20111220Comments.pdf

C~E r r~": c:
to! I DEC 20 AM 9= II
December 19,2011
Idaho Public Utilties Commission
4 72 West Washington Street
PO Box 83720
Boise,ID 83720-0074
Re: Case No. PAC-E-II-12
Dear Idaho Public Utilties Commissioners:
I would like to comment on the Rocky Mountain Power rate increase request, Case No PAC-E-
11-12. I am speaking on behalf of Energy Integrity Project, a citizens' grassroots organization
which believes real science should be used to judge whether any component or new energy
source be allowable under rate cases that wil raise rates for Idahoans. We believe that we are
currently being bombarded with false representations as to the advisability of consumers being
forced to pay for expensive renewable energy projects. Unlike many other states, Idaho has not
passed a renewable energy standard. In the current economic conditions, Rocky Mountain
Power has seen power sales in Idaho stagnate or fall below projections. As the political climate
of cap and trade, renewable energy, global warming, and climate change was evolving, it is
obvious that Warren Buffett and his advisors saw it all as an investment opportunity.i They set
about pouring billons of dollars into wind energy and planning massiv~ investments in
transmission facilties to move new renewable energy to market points.1I
To prove our points we direct you to an editorial that appeared on June 1,2011, (Idaho Falls Post
Register) titled "Ask the Power Company."iii In the PostTalk, Gene Fadness, who is a public
spokesman for the IPUC provided the following comments:
Wednesday June 01,2011 5:25 pm
Kade,
I have spent this afternoon very quickly reviewing the testimony provided by Rocky Mountain Power
in this rate case. You can also read it by going to our Website at www.puc.idaho.gov.Click on the
electric icon, then on "Open Electric Cases," and scroll down to Case No. PAC-E-l1-12. The
testimony of company president Rich Walje, provides an overview of their case.
Before I offer the summary the company gives, I state that this is the company's claim. The
Commission now begins a 6- to 8-month process of reviewing this application and does not endorse,
at this point, any of the claims made by the company. As you may recall in the last general rate
case, the average rate increase approved to be effective last Jan. 1 was 6.8 percent. The company's
original request was 13.7 percent.
In this case, the company claims that $17 millon of their total $32.7 million revenue requirement
',,,
increase comes from net power supply costs. These include l)the expiration of a number of long-
term wholesale power contracts with new higher-cost contracts (see Duvall testimony); 2) increased
coal costs -- not from coal generation but from third-party coal supply and transportation and cost
increases at the operations of the mines themselves; 3) a decline in wholesale sales revenues due to
falling natural gas prices; 4) more capacity from thermal units needed to provide reserves for wind
generation and 5) wind integration costs for wholesales transmission customers as required by
federal law. So, net power costs are more than 50 percent of the requested increase.
Another 31 percent comes from capital additions. The largest portion of these are pollution control
expenses at coal and natural gas plants (see Teply testimony) and upgrades to hydro generation.
Another large component of capital investment is transmission. The company is requesting the 27
percent of investment in the Populus to Terminal transmission line that the commission did not
include in the last rate case, plus another $150 milion (system-wide) in transmission investment
(each project is outlined in Gerrard's testimony).
Gene Fadness
Idaho Public Utilities Commission
-- gene.fadness
As you can see, Mr. Fadness, in point number 4, states that more capacity from thermal units
wil be needed to provide reserves for wind generation - from this statement, we see that when
incorporated onto the public grid, wind does have a fuel cost. The reality is that there is no such
thing as wind energy by itself. Wind MUST always be paired with an augmenting (fast
responding) source to continuously balance out wind's fluctuations. This augmenting source wil
be a fossil fuel source (with exception to the limited locations that have some finite hydro
resources available).
Fadness' point number 5 addresses costs for wind integration as another driver of the requested
rate increase pending before the IPUC. Further the Commission received direct testimony (page
17 - Duvall testimony) on the same topic:iv
"Given the size of the wind portfolio, and the possibilty of rapid variations in wind
generation, the Company has had to commit its gas-fired generation units to be able to
quickly respond to the magnitude of changes. At times, this "must-run" operation requires
gas-fired generation units to run when it would otherwise be uneconomic to do so, thereby
adding to the wind integration costs."
Gene Fadness also pointed to transmission costs as a driver in the curent rate case. We believe
that it is very clear a major change occurred at Rocky Mountain Power with regard to
transmission. In the PacifiCorp 2004 IR Update (page 46), it talks about only ONE definite
transmission upgrade, "Path-C Upgrade,"V which became one of the commitments when
MidAmerican Energy Holdings acquired PacifiCorp in 2006. In the PacifiCorp 2007 Integrated
Resource Plan (page 20), it talks of THREE possible transmission upgrades: Path-C ($78
milion), Mona-Oquirrh ($196 milion), and Walla Walla - Yakima or Mid-C ($88 milion) for a
total of$362 milion.vi Fast forward to the PacifiCorp 2011 Integrated Resource Plan where we
have the full Energy Gateway transmission system which, as stated on page 78, is an
approximately $6 bilion investment plan.vii
What is the driver of this Energy Gateway transmission plan? Wind. Page 82 of the PacifiCorp
2011 Integrated ResourcePlan says:
"The modeling analysis indicates that the full Energy Gateway strategy is cost effective
assuming incremental wind additions are in line with the Company's current wind
acquisition plans. However, without the mandate for additional renewable resources and
regulatory support for associated transmission investments, further evaluation of
proposed incremental transmission originating in Wyoming (most economic location for
wind) would be required to determine need for Company load service. One thing is clear;
the Energy Gateway strategy provides the necessary capacity for the Company to be
aligned with a green resource future."
And from expert witness, Dennis Peseau, testimony given on 10114/2010:viii
"Energy Gateway is PacifiCorp's program to invest over $6 bilion for approximately
2,000 miles of high voltage transmission lines, primarily 500 kV, throughout the western
United States. If completed as planned, the project would have a total capacity of 6,000
MW with the intention of transmitting electricity generated primarily from wind energy
planned in Wyoming and elsewhere, to markets in California, southern Nevada and to a
lesser extent Utah and the Pacific Northwest."
Exactly why does Rocky Mountain Power choose wind as a resource?
On page 129 ofPacifiCorp's 2011 Integrated Resource Plan, it says:
"It should be noted that primary drivers of wind resource selection are the requirements
of renewable portfolio standards and the availabilty of production tax credits."
So, is this about Rocky Mountain Power making money from the production tax credits for
renewables, given by the federal government, and by mandates to use renewables?
We respectfully point out the following:
Idaho does not have a renewable energy standard. Many jurisdictions that do are rethinking it.
Rocky Mountain Power sales in Idaho are not demanding huge increases in generation capacity
or transmission upgrades that justify the huge and crippling increases already announced.
Rocky Mountain Power and their parent companies, in a politically-charged atmosphere, chose a
bad and expensive power source that Idahoans don't need or support and became one of the
nation's largest owners of wind turbines.ix
To grant this rate increase leaves Idahoans paying for an extremely expensive energy source that
is unreliable, variable, and has a 29% - 35% annual capacity factor, but more importantly has
very little capacity value. Furthermore, there is NO evidence in the real world -- NONE -- that
wind actually offsets meaningful levels of C02 emissions or reduces fossil fuel consumption.
Our economy cannot stand the already announced rate increase plans of Rocky Mountain Power.
School officials are starting to realize what is happening to them. As an example, on September
22,2010, West Side Superintendent, Melvin Beutler, said the following in his public comments
submitted to the Commission:x
"Two years ago we took a 5% decrease in State Budget dollars. Last year we took an
8.5% decrease in state funding with a warning from the Governor and Legislature to
budget for a 13% decrease because that look eminent. I can't in good faith to my students
budget find another dollar to pay fixed cost."
Likewise, on August 3,2011, the Shelley School District Superintendent was on record in the
Shelley Pioneer newspaper saying "it was almost impossible for a small. school district to absorb
a 15-percent rate hike in light of shrnking funds for schools in Idaho."xi
Big businesses and small businesses wil be hurt as quoted in the Peseau IPUC testimony:
"These rate increases are certainly disastrous not only for Monsanto, but for the general
livelihood of eastern Idaho."xii
Chris Horner, an energy expert and attorney, recently summarized the nation's situation which
we can aptly apply to our current Rocky Mountain Power situation:xiii
"There are other things that result, indeed economic harms, from politically directing
capital and from increasing energy costs, forcing less reliable and more expensive energy
sources into the market that need governental intervention in order to have a market to
speak of."
"This does more than just transfer wealth, from people who use energy to entities
experiencing what in any other context is called a "windfall" thanks to this act of
government. Worse, it inescapably means the cost hits everyone, most particularly
seniors and the poor, anyone on a low- or fixed-income is hit first and worst."
However, MidAmerican Energy Holdings Company promised no more than a 4% increase in
rates per year. In Idaho, Brent Gale testified "We (MEHC) do not expect thatthe commitments
that we are offering wil cause an increase in the percentage discussed in PacifiCorp witness
Johansen's testimony."xiv In this referenced Johansen testimony, Johansen said "we believe that
PacifiCorp's rates, even taking into account revenue from load growth, wil have to rise annually
across all our jurisdictions by over 4 percent for the foreseeable future."xv Also, Brent Gale
testified before the Oregon PUC in 2005 that if MidAmerican was allowed to acquire PacifiCorp,
rates would not increase more than 4% per year. xvi This has not been true - where is the
accountability?
The ratepayers of the Rocky Mountain Power service area in Idaho have for many years suffered
higher rates than other ratepayers in Idaho. At the same time our climate is one of the most
severe in the nation which sends demand skyrocketing. Idaho Falls was just identified as the
18th coldest city in the country! xvii
"
On behalf of the ratepayers of Rocky Mountain Power in Idaho, we urge the Idaho Public
Utilties Commission to send the message to the wealthy investor owners of Rocky Mountain
Power that the investment in renewables (i.e. wind) was not required by anyone in Idaho, and the
attendant costs wil damage our economy. Tell them to use their political connections to stop the
mad rush into politically-driven energy decisions that diverge completely away from the capacity
of ratepayers to pay.
We urge the Idaho Public Utilties Commission to focus on what is best forJdaho and deny the
rate increase. Please do as the Oregon Public Utilities Commission recently did - send them
back to MidAerican Energy Holdings Company with the message - "Des Moines, we really
have a problem here."xviii
Sincerely,
Tauna Christensen
Energy Integrity Project
Box 3555
Idaho Falls, ID 83403
i http://www.bloomberg.com/news/2011-12-07/berkshire-s-midamerican-energy-to-buy-topaz-solar-farm.html
Buffett, 81, has said that businesses like utilties have earnings power even under adverse economic conditions and
can provide fair returns on capital as long as they make investments in infrastructure to meet customer needs.
Owning utilities is "not a way to get rich," he said at a meeting of U.S. state regulators in 2006. "It's a way to stay
rich."
ii http://www.lebanon-express.com/business/articled8f822S0-4f4e-11eO-bb64-001cc4c002eO.htm I
PacifiCorp, a division of Pacific Power, is in "heavy investment mode."
PacifiCorp has put in 1,700 megawatts of new wind resources over the last few years.
''That makes us the second largest wind owner among regulated utilities in the country," Reiten said.
The company has invested about $2 billon in wind over the last four years.
Additionally, PacifiCorp has focused on investing in high voltage transmission.
ii http://www.postregister.com/story. ph p ?accn u m= 101S-06012011&tod ay=2011-06-
01&keywords=ask+the+power+company
Iv http://www.puc.idaho.gov/internet/ cases/ elec/PAC/PACEl112/ com pany/20110S27 DUVALL%20DI. PDF
v http://www.puc.idaho.gov/internet/ cases/ elec/PAC/PACEOS02/200S11042004%20U PDATE. PDF
vi http://www.puc.idaho.gov/internet/ cases/ elec/PAC/PACE0711/20070S302007%201 RP. P DF
vii
http://www . puc. idaho.gov /i nternet/ cases/ el ec/PAC/PACElll0/201104011 NTEG RATED%20RESOU RCE%20PLAN, %
20VOL%20I.PDF
vii http://www.puc.idaho.gov/internet/cases/ elec/P AC/PACEll12/ com pany/20110S27 DUVALL%20DI. PDF
Ix http://legislature.idaho.gov/sessioninfo/2010/interi ml energy092 7 0929mi n. pdf
Mr. Walje, President of Rocky Mountain Power, said the following in the Sept 2010 Energy Interim Committee
meeting: "Rocky Mountain Power and its parent Mid American Electric Co is the second largest owner operator of
wind turbines in the United States."
x http://www.puc.idaho.gov/internet!cases/elec/PAC/PACE1007/public.1020comments/20100923COM M ENT. P DF
xl http://www .energyi ntegrityproject.orgl u ploads/ShelleyPioneer .pdf
xii
http://www.puc.idaho.gov/internetlcases/ el ec/PAC/PACE1007/i ntervenor //MONSANTO 120101014PESEAU%20DI.
PDF
xli http://www .globa Iwa rming.org/2011/12/1S/cei%E2 %80%99s-chris-horner-testifies-before-ohio-house-on-folIy-
of -green-en ergy-pol icy
xiv
http://www.puc.idaho.gov/internetl casesl elec/PAC/PACE0508!com pany/200S0817REVISED%20GALE%20DI RECT.
%20EXHIBITS.PDF
xv http://www.puc.idaho.gov/internet!cases/ el ec/PAC/PACE05081 company/20050715JOHANSEN%20DI RECT. PDF
xvi http://edocs.puc.state.or.us/efdocs/HTB/um1209htb 132123. pdf
PPL!312
xvii http://www.thedailybeast.com/galleries/2010/12/1O/america-s-25-coldest-cities.html#
xvii http://www.oregonlive.com/business/index.ssf/2011/12/pacificorpplandismaysregula.html
Susan Ackerman, a more recent addition to the utility commission, suggested that PacifiCorp's system was "so
diverse, so ungovernable" that it was getting too difficult to agree on a plan that made sense for Oregon
ratepayers in isolation.
She told PacifiCorp managers that she wanted them to deliver a clear message to executives at their Iowa-based
parent company, MidAmerican Energy Holdings Co.: "Des Moines, we really have a problem here."
. '
Fall20lJ
VOLUMEJ5.4
Manager's Message
crease in its wholesale power rates. Idahopower from Bonne ministration. As a result, this rate
our customers. This wil be the first rate increase since 2009. The rate
d upon how much electricity you use. Across ali customer classes, the average increase will be
residential customer (depending upon how much electricity you use) can expêct to see a $5.80
per month increase. We work hard to maintain affrdable elecricity rates. We thought you would like to see how
our compare to what customers in other Idallo cities pay.
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Do Touch that Dial!
Just as you flip a switch on your
thermostat every fall so it controls the
heat instead of the air conditioning, you
i:n sWitch which directòn your ceiling
fan blades spin to suit the season.
When fan blades rotate one way, the
, blades for
The more comfortable you
feel, the less likely you are
to crank up the
thermostat.
Most manufacturers
ersto
tospir¡
they spin In the other direction, the blades
create a subtle updraft, which sends warm
air-which rises-down from the ceilng via
the walls, so you feel warmer without
feling a draft.
counterclockwiSe
In the summer and clockwise
in the winter, but irs not true
for all brands.
Ii.
Jean Jewell
From:
Sent:
To:
Subject:
Les Hendrickson rhenfam1~hotmail.coml
Monday, December 19,201111:26 PM
Jean Jewell; Randy Lobb; Beverly Barker
Rate Increase
"Dear IPUC.
My current power rates are already high enough (among the highest in the state and particularly in our area). In an
economic depression it makes no sense for the IPUC to approve any rate increase for Rocky Mountain Power and further
guarantee them an additional increase next year. RMP will already receive a rate increase based on the federal ECAM in
April, we don't need to approve any others. With the price of coal and natural gas at an all-time low, we don't see any
reason for RMP's rates to be at an all-time high. Please disapprove the current RMP rate increase proposal.
Sincerely,
Les Hendrickson
3693 E. 800 N.
Menan, Idaho 83434
1
Jean Jewell
From:
Sent:
To:
Roger Raymond (sledtech~gmail.comJ
Monday, December 19, 2011 8:33 PM
Gene Fadness; Jean Jewell; Anga Velasquez; Joe Leckie; David Hattaway; Wayne Hart; Lou
Ann Westerfield; Randy Lobb; Stacey Donohue; Nikki Karpavich; Jo Nelson; Glenda Koch;
Beverly Barker; Chris Hecht; Marilyn Parker; Curtis Thaden; Nancy Hylton; Daniel Klein;
governor~gov. state. id. us; brad~bradlittleforidaho. com; brent~hillfamily. net
Stop Rocky Mountain Power Rate HikeSubject:
To whom it may concern:
The United States was built on a Capitalistic economy. It is the only way for a country to flourish. The only
thing that can ruin capitalism is a MONOPOLY. In order to prevent monopolies from developing, we build
laws that ensure healthy competition exists in the market. Due to the nature of power distribution, and other
similar utilties, it is generally not possible to have competing electric companies in a specific area. The
purose for the Utility Trades Commission (UTC) and the Public Utilties Commission (PUC) is to ensure that
companes (like Rocky Mountain Power) distributing the power do not tae unfair advantage of the people since
they have no alternative options.
The curent staff and management at the ¡PUC is failing in their responsibility to protect the people. Never
before has the ratio of power production and distribution cost to consumer cost been so out of line. The lack of
action is so blatat that one would immediately suspect collusion. Law suits have been filed to challenge this
neglect, but since local individuals have such limited resource in comparison to the monopoly, justice has not
been achieved. The fact that Mr. Buffet purchased Rocky Mountain Power should be evidence enough that
ridiculous amounts of surlus revenue exist as he would never invest in a company that was just getting by. I
am familar enough with the policies of Rocky Mountan Power to know that they are unecessarly gouging the
consumer so they do not have to be frugal in their business practices.
In a time where the economy is forcing almost every family to eliminate all but the most critical necessities, we cannot
afford to have the PUC fail us as you currently are. The proposed increases must be replaced with reductions of equal or
greater amounts. It is not constitutional to have laws that ensure financial growth to a monopoly. The IPUC will correct
this problem or we will hold the Governor accountable for his appointed commissioners.
Roger Raymond
3268 East 100 North
Rigby, Idaho
83442
1