Yes. The IR uses a peak load forecast that includes Monsanto's full load,
2 The slide prsentation from the Octobe 5, 2010, IR public input meetig can be found on the
Company's website at htt://www.pacico.comlesuppip.htm.
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Rocky Mountan Power
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including the portion of this load that is interrptible on a fir basis durg the
anual system coincident peak load hour.
If the Company has a contract allowing interruption of Monsanto why doe
the Company include that load in the IRP.
For resource planning and dispatch it is necessar to include Monsanto's full
energy and demand in the IRP otherwise their interrptible capacity would be
double counted since the interrptible products are included as a fir system
resource.
Ms. Iverson makes the following comment in her testimony findings and
conclusions; "The concept of forcing a non. firm customer to first "buy all.
firm" and then "sell a product" back to the utilty is neither reasonable nor
fair and in fact is a fiction that does not reflect reality.,,3 What is your
response to this statement?
Ms. Iverson'sclai is nonsensical, the concept that Rocky Mountain Power is
forcing Monsanto to do anything is a fiction and does not reflect realty. The
Company provides Monsanto fum electrc service, the same service quality as any
other customer on the electrc system. Monsanto has offered to allow the
Company to interrpt that service and in retu the Company has compensated
Monsanto for the right not to serve them under specific prices, term and
conditions. These arngements are contractual and represent mutually agreeable
arangements to which both Monsanto and the Company have chosen to accept.
3 Ivern diect page 3 lies 11 thugh 13, bold underline added for emhasis.
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Do you agree with Ms. Iverson statement that: "The fundamental principle is
that non. firm customers receive a lower quaty service than the firm
customers do.,,4
No. Once power enters the electric grid there isno distiction or difference to that
power. There is no distinction between green or brown power just as there is no
difference between fum or non-firm power; the service is the same. Ms.
Iverson's claim that Monsanto's loads are served at a lower qualty of service is
not based on any facts.
What percent of Monsanto's load is interruptible?
Ms. Iverson claims that 95 percentS of Monsanto's load is interrptible by
comparg nine megawatts of fum load to a total of 182 megawatts, which is a
correct mathematical statement given the numbers she used, but one that only
provides a single perspective and uses incorrect assumptions6. Looking at this
ratio from a different perspective, the current energy service agreement between .
Rocky Mountain Power and Monsanto allows interrption for a maimum of
1,050 hours out of 8,760 tota hours in a year, which is less than 12 percent. On a
megawatt-hour basis, Monsanto receives approximately 1,385,000 megawatt
hours? per year and the curent contract alows for only approximtely 76,754
hours of curailment for a maximum of 5.5 percent interrptible service from
Monsanto.
4 Ivern dirt page 7 lies 18 though 19, page 10 lies 3 thugh 4.
5 Ivern, dirt page 4 line 14.
6 If Ms. Iverson had used the 2011 IR assumtion that 116 megawatts are interrptible, her
r;rcntage of load that is interrtible would change frm 95 pecent to 64 peent.Company witness Grth Exibit No. 50 line 16.
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Rocky Mounta Power
1 Regulatory Treatment of Monsanto
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Has the Idaho Public Utilties Commision previously ruled on Ms. Iverson
proposal of a "non. firm" approach to both jurisdictional and class
allocations?
Yes. In Case No. PAC-E-01-16 Monsanto argued that they should only pay a
single net energy rate. The Commssion rejected this proposal and ordered
Monsanto to pay a capacity and energy charge for all of Monsanto's service;
"The Commssion does support separate pricing components. The
Commssion finds that the contract for Monsanto should specify
separate rate components for firm service and for the
interrptibilty discount. The fixed costs of service to Monsanto
should not be buried in an energy only rate, payable only if
energy is used and possibly not recovered in full, but should be
captued in a fixed customer charge and demand charge.
Recovering fixed charges in this manner is consistent with
rates formulated for other customer classes and recognizes the
fact that PacifiCorp continues to incur charges and is reguired
to be ready to serve even when Monsanto is idle."a
On December 18, 2006 in Order No. 30197 the Commssion ruled on the
appropriate jurisdictional treatment of Monsanto:
''The transition of Monsanto from contract to taff standa
customer, we find, wil faciltate futue rate adjustments and
should serve to keep Monsanto's rates better algned with its
cost of service. .. While taf rates may present Monsanto with
new challenges, we perceive the regulatory result to be positive
and one of greater eguity. Under the submitted Agreement
Monsanto's futue rates after Januar 1,2008 wil be adjusted
using the same process as all other customers."g
Doe the Company have a proposd solution for this issue?
Yes. The Company follows a "customer indiference" approach when valuing
8 Fmal Orer No. 29157, page 4 lies 12-22, emhasis added.9 Orer No. 30197 page 9 lines 1 - 8, bold underlie added for emphasis.
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Rocky Mountan Power
1 interrptible products offered by industral customers. In other words, the
2 Company seeks to pay industrial customers who can offer interrptible products
3 the same price the Company would otherwise pay if it were to acquire those same
4 products from other sources, such as the maket or its own resources.
5 Conclusions
6 Q.Please summarize your testimony.
7 A.Monsanto's full load is included as fir load in the IRP for resource plannig
8 puroses and should be include for allocation puroses. The Company has
9 appropriately treated Monsanto's load for jurisdictional alocation puroses
10 consistent with previous Commssion orders.
11 Q.Does this conclude your testimony?
12 A.Yes.
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Rocky Mountan Power