20180117Steward Supplemental Direct.pdf

REGE!VED
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION )CASE NO.PAC-E-17-07
OF ROCKY MOUNTAIN POWER FOR A )
CERTIFICATE OF PUBLIC )SUPPLEMENTAL DIRECT TESTIMONY
CONVENIENCE AND NECESSITY AND )OF JOELLE R.STEWARD
BINDING RATEMAKING TREATMENT )FOR NEW WIND AND TRANSMISSION )
FACILITIES )
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ROCKY MOUNTAIN POWER
CASE NO.PAC-E-17-07
January 2018
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l Q.Are you the same Joelle R.Steward who adopted direct testimony and submitted
2 rebuttal testimony in this proceeding on behalf of Rocky Mountain Power
3 ("Company"),a division of PacifiCorp?
4 A.Yes.
5 PURPOSE AND SUMMARY OF TESTIMONY
6 Q.What is the purpose of your supplemental direct testimony?
7 A.My testimony supports the Company's application to the Idaho Public Utilities
8 Commission ("Commission")requesting Certificates of Public Convenience and
9 Necessity ("CPCNs")and binding ratemaking treatment for new wind resources
10 ("Wind Projects")and the Aeolus-to-Bridger/Anticline line and network upgrades
11 ("Transmission Projects"),as reflected in this supplemental filing (collectively,the
12 "Combined Projects").In my supplemental direct testimony,I update the expected
13 costs and benefits proposed to be recovered through the Resource Tracking Mechanism
14 ("RTM"),associated with the Combined Projects based on the Company's 2017R
15 Request for Proposals ("2017R RFP")final shortlist.
16 Q.Please summarize your testimony.
17 A.The lower rate impact of the Combined Projects reflects the reduction in costs and
18 increase in benefits in the Company's updated economic analysis provided by
19 Company witness Mr.Rick T.Link.It also reflects the effects of federal tax reform.
20 The first year revenue requirement of the Combined Projects is reduced nearly 20
21 percent from the initial filing.The Company's request for resource approval and
22 recovery through the RTM is reasonable and in the public interest.The Combined
23 Projects are the least cost alternativeto meet customers needs today and into the future.
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Steward,Di-Supp -l
Rocky Mountain Power
l SUPPLEMENTAL DIRECT TESTIMONY
2 Q.Have you updated the exhibits from your direct testimony to reflect the updated
3 economic analysis for the Combined Projects,including the Wind Projects
4 selected to the 2017R RFP final shortlist,as reflected in this supplemental direct
5 filing?
6 A.Yes.My original exhibits have been updated and are presented as Exhibit No.42,
7 Exhibit No.43,Exhibit No.44,and Exhibit No.45.1 These exhibits are revised with
8 the updated economic analysis in Mr.Link's supplemental direct testimony which
9 reflects results from the 2017R RFP final shortlist.The exhibits are in the same format
10 as in the initial filing and calculate the monthly and annual revenue requirements and
11 the overall rate impact ofthe Combined Projects that would be reflected in the proposed
12 RTM.
13 Q.Please provide a summary of the updates in your revised exhibits.
14 A.The updates include changes in Idaho's allocated share of the updated Combined
15 Projects'construction costs,return,depreciation,Production Tax Credits ("PTCs"),
16 taxes,and operating costs and benefits.Updated net power costs associated with the
17 20l7R RFP final shortlist,an updated load forecast,system dispatch,and revised wind
18 generation projections have also been included in the Energy Cost Adjustment
19 Mechanism ("ECAM")pass-through calculation.Overall,these changes show a
20 reduction in revenue requirement of nearly 20 percent from the initial filing.
O 1 Exhibit No.42 is included but is the same as Exhibit No.26 presented in direct testimony.
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Rocky Mountain Power
l Q.Does the updated revenue requirement analysis incorporate the federal income
2 tax rate change from 35 percent to 21 percent,as passed under the Tax Act of
3 2017?
4 A.Yes.As shown in Exhibit No.45,line 5,the consolidated federal and state income tax
5 rate has changed from the 37.951 percent used in my direct testimony to 24.587 percent,
6 reflecting the change in the federal tax rate.Also,on line 6 of Exhibit No.45,the PTC
7 tax gross-up factor has been updated from 1.6116 in my direct testimony to 1.3260.
8 These changes are incorporated in the revenue requirement results shown in Exhibit
9 No.43 and Exhibit No.44.
10 Q.What is the updated estimated rate impact associated with the Combined Projects,
11 which would be reflected in rates through the RTM,in conjunction with the
12 ECAM?
13 A.The Company is projecting the Combined Projects'updated annual revenue
14 requirement impact for the years 2020 to 2023 to be in the range of ($0.3)million to
15 $4 million in Idaho,as shown in Table l of Exhibit No.43.The net rate impact would
16 now be less than 1.6 percent for the first full year of operation.
17 Q.As a result of this updated economic analysis,has the Company's proposed
18 ratemakingtreatment for interim recovery of costs through the RTM changed?
19 A.No.As discussed in my rebuttal testimony filed on December 18,2017,the Company
20 continues to propose recovery of costs through the RTM in order to match benefits and
21 costs in rates.
22 Q.Does this conclude your supplemental direct testimony?
23 A.Yes.
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Rocky Mountain Power