20160901Wilding Direct.pdf

BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF ROCKY MOUNTAIN POWER TO
UPDATE BASE NET POWER COSTS AND
IMPLEMENT A RA TE STABILITY PLAN
) CASE NO. PAC-E-16-12
)
) DIRECT TESTIMONY OF
) MICHAEL WILDING
)
)
)
ROCKY MOUNTAIN POWER
CASE NO. PAC-E-16-12
September 2016
Q.
2
3 A.
Please state your name, business address and present position with PacifiCorp,
dba Rocky Mountain Power (the "Company").
My name is Michael G. Wilding. My business address is 825 NE Multnomah Street,
4 Suite 600, Portland, Oregon 97232. My title is Net Power Cost Mechanism
5 Manager.
6 Qualifications
7 Q.
8 A.
9
10
11
12
13
14 Q.
15 A.
Briefly describe your education and business experience.
I received a Master of Accounting from Weber State University and a Bachelor of
Science degree in accounting from Utah State University. I am a Certified Public
Accountant licensed in the State of Utah. Prior to joining the Company, I was
employed as an internal auditor for Intermountain Healthcare and an auditor for the
Utah State Tax Commission. I have been employed by the Company since February
2014.
Have you testified in previous regulatory proceedings?
Yes. I have filed testimony in proceedings before the public utility commissions in
16 Idaho, California, and Oregon, Utah, and Wyoming.
17 Purpose and Summary
18 Q.
19 A.
20
21
22
What is the purpose of your testimony?
My testimony supports the Company's Application required as part of a prior
stipulation approved by the Commission to update the net power costs ("NPC") in
base rates ("Base NPC") that are compared to actual NPC in the energy cost
adjustment mechanism ("ECAM").
Wilding, Di -1
Rocky Mountain Power
Q. Please summarize the impact of the Company's proposed update to Base NPC.
2 A. In compliance with the Stipulation approved in Case No. PAC-E-15-09, the
3 Company proposes to update the level of Base NPC in customers' rates based on
4 the normalized NPC reported in the Company's 2015 Annual Results of Operations
5 ("ROO"). Total company NPC in the 2015 ROO are $1.485 billion, or $91.6 million
6 on an Idaho-allocated basis. This compares to a Base NPC in rates of$1.529 billion
7 total-company, or $94.8 million Idaho-allocated basis. Exhibit No. 1 provides a
8 detailed calculation of the updated NPC.
9 Update to Base Rates
10 Q.
11 A.
12
13
14 Q.
15 A.
16
17
18
19
20
21
Why is Base NPC being updated at this time?
As part of the Stipulation in Case No. PAC-E-15-09, the Parties agreed that Base
NPC would be updated effective January 1, 2017. It was also agreed that the
updated Base NPC would be the amount reported in the 2015 ROO.
How are NPC calculated for the Annual Results of Operations?
NPC are calculated for the ROO by projecting the NPC needed to serve the
Company's 2015 normalized load while incorporating known changes to NPC
related items occurring in 2016. This is also the method used to calculate NPC in
the Company's general rate cases in Idaho. The NPC in the 2015 ROO incorporates
the latest forward market prices for natural gas and electricity, signed contracts,
coal costs, and other inputs to the Company's production cost model ("GRID")
known at the time the ROO was prepared.
Wilding, Di - 2
Rocky Mountain Power
Q.
2
3 A.
4
5
6
7
8
9
10
11
12
13
14
15
What are the major drivers causing Base NPC to decrease since it was last set
in Case No. PAC-E-15-09 ("2015 Rate Plan")?
The $44 million difference on a total company basis between the Base NPC set in
the 2015 Rate Plan and the proposed Base NPC from the 2015 ROO is summarized
in Table 1 by the major categories in the NPC report.
Table 1
NPC Reconciliation ($mill ions)
ID Base NPC PAC-E-15-09
lncrease/(Decrease) to NPC:
Wholesale Sales
Purchased Power
Coal Generation
Gas Generation
Wheeling Hydro and Other
Total lncrease/(Decrease)
Settlement Adjustment
Total Company NPC Difference
Annual Results of Operations
EBA Deferral
Period
$1,529
132
(103)
(13)
(33)
(11)
($28)
(15)
($44)
$1,485
As part of the Stipulation implementing the 2015 Rate Plan, Base NPC was
increased $15 million from the initial filling. This accounts for approximately a
third of the reduction ofNPC.
Compared to the Base NPC currently in rates, wholesale sales revenue are
down $132 million, which increases total NPC. The reduction in wholesale sales
revenue is mainly due to a reduction of market prices.
The increase to NPC due to decreased wholesales revenue is offset by the
decreased purchased power costs, coal and natural gas fuel costs, and wheeling and
other costs. The decrease in NPC due to lower purchased power costs is due to both
a reduction in the volume of purchased power and the market prices. The decrease
Wilding, Di -3
Rocky Mountain Power
to coal fuel costs is mainly due to lower coal generation, and the decrease to natural
2 gas fuel costs is mainly due to lower natural gas prices. Additionally, lower load
3 also contributed to lower NPC compared to the Base NPC from the 2015 Rate Plan,
4 with the impact spread across multiple cost categories.
What other updates are being made to base rates? 5 Q.
6 A. Consistent with the 2015 Rate Plan Stipulation, the deferral calculated in the ECAM
7 is measured on a dollar per megawatt-hour ("MWh") basis using load at meter.
8 Therefore, the Idaho load at meter will be updated to 3,407,488 MWh consistent
9 with the 2015 ROO report. This is a decrease from the Idaho load at meter of
10 3,483,480 MWh currently being used. This will change the dollar per MWh base
11 used in the ECAM for NPC, the load change adjustment rate ("LCAR"), production
12 tax credits ("PTC"), and renewable energy credits ("REC") as shown in Table 2
13 below.
Table 2
ECAM Base ( $/MWh) January 1, 2016 January 1, 2017
NPC $ 27.21 $ 26.90
LCAR $ 5.68 $ 5.80
PTC $ (1.99) $ (2.04)
REC $ (0.09) $ (0.09)
14 Q. Was any other changes made to the LCAR, PTC, or REC rates other than
15 updating the denominator for the 2015 load?
16 A. No. The costs or numerator remand the same, I simple divided those costs by
17 Idaho's load from the 2015 Results of Operations.
18 Q.
19 A .
Does this conclude your testimony?
Yes.
Wilding, Di - 4
Rocky Mountain Power