20051221Ottens direct .pdf

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Brad M. Purdy
Attorney at Law
2019 N. 17th St.
Boise, Idaho 83702
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December 21 2005
Idaho Public Utilities Commission
Ms. Jean Jewell
Commission Secretary
472 W. Washington St.
Boise, ID. 83702
Re: Idaho Public Utilities Commission Case No. P AC-05-8 - Revised testimony of
T eri Ottens~
Dear Ms. Jewell:
Enclosed, please fmd a revised original and 8 copies ofthe prefiled direct testimony of
Teri Ottens in the above-referenced proceeding filed on behalf of the Community Action
Partnership Association ofIdaho.
The version of Ms. Otten s testimony that was filed and served on all parties yesterday
was a draft, and not the fmal version. The result of a misunderstanding with my assistant.
Please replace yesterday s draft with the version enclosed. All parties on the service list
are also being sent replacement copies.
My apologies for any inconvenience.
Very truly yours,
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Brad M. Purdy '
All parties of record
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Brad M. Purdy
Attorney at Law
Bar No. 34722 2019N.St.
3 Boise, ID. 83702
[phone]
FAX: [phone]
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Attorney for Petitioner
Community Action Partnership
Association ofIdaho
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IN THE MATTER OF THE JOINT
APPLICATION OF MIDAMERICAN
ENERGY HOLDINGS COMPANY (MEHC)
AND P ACIFICORP DBA UTAH POWER &
LIGHT COMPANY FOR AN ORDER
AUTHORIZING MEHC TO ACQUIRE
ACIFICORP
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
CASE NO. PAC-05-
COMMUNITY ACTION PARTNERSHIP ASSOCIATION OF IDAHO
DIRECT TESTIMONY OF
TERI OTTENS
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I. INTRODUCTION
Please state your name and business address.
My name is Teri Ottens. I am the Policy Director of the Community Action Partnership
Association ofIdaho headquartered at 5400 W. Franklin, Suite G, Boise, Idaho , 83705.
On whose behalf are you testifying in this proceeding?
The Community Action Partnership Association ofIdaho ("CAP AI") Board of Directors
asked me to present the views of an expert on, and advocate for, low income customers 0
PacifiCorp on behalf of CAP AI. CAP AI's participation in this proceeding reflects our
organization s view that low income people are an important part ofPacifiCorp
customer base, and that these customers will be uniquely impacted by the proposed
merger between PacifiCorp and MidAmerican Energy Holdings Company (MHEC).
CAP AI is an association of Idaho s six Community Action Partnerships, the Idah
Migrant Council and the Canyon County Organization on Aging, Weatherization and
Human Services, all dedicated to promoting self-sufficiency through removing the causes
and conditions of poverty in Idaho s communities.
Community Action Partnerships ("CAPs ) are private, nonprofit organizations
that fight poverty. Each CAP has a designated service area. Combining all CAPS, every
county in Idaho is served. CAPS design their various programs to meet the unique needs
of communities located within their respective service areas, Not every CAP provides all
of the following services, but all work with people to promote and support increased self-
sufficiency, Programs provided by CAPS include: employment preparation and dispatch
education assistance child care, emergency food, senior independence and support
clothing, home weatherization, energy assistance, affordable housing, health care access
and much more.
Have you testified before this Commission in other proceedings?
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Yes, I have testified on behalf of CAP AI in general rate cases involving Idaho Power
Company, AVISTA, and United Water. CAP AI participated in the recent PacifiCorp
general rate case and was a signatory to the settlement reached in that proceeding.
addition, CAP AI has also submitted comments in Intermountain Gas Company s recent
PGA filing.
Why has CAP AI intervened in this particular proceeding?
CAP AI was concerned that the acquisition ofPacifiCorp by a holding company with non-
utility interests, and the utility holdings of which operate well outside our geographic
reason, was of significant importance to PacifiCorp s low-income Idaho customers.
Furthermore, when PacifiCorp and Scottish Power applied to this Commission for
approval of their merger in the late 1990s, the applicants made certain concessions to
ensure that ratepayers would not be harmed as a result of the merger. CAP AI's intent
was to see that similar assurances were made in support ofthe merger proposed in this
case.
According to the Department of Commerce in the State ofIdaho, 12% of the
State s population, when using the 2000 Census, falls within federal poverty guidelines
and 21 % fall within the state guidelines set at 150% of poverty levels. The 2000 Idaho
Census reveals that those living in poverty are categorized as 8.3% elderly, 13.
children, 8.3% all other families, 35.3% single mothers and 34% all others. In Idaho
104 537 households representing 227 000 citizens were eligible in Idaho for energy
assistance and weatherization but only 31903 households statewide received LIHEAP
assistance in the 2004 heating season and only 1 395 homes received weatherization
services (356 in the Idaho PacifiCorp service area).
According to the Department of Energy, the "affordability burden" for total home
energy is set nationwide at 6% of gross household income and the burden for home
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Q25
heating is set at 2% of gross household income. Idaho ranks # 4 in the nation with the
highest energy burdens. There is a gap of $50 470 559 between what Idahoans can afford
to pay (based on federal standards) for energy in 2004 and what they actually paid.
Currently the LIHEAP program sends $11 million (for energy assistance, Weatherization
and administration) to Idaho.
What types of programs does PacifiCorp currently have in place that directly address the
needs of its low-income customers?
PacifiCorp operates project "Lend a Hand" which is similar to Idaho Power s "Project
Share." In addition, PacifiCorp operates a low-income weatherization program as do
Idaho Power and A VISTA.
Does CAP AI believe that there are improvements that can and should be made to these
programs?
Definitely. Regarding Lend a Hand, CAP AI believes that the current level of funding,
approximately $10 000-$15 000 is hardly enough to make a dent in the needs of the
PacifiCorp Idaho customer base. Regarding the company s low-income weatherization
CAP AI has been strongly encouraging certain program design changes for some time
now. This is the result of two particular problems with the current program.
What problems are you referring to?
First, PacifiCorp will only fund 50% of any given low-income weatherization project.
The other funding must come :ITom other sources such as federal Department of Energy
and Low Income Home Energy Assistance programs. Second, even when federal funds
are fully exhausted for any given year, which they often are, PacifiCorp will only fund
50% of project costs. Finally, CAP AI believes that the total amount of annual funding
should be increased :ITom the current level of$150 000.
Please explain your specific concerns regarding the aforementioned issues.
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Idaho Power only asks that an average of 15% in federal weatherization funds be spent
on each project their funds are involved in. Avista makes no requirements at all. Both
recognize the value of the program and the need to spread the utility and private dollars
as far as they will go,The customer value of the program was recognized by the utilities
and they saw that more customers could be served if there was not a high match
requirement. There is a limited amount of federal funds available (which looks to be cut
even further this year). In the eastern part ofIdaho, the waiting list for weatherization is
over 2 years long, and for less critical cases as long as six years. Because PacifiCorp
territory is interspersed with municipal and cooperative electrical companies, as well as
Idaho Power territory, it is often difficult to fmd enough houses in one year that are
Pacificorp customers when we can only spend 50% of their money on the home. This
means that PacifiCorp money could be left on the table by this restriction while other
homes in need of critical weatherization may miss out because federal money had to be
used to provide the 50% match. Finally, PacifiCorp is the only utility that has not
completely adopted all of the DOE measures - meaning that we have to use federal
money to pay for certain weatherization aspects (such as hot water heater replacement).
Again this forces federal money to be spent when PacifiCorp money could have been
applied, reducing our flexibility in reaching other homes.
Q19 Did CAP AI participate in the settlement discussion that took place in this case?
A20 Yes, and we participated and ultimately signed the settlement stipulation.
Q21 Does that mean that all of CAP AI's concerns outlined above have been resolved?
No. We believe that much remains to be accomplished. The applicants in this case
expressed their opinion that CAP AI's concerns should be resolved through the general
rate case that PacifiCorp intends to file in the Spring of2006.
Does CAP AI agree with the applicants' contention in this regard?
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, but the fact that PacifiCorp will file a general rate case in the near future, combined
with certain commitments agreed to by applicants, however, convinced CAP AI that
settlement at this juncture was reasonable.
What "commitments" are you referring to?
Concerning CAP AI's specific interests, the applicants agreed to several things. First, the
applicants agreed that for any low-income eligible project, for which federal matching
funds are exhausted or otherwise unavailable, PacifiCorp will fund 100% of
weatherization costs for that project (Idaho-specific commitment # 13(a)). This reflects a
policy change on the part ofthe company.
Are there additional commitments?
Yes. PacifiCorp agreed (in Idaho-specific commitment # 13(b)) that it will analyze and
directly address CAP AI's contention that the company should be willing to fund 100% 0
low-income weatherization costs for any given project, regardless of whether there exist
federal monies available. CAP AI raised this issue in PacifiCorp s last general rate case
(Case No. PAC-05-1), but the applicants refused to agree to eliminate the 50%
matching requirement and failed to address it in this proceeding. Thus, CAP AI believes
that the settlement agreement in this case will, at the least, put the issue squarely before
the Commission in the relatively near future.
What about your contention that annual low-income weatherization funding levels should
be increased?
CAP AI's primary objective is to fIrst remove the 50% limitation. So long as this
limitation remains in place, we believe that PacifiCorp money will be left on the table
because there are insufficient federal funds to match it against. This anomaly can and
likely will occur even ifPacfiCorp agrees to fund projects at 100% once federal funds are
exhausted. The reason for this is because these limitations decrease flexibility in the
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manner in which these funds can be best spent to benefit all customers in the PacifiCorp
service area. Regardless, CAP AI believes that the total annual funding level should be
increased and will make this recommendation in PacfiCorp s next general rate case.
Are there any other commitments that convinced CAP AI to agree to the settlement?
Yes. The applicants agreed that shareholder funding of project Lend a Hand would be
increased :ITom its current level to $20 000 (Idaho-specific commitment # 14). While
CAP AI believes this level of funding is inadequate, this increase is acceptable until the
next rate case. The applicants further agree to work with low-income advocates to
evaluate additional matching contributions" in the future. CAP AI encourages
PacifiCorp to do so in the upcoming general rate case. Finally, the applicants have
agreed to fund and hire a consultant to study and design for possible implementation an
arrearage management project for low-income customers." The stated purpose ofthe
project is to find means to reduce the numerous system-wide costs attributable to
customers who become delinquent on their bills. The applicants commit to forming a
working group of regulatory agencies and low-income advocates to oversee this project
and, during settlement discussions, indicated that CAP AI would be welcome to be a part
ofthat working group.
, in summary, do you support the settlement stipulation, with the attached conditions
for approval by this Commission?
Yes. Though there are several important issues yet to be resolved, CAP AI believes that
for purposes of this case, the settlement is of benefit to low-income customers. The
applicants did not specifically propose any ofthe low-income commitments in its direct
filing. The negotiated settlement constitutes a reasonable settlement for the interim
pending the company s next general rate case.
Does that conclude your testimony?
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Yes it does.
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