20110114Duvall Reb.pdf

ioii JAN 14 AM
.nlO: 25
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE
APPLICATION OF ROCKY
MOUNTAIN POWER FOR
APPROVAL OF CHAGES TO ITS
ELECTRIC SERVICE SCHEDULES
AN A PRICE INCREASE OF $27.7
MILLION, OR APPROXIMATELY
13.7 PERCENT
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) CASE NO. PAC-E-IO-07
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) Rebuttal Testimony of Gregory N. Duvall
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ROCKY MOUNTAIN POWER
CASE NO. PAC-E-IO-07
January 2011
1 Q.Please state your name, business address and present position with Rocky
2 Mountain Power (the Company), a division of PacifiCorp.
3 A.My name is Gregory N. Duvall. My business address is 825 NE Multnomah,
4 Suite 600, Portland, Oregon, 97232. My present position is Director, Long Range
5 Planning and Net Power Costs.
6 Q.Are you the same Gregory N. Duvall that submitted rebuttal testimony in
7 this proceeding?
8 A. Yes.
9 Summary of Testimony
10 Q.What is the purpose of your rebuttal testimony?
11 A.I wil respond to Mr. Brian C. Collns' testimony that was fied on behalf of
12 Monsanto. Specifically my testimony wil rebut:
13 . Mr. Collns' discussion of the method used to value the Idao Irrgation Load
14 Control Program;
15 . Mr. Collns' comments regarding the treatment of Monsanto's load and
16 interrptible products in the Company's Integrated Resource Plan ("IRP");
17 and
18 . Mr. Collns' claim that the avoided peaker costs should be increased by 12
19 percent based on his assertion that Monsanto allows the Company to avoid
20 planing reserves.
Duvall, Di-Reb - 1
Rocky Mountain Power
1 Valuation of the Idaho Irrigation Load Control Program
2 Q.
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4 A.
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18 Q.
19 A.
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What does Mr. Collns say about the valuation methodology the Company
uses to value the Idaho irrigation load control program?
On page 14 of Mr. Collns' direct testimony, he quotes the Company's response
to lIP A Data Request 46. In that response, the Company describes the
methodology used to value the Idaho Irrgation Load Control Program. Most
importantly, the response states the following:
This methodology captues the capacity deferrl benefit of the resource via
displacement of simple cycle combustion tubine proxy resources and
firm market purchases. (Emphasis added)
In addition, the response cites the latest estimated value of $73.09 per kilowatt-
year.
Is Mr. Collns' proposed peaker method consistent with the Company's
approach to valuing the Idaho Irrigation Load Control Program?
No. Mr. Collns relies solely on peaker units, while the Company includes both
peakers and market purchases in the evaluation of the Idaho Irrgation Load
Control Program.
Does the Company pay irrigators $73.09 per kiowatt-year to be interrupted?
No. In 2010, the Company paid irgators $30 per kilowatt-year, or about 41
percent of the estimated value produced by the IRP model evaluation of the
program. Thus, irrigators receive a discount and other customers receive a benefit
from a "share the savings" arrangement. If a similar "share the savings"
arrangement were made with Monsanto, Mr. Collins' capacity value would need
to be discounted by 59 percent (1 - 0.41), which would reduce his proposed $17.6
Duvall, Di-Reb - 2
Rocky Mountain Power
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millon capacity value! by $10.4 millon to $7.2 milion. As a result of this
adjustment, the total value of$25.6 millon2 would be reduced to 15.2 milion. I
would note that the Company does not endorse Mr. Collns' peaker method;
rather this information is provided to the Commission to ilustrate how his results
would need to be modified to be consistent with the treatment of the Idaho
Irrgation Load Control Program. Furer downward adjustments would need to
be made to the capacity value in order to compensate for the fact that Mr. Collns
limited his analysis to peaker units, while the Idaho Irrgation Load Control
Program study used a combination of peaker units and market purchases.
Does the Company plan to add any peaking units as a result of its IRP?
No. The Company's most recent IRP does not include any peaking units because
they are not least cost. This conclusion has been reinforced through the
Company's resource procurement process. In that process, peaking resources are
allowed to participate in the Company's competitive bidding process, but have not
been found to be economic compared to other resource tyes. Monsanto's
16 assumption that their interrptible product would avoid the addition of a peaking
17 unit has no basis in fact.
18 IRP treatment of Monsanto
19 Q.
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21 A.
On page 4 of Mr. Collns' testimony, he claims that Monsanto's full load is
not treated as firm load in the Company's IRP. Is he correct?
No. First, Mr. Collins makes up a formula that he claims is in the 2008 IRP but is
! See Mr. Collins' Exhibit No. 254 (BCC-1), page 1 of 1, line 7, colum 4.
2 Ibid.
Duvall, Di-Reb - 3
Rocky Mountain Power
1 not. Mr. Collns' formula is shown on page 4, line 12 of his testimony3. Second,
2 he defines the phrase "net firm obligations" in a way not used by the Company.
3 This apparently comes about because Mr. Collins mistakenly used the discussion
4 on page 89 of the 2008 IRP - a discussion that describes how the Company
5 determines its planning reserve - to somehow conclude that Monsanto's load is
6 not treated as firm load in the IRP. The discussion should be ignored by the
7 Commission since it is out of context and ilogicaL.
8 Q.How is Monsanto's load treated in the IRP?
9 A.As I stated in my rebuttal testimony in phase 1 of this proceedig, Monsanto's
10 load is treated as firm load and their interrptible products are treated as firm
11 resources. If Monsanto's interrptible products were no longer economic, the
12 Company would find other means to meet its firm load obligations and would
13 have an obligation to serve Monsanto's entire load. If Monsanto's load were non-
14 firm, the Company would be able to interrpt it at any time for any reason with no
15 limitations, and would only provide power on an as if and when available basis.
16 Planning Reserve Margin
17 Q.What does Mr. Collns assert about the effect of Monsanto's interruptible
18 load on the Company's planning reserve margin?
19 A.On page 10 of Mr. Collns' testimony, he asserts that Monsanto's interrptible
20 load allows the Company to avoid constrction or purchasing a firm resource.
21 Based on this, he concludes that the planning reserve for these avoided firm
22 resources would also be avoided.
3 The referenced formula is: Net Firm Obligation - Purchases - DSM - Interrptible.
Duvall, Di-Reb - 4
Rocky Mountain Power
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12 Q.
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How do you respond to his assertion?
First, Monsanto's interrptible load does not allow the Company to avoid
constrction of firm resources. As described in the testimony of Company
witness Mr. Paul H. Clements, Monsanto's interrptible product is not
comparable to the tyes of firm resources the Company plans to constrct or
acquire. Monsanto's interrptible load does allow the Company to avoid the
purchase of firm power and generation at existing facilities which is exactly what
is reflected in the Company's valuation studies in this case.
With regard to planing reserves, Monsanto's interrptible load does not
avoid planning reserves since the avoided purchased power is firm and requires
no reserves.
Does this conclude your rebuttal testimony?
Yes.
Duvall, Di-Reb - 5
Rocky Mountain Power