20101014Peseau Di.pdf

BEFORE THE IDAHO PUBLIC SERVICE COMMISSION
IN THE MATTER OF THE APPLICATION OF )
ROCKY MOUNTAIN POWER FOR )
APPROVAL OF CHANGES TO ITS )
ELECTRIC SERVICE SCHEDULES AND A )
PRICE INCREASE OF $27.7 MILLION, OR )
APPROXIMATELY 13.7 PERCENT )
)
)
DOCKET NO. ID PAC-E-10-07
DIRECT TESTIMONY OF
DENNIS E. PESEAU
ON BEHALF OF
MONSANTO
COMPANY
October 14, 2010
~-,~;.-i;
~--..~
1 Q. PLEASE STATE YOUR NAME AND BUSINESS ADDRESS.
2 A. My name is Dennis E. Peseau. My business address is Suite 250, 1500
3 Liberty Street, S.E., Salem, Oregon 97302.
4 Q. BY WHOM AND IN WHAT CAPACITY ARE YOU EMPLOYED?
5 A. I am President of Utility Resources, Inc. The firm has consulted on a number
6 of economic, financial and engineering matters for various private and public
7 entities since 1985.
8 Q. ON WHOSE BEHALF ARE YOU TESTIFYING IN THESE PROCEEDINGS?
9 A. I am testifying on behalf of Monsanto Company.
10 Q. DOES ATTACHMENT DEp.A ACCURATELY DESCRIBE YOUR
11 BACKGROUND AND EXPERIENCE?
12 A. Yes.
13 Q. WHAT IS THE PURPOSE OF YOUR DIRECT TESTIMONY?
14 A. The purpose of my testimony is to recommend that the Commission defer its
15 decision on PacifiCorp's requested rate base addition of $801.5 milion for
16 the Segment B portion of the Gateway Central, approximately $45 milion of
17 which is allocated to Idaho, until PacifiCorp's next general rate case. As I
PESEAU DI - Page 1
1 explain below, this Gateway Central transmission project is but an initial leg
2 of a very speculative and massive undertaking, Energy Gateway that mayor
3 may not be built by the end of the next decade. As a result of the over sizing
4 to accommodate a planned larger "Gateway South" 500 kV line, that may be
5 completed in 2020, the requested rate base of Segment B from Populus
6 (near Downey, ID) to Terminal (NW Utah) is far greater than that necessary
7 to upgrade this path on a stand-alone basis.
8 Q. WHAT IS THE GENERAL BASIS FOR YOUR RECOMMENDATIONS?
9 A. As explained very clearly by PacifiCorp in its direct testimony and exhibits,
10 and also its 2008 IRP and in multiple company documents, Gateway Central
11 is but a 135 mile line that is the initial segment of perhaps the most ambitious
12 and expensive planned transmission network expansion ever attempted in
13 the United States. PacifiCorp estimates that the entire 2,000 mile network, if
14 completed as Energy Gateway, will have project costs exceeding $6 billon.
15 Most of the actual legal, environmental, permitting, rights of way, etc. has
16 only just begun on the remaining 1,865 miles of proposed facilities.
17 For perspective, if the entire $6 billon Energy Gateway project is ever
18 completed, Idaho's allocation would be approximately 6%, or $360 million of
19 rate base addition. The Energy Gateway transmission project alone will have
20 increased the total Idaho rate base (generation, transmission and distribution
PESEAU DI - Page 2
1 plant) by over 60% compared with the year end 2009 rate base. The
2 magnitude of this project's impact on Idaho customers' rates warrants careful
3 and cautious scrutiny by this Commission. My proposal to defer the
4 proposed rate base treatment of Gateway Central is the best means to
5 protect both customers and shareholders of PacifiCorp. As i argue below,
6 most of the Gateway Central rate base will not be used and useful at the
7 outset due to its over sizing. I believe that shareholders as well as
8 customers would be best served by holding open the issue of rate base
9 treatment of Gateway Central until the larger issues of the entire Energy
10 Gateway project are better known.
11 Q. WHAT ARE YOUR SPECIFIC RECOMMENDATIONS IN THIS CASE WITH
12 RESPECT TO THE COMMISSION'S TREATMENT OF THE REQUESTED
13 APPROXIMATE $45 MILLION GATEWAY CENTRAL RATE BASE
14 ADDITION?
15 A. i recommend that the Commission:
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1.Not make a determination regarding the degree of "used and
usefulness," if any, of the proposed Gateway Central project in
this case even if it does come online December 31, 2010.
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2.Defer the consideration of Gateway Central as an Idaho rate
base component until the next general rate case.
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3.Remove $5.9 millon (reduced by power cost offset) from
PacifiCorp's requested rate increase.
PESEAU DI - Page 3
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4.Order PacifiCorp to place all Gateway Central plant into Plant
Held for Future Use, with no carrying charge until such time as
the degree of used and usefulness can be determined.
5.Require PacifiCorp to submit a specific progress report on the
status of the proposed Gateway South project as the proposed
Gateway Central project makes sense only when Gateway South
is completed.
6.Require PacifiCorp to hold an open season or nomination
process for capacity on Gateway Central as a means to gauge
the degree of excess rate base that Idaho's network customers
will be required to pay for until OATT customers develop.
7.Require PacifiCorp to revisit its 2008 IRP justification of system
load forecast and the proposed Energy Gateway project in light
of the prolonged recession and economic uncertainty.
15 OVERVIEW OF GATEWAY CENTRAL AND ENERGY GATEWAY
16 Q. PLEASE DESCRIBE THE PROPOSED GATEWAY CENTRAL PROJECT.
17 A. PacifiCorp's filing in this case, particularly the testimonies of Messrs.
18 Gerrard, Cupparo and McDougal, provides detailed descriptions of the
19 proposed Gateway Central, or "Populus to Terminal" transmission line. I
20 summarize those aspects of the proposed line that bear on the
21 recommendation i make in this case. As a considerable portion of Gateway
22 Central's description has been labeled "CONFIDENTIAL," I wil only generally
23 summarize these elements in relation to the much larger plan to construct
24 Energy Gateway.
PESEAU DI - Page 4
Q. WHAT IS ENERGY GATEWAY?
2 A. Energy Gateway is PacifiCorp's program to invest over $6 bilion for
3 approximately 2,000 miles of high voltage transmission lines, primarily 500
4 kV, throughout the western United States. If completed as planned, the
5 project would have a total capacity of 6,000 MW with the intention of
6 transmitting electricity generated primarily from wind energy planned in
7 Wyoming and elsewhere, to markets in California, southern Nevada and to a
8 lesser extent Utah and the Pacific Northwest. My Exhibit 221 (DEP-1), taken
9 from PacifiCorp's website on Energy Gateway Transmission Project's
10 "Frequently Asked Questions," Page 5, provides a schematic of the proposed
11 project.
12 The proposed "Gateway West" segment of Energy Gateway, with an
13 estimated in-service date in the 2014-2018 timeframe,1 would connect areas
14 of Wyoming that have potential for wind-generated power, to the Captain
15 Jack substation near Malin, Oregon. My Exhibit 222 (DEP-2) is a copy of
16 PacifiCorp's website description of Gateway West, with key milestones. The
17 Captain Jack substation is the hub or connection between the California-
18 Oregon transmission intertie and provides access to several 500 kV lines
19 running south throughout California.
1 Recent deferral of draft EIS may push timeframe back. See Bureau of Land Management
announcement at http://ww.blm.gov/wy/sUen/info/news_room/2010/july/22gatewaywest.html
PESEAU DI - Page 5
1 The proposed "Gateway South" segment of Energy Gateway, with an
2 in-service date in the 2017 -2019 timeframe,2 would connect potential
3 Wyoming wind generators to the Crystal substation in Nevada Powets
4 service territory. My Exhibit 223(DEP-3) is a copy of PacifiCorp's website
5 description of Gateway South, with key milestones. The Crystal substation
6 connects a number of transmission lines and provides access to several 500
7 kV, 345 kV, and 230 kV lines running through Las Vegas Valley and west
8 into California.
9 Q.
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HOW DOES PACIFICORP DESCRIBE PLANNING ASPECTS OF THE
PROPOSED ENERGY GATEWAY AND GATEWAY CENTRAL
PROJECTS?
PacifiCorp differentiates this over $6 billon project from more conventional
resource planning approaches. The Company states:
Unlike the conventional "generation before transmission"
approach, this transmission project (Energy Gateway) is a
relatively new approach, constructing transmission ahead of
specific generation resources. With increasing development of
location - constrained renewable resources, one project often
can no longer form an anchor for transmission.
(Page 1, "Frequently Asked Questions")
Elsewhere, PacifiCorp characterizes the Energy Gateway project as more of
an overall strategy rather than one single transmission project. PacifCorp is
2According to the Company's response to Monsanto Data Request 4.4, Energy Gateway is now
anticipated to be completed in the 2018-2020 time frame.
PESEAU DI - Page 6
1 proposing to construct Energy Gateway in anticipation of future development
2 of generation resources, and future markets for such resources.
3 Q. WHAT IS THE COMPANY'S OVERALL STRATEGY WITH THE
4 PROPOSED ENERGY GATEWAY?
5 A. If PacifiCorp succeeds in completing the entire Energy Gateway project by
6 2020, the Company will dominate transmission services throughout the
7 western U.S. This circumstance would place shareholders in the enviable
8 position of earning a return on over $6 billion in new rate base, as well as
9 providing the "highway" to California and southern Nevada for sales of
10 PacifiCorp's existing and developing wind projects. The reason i say
11 "enviable" is because, unlike unregulated third part developers of new
12 transmission facilities, PacifiCorp is attempting to earn on Energy Gateway
13 immediately by placing the large, initially over-built segments into rate base
14 as each is completed. Private third party developers are not, of course, able
15 to earn on the excess investment prior to the facilities reaching full capacity
16 and coming on line, when they then can charge OATT wheeling tariff rates.
17 Q. PLEASE EXPLAIN.
18 A. The proposed Gateway Central project for which PacifiCorp is requesting
19 rate base treatment in these proceedings is a good example of this enviable
PESEAU DI - Page 7
1 position. The overwhelming amount of this $801.5 milion investment is for
2 interconnection with planned future Energy Gateway segments. Thus, in this
3 docket, Idaho customers, by virtue of PacifiCorp's request to place the Idaho
4 allocation of the entire $801.5 million into rate base, are being asked to fund
5 the carrying costs of this initially over built segment B until this path will
6 become functional with later segments, particularly Gateway South.
7 Q. WHEN IS GATEWAY SOUTH PREDICTED TO BE COMPLETED?
8 A. Gateway South is in the early planning, siting and permitting stages. Rights
9 of way and EIS are not expected to be completed until 2015. The Company
10 projects an in-service date in the 2017-2020 timeframe. As this particular
11 segment of Energy Gateway is the principal driver for the over-building of
12 Gateway Central, this late date and early stage of development causes major
13 concern for the equity and reasonableness to Idaho customers funding and
14 carrying the over built Gateway Central for so many years. Most of this
15 Gateway Central wil not be "used and useful" unless and until Gateway
16 South is energized.
17 Q. WHAT IS THE BASIS FOR YOUR CONCLUSION THAT THE INITIAL LEG
18 OF ENERGY GATEWAY, WHICH IS GATEWAY CENTRAL, IS OVER
19 BUILT?
PESEAU DI - Page 8
1 A. I base my conclusion on a number of factors. First, as a part of the approval
2 of MEHC's acquisition of PacifiCorp in 2005, both Companies agreed to
3 upgrade this same Path C by the 300 MW required to enhance reliability,
4 facilitate the receipt of renewable resources and to enable further
5 optimization on this segment of Path C. The Path C upgrade was an
6 important commitment to get from MEHCIPacifiCorp because this segment
7 had been previously identified as a potential congested transmission path.
8 Prior to the conception of Energy Gateway, the 300 MW Path C upgrade
9 committed to by MEHCIPacifiCorp was seen as sufficient for this path.
10 Q. WHAT WAS PACIFICORP'S ESTIMATE OF THE COSTS OF THE
11 REQUIRED UPGRADE TO THE PATH C SEGMENT BETWEEN
12 SOUTHWEST IDAHO AND NORTHERN UTAH?
13 A. The Company indicated that this upgrade would cost approximately $78
14 millon, or less than 1/10 of the $801.5 million requested in these
15 proceedings for the Path C upgrade. Clearly this ambitious request is for the
16 benefit of interconnecting to the planned Gateway South. This is explained
17 on Page 6 of Order No. 29973 approving the acquisition, attached as my
18 Exhibit 224 (DEP-4).
PESEAU DI - Page 9
1 Q.
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IS THE ANTICIPATED CAPACITY RATING FOR THE POPULUS TO
TERMINAL SEGMENT B OF PATH C DIFFERENT BEFORE AND AFTER
THE PLANNED GATEWAY SOUTH?
Yes. PacifiCorp's response to Monsanto Data Request 4.4 indicates:
Monsanto Data Request 4.4
Reference Testimony of Mr. John Cupparo. What is the expected
megawatt line rating or capacity of the 345 kV Populus to Terminal
facility before and after completion of the Gateway West and Gateway
South segments?
Response to Monsanto Data Request 4.4
The incremental capacity is expected to be 700 MW in the southbound
direction and 350 MW in the northbound direction prior to completion of
Gateway South in 2018-2020. Once Gateway South is completed the
capacity in both directions is expected to increase to 1400 MW.
15 Q. DOES THE FACT THAT THIS SEGMENT WILL HAVE ITS CAPACITY
16 INCREASED BY 1,050 MW (1400-350) WITHOUT MATERIAL
17 ADDITIONAL INVESTMENT DEMONSTRATE THAT IT IS OVER-BUILT
18 TODAY IN ANTICIPATION OF THE 2018-2020 PLANNED GATEWAY
19 SOUTH?
20 A. Yes. Let me state that my characterization of Segment B as "over-built" here
21 is not to suggest that this line may not someday become fully used and
22 usefuL. It is not unusual for a utilty to "over-build" facilities at the outset in
23 order to accommodate a near-term expansion of other facilities. What is
24 unusual with PacifiCorp's request is to include a rate base addition, and
PESEAU DI - Page 10
1 charge Idaho ratepayers initially, at a level that is approximately ten times its
2 previously approved commit level ($79 milion compared to $801.5 millon)
3 ten years in advance of the transmission line being fully used and usefuL.
4 And, if the planned Gateway South segment faces the hurdles typical of
5 siting and constructing 500 kV transmission lines in the western U.S., there is
6 a real possibility that Gateway South may be delayed or disapproved by
7 virtue of other competing high voltage transmission line servicing similar
8 markets.
9 Q. ARE YOU SUGGESTING THAT THE $801.5 MILLION INVESTMENT IN
10 SEGMENT B IS IMPRUDENT?
11 A. No. I cannot conclude on the prudence or not of the level of investment
12 absent a more thorough understanding of the segment in relation to the
13 uncertainty and risk associated with Gateway South. My recommendation to
14 defer any rate base treatment of the $801.5 milion investment is to better
15 understand these issues, and avoid any decision at present as to how much
16 of the $801.5 milion investment is "used and useful" in the traditional
17 regulatory sense.
18 Q. IS YOUR RECOMMENDATION FAIR AND EQUITABLE TO IDAHO
19 CUSTOMERS AND PACIFICORP SHAREHOLDERS?
PESEAU DI - Page 11
1 A. Yes, I believe it is the most equitable position to take in these proceedings.
2 Ratepayers are being requested to carry a huge investment made for a
3 future planned project that would ordinarily be borne by shareholders. And,
4 in my opinion, shareholders are better served by having the Commission
5 defer full approval rather than force it to determine what degree of present
6 "used and usefulness" Segment B serves in 2011. The latter decision could
7 be viewed negatively by financial markets and should be avoided in favor of
8 a more comprehensive, integrative review of the Segment B Gateway South
9 Gateway West projects.
10 Q. DID YOU CONDUCT ADDITIONAL ANALYSES TO DETERMINE
11 WHETHER THE POPULUS TO TERMINAL SEGMENT B IS BEING OVER
12 BUILT?
13 A. Yes. There are a number of other high voltage transmission projects in the
14 western U.S. in both the planning and construction phase. A simple
15 comparison of the investment per transmission mile serves as a rough check
16 of the investment per mile of Segment B if completed as a stand-alone
17 project.
18 Q. PLEASE EXPLAIN.
PESEAU DI - Page 12
1 A. A simple and straightforward manner in which the Segment B investment
2 costs can be bench marked is to compare its investment per mile with the
3 remainder of the Energy Gateway planned projects. This is a conservative,
4 but not completely comparable basis for comparison because the 135 mile
5 Segment B line is 345 kV, while the majority of the remaining 1,865 miles of
6 the planned Energy Gateway project is the higher voltage, higher cost 500
7 kV transmission line. As such, the comparison is conservative.
8 My Exhibit 225 (DEP-5) shows the simple calculations comparing the
9 investment costs of Segment B with the remainder of Energy Gateway. The
10 assumptions shown include the total investment in the planned Energy
11 Gateway of (over) $6 billon for the 2,000 mile project. The 135 segment
12 from Populus to Terminal is $801.5 millon.
13 Q. WHAT ARE THE RELATIVE INVESTMENT COSTS PER MILE OF THE
14 GATEWAY CENTRAL PROJECT COMPARED WITH THE REMAINING
15 SEGMENTS OF ENERGY GATEWAY?
16 A. As shown on my exhibit, the requested investment for Gateway Central is
17 $5.94 million per mile. The remaining Energy Gateway project is estimated
18 to be $2.79 millon per mile. The fact that the proposed Gateway Central
19 project investment is well more than twice as expensive as the remaining,
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1 higher voltage Energy Gateway transmission system is a further indication
2 that Gateway Central is being over-built to accommodate Gateway South.
3 If Gateway South was a certain project that was expected to come on-
4 line at a time similar to the expected December 2010 on-line date of Gateway
5 Central and there was true demand for that amount of transmission, this
6 investment mismatch would not be a problem. However, this is not the case.
7 Gateway South wil not even be permitted in the near future and wil not be
8 energized before 2020, if indeed it is constructed at alL.
9 Q. HAVE YOU PARTICIPATED RECENTLY IN THE SITING AND APPROVAL
10 OF OTHER SIMILAR AND COMPETITIVE HIGH VOLTAGE
11 TRANSMISSION PROJECTS IN THE U.S.?
12 A. Yes. I have for many years participated in some of the financial planning for
13 the Southwest Intertie Project, or "SWIP" as it has been called. This project,
14 originally proposed by Idaho Power Company, has been planned in various
15 stages since as early as 1992. Today, SWIP is a similar and competing
16 project with Gateway South and is owned jointly by NV Energy and Great
17 Basin Transmission, LLC. The project originates at Midpoint, Idaho and
18 terminates initially in Nevada Powets territory, similar to Gateway South
19 plans. The SWIP project is being constructed in two phases, the first being
20 called "ON Line" and wil originate in Sierra Pacific Powets service territory in
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1 eastern Nevada (Robinson Summit substation) and run south for 235 miles
2 to major markets in the southern Nevada and California markets. ON Line is
3 a 500 kV transmission line approved and under construction.
4 Q. WHAT ARE THE INVESTMENT COSTS FOR ON LINE THAT HAVE BEEN
5 APPROVED BY THE PUBLIC UTILITIES COMMISSION OF NEVADA?
6 A. $509.6 million. The investment cost per mile for this 500 kV, 235 mile line is:
7 $509.6/235 = $2.17 milionlmile
8 The ON Line 500 kV line is below, but in line with $2.79 million/mile
9 investment in the remaining Energy Gateway project, but vastly below the
10 $5.94 millon/mile investment cost estimate for the proposed Gateway
11 Central segment.
12 Q. IS THE ON LINE TRANSMISSION PROJECT IN COMPETITION WITH THE
13 PROPOSED GATEWAY SOUTH PROJECT?
14 A. Yes. The ON Line project is being built to serve renewable energy projects in
15 northern Nevada, Idaho and Wyoming. The 2000 MW project is well ahead
16 of and in direct competition with Gateway South.
17 Q. DOES THE ON LINE PROJECT PRECLUDE GATEWAY SOUTH FROM
18 EVER BEING BUILT ECONOMICALLY?
PESEAU DI - Page 15
1 A. No. But clearly the current clamor for renewable resources in southern
2 Nevada and in California is moderating and would have to grow significantly
3 in order to accommodate and justify a second major 500 kV project such as
4 Gateway South.
5 Q. BESIDES ON LINE, WHICH IS APPROVED AND UNDER
6 CONSTRUCTION, ARE THERE OTHER PLANNED HIGH VOLTAGE
7 TRANSMISSION PROJECTS DESIGNED TO SIMILARLY CONNECT AND
8 DELIVER POTENTIAL WIND GENERATION IN WYOMING TO THE
9 DESERT SOUTHWEST?
10 A. Yes, there are severaL. While I make no attempt here to rank the
11 probabilities of each being completed in relation to the proposed Gateway
12 South project, the mere existence of several proposed competing
13 transmission projects demonstrates the inherent uncertainty attached to any
14 single project's success.
15 Q. WHAT OTHER COMPETING PROJECTS ARE UNDER DEVELOPMENT?
16 A. My Exhibit 226 (DEP-6) provides a map of a number of competing 500kV
17 and above projects currently being proposed and developed. I have not
18 studied the progress of each, but have generally been aware of their
19 intentions in industry press. Most of these projects have been proposed prior
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1 to Gateway South and as such are competitors to it. If one or more of these
2 competitor projects advances prior to Gateway South, there is a distinct
3 possibility that Gateway Central would become a largely stranded
4 investment. My testimony anticipates this, and requests that the Commission
5 guard today against the potential for Gateway Central to be carried by
6 ratepayers in the event that Gateway South never develops. This complex
7 issue is best considered in future proceedings where the risks and rewards of
8 this investment can be analyzed.
9 Q. ARE YOU CHALLENGING PACIFICORP'S PROPOSED RATE BASE
10 TREATMENT OF IDAHO'S SHARE OF THE $801.5 MILLION GATEWAY
11 CENTRAL INVESTMENT BECAUSE YOU BELIEVE THAT THIS
12 SEGMENT WILL SERVE NO PURPOSE FOR THE FORESEEABLE
13 FUTURE?
14 A. No, I am not. Even if Gateway South is never completed, the Populus to
15 Terminal segment wil relieve congestion on this transmission path. In
16 response to Monsanto Data Request 4.5, PacifiCorp listed a number of
17 potential benefits that would derive from an upgrade to this path. i attach the
18 one page response as my Exhibit 227 (DEP-7). I do not challenge this
19 response. I do challenge the proposed decade long inclusion of the $801.5
20 millon investment in rate base, and its associated large increase in revenue
PESEAU DI - Page 17
1 requirements, so long in advance of it being used and useful for Gateway
2 South.
3 Q. DO YOU RECOMMEND THAT A SMALL PORTION OF THE PROPOSED
4 $801.5 MILLION BE PLACED IN IDAHO'S RATE BASE IN THIS CASE?
5 A. No. Again this issue is complex and needs a more thorough review. And,
6 from PacifiCorp's viewpoint, the Company may well wish to postpone
7 consideration until the entire investment could logically be determined to be
8 used and usefuL.
9 Q. HAS THIS COMMISSION SPECIFICALLY CONSIDERED PACIFICORP
10 RATE BASE ADDITIONS PREVIOUSLY THAT WERE REQUESTED
11 EITHER OUT -OF-PERIOD OR MUCH LONGER THAN CURRENTLY
12 NECESSARY?
13 A. I do not believe so. It is my understanding that the Commission has not
14 issued an order pertaining to PacifiCorp in a fully contested rate case since
15 sometime in the 1980s.
16 Q. PLEASE SUMMARIZE
17 RECOMMENDATIONS.
YOUR CONCLUSIONS AND
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1 A. I conclude that the Commission should defer consideration of Pacificorp's
2 proposed Gateway Central rate base addition to the next general rate case,
3 for the reasons developed in my testimony.
4 Q.
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7 A.
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DO YOU HAVE CONCLUDING REMARKS REGARDING THE COURSE
OF IDAHO WITH REGARD TO MULTI-8TATE ALLOCATORS FOR THIS
COMMISSION?
Yes I do. I have participated in numerous studies and proceedings in Idaho
since the early 1980s. My preparation for the testimony I sponsor here has
raised major concerns in regard to my assessment of how the new era of
renewable resource development and major speculative transmission
investments in the western United States wil affect this state, and especially
the Idaho service territory served by PacifiCorp. We all know that Idaho is
less than 6% of PacifiCorp's total customer base. We further know that
certain of PacifiCorp's larger state jurisdictions are "driving" the surge for
more expensive and potentially excess resources through ambitious
resource portolio standards ("RPS"). The fact that PacifiCorp is driven to
serve these requirements, and potentially to profit greatly from them, wil not
in my opinion, bode well for the State of Idaho. I say this because of the
multi-state protocols and resulting costly allocations that are headed Idaho's
way as a result these multi-billion dollar investments that would likely not
PESEAU DI - Page 19
1 arise in the absence of such requirements. The largest drivers of the need
2 for these investments are those large states that either are not rich in
3 generation resources, or simply wil not allow such development in their own
4 back yard. Idaho, on the other hand, can independently pursue its rich
5 renewable and other generation resource potential largely without the aid of
6 the massive type projects such as Energy Gateway and wind generation.
7 Idaho ratepayers I fear may be in for indefinite rate increases that could be
8 avoided if the state would opt out of the multi-state policies. These rate
9 increases are certainly disastrous not only for Monsanto, but for the general
10 livelihood of eastern Idaho. I urge the Commission to consider whether it
11 wishes to adopt a more parochial view of the western U.S. energy future and
12 focus on what is best for Idaho.
13 Q. WOULDN'T IDAHO'S OPTING OUT OF MANY OF PACIFICORP'S
14 EXPANSION PROGRAMS HURT THE COMPANY?
15 A. No, not at alL. Idaho is such a small percentage of PacifiCorp that neither the
16 Company nor other states would necessarily be affected.
17 Q. DOES THIS CONCLUDE YOUR DIRECT TESTIMONY?
18 A. Yes.
PESEAU DI - Page 20
1985 - Present
1978 - 1985
1974 - 1978
1972 - 1974
Education
Attachment DEP-A
QUALIFICATIONS OF
DENNIS E. PESEAU
President of Utility Resources, Inc., a firm that provides
consulting and technical services on economic and financial
matters. Dr. Peseau has conducted numerous studies on
economic, energy and competitive and regulated markets,
including complex litigation.
His regulatory experience includes studies and
testifying on a number of regulatory revenue requirement, cost
of service, rate of return and rate design issues in more than
100 civil and administrative proceedings.
Vice President, Zinder Companies, Inc. Dennis headed the
west coast office of the national consulting organization
headquartered in Washington, D.C. His primary responsibilities
included marginal and incremental cost of service studies, rate
of return and rate design for a number of public utilities
companies.
Senior Economist, Oregon Public Utility Commissioner. Dr.
Peseau conducted numerous studies on behalf of the
Commissionets staff on various financial capital structure, rate
of return, econometric and forecasting issues.
Senior Economic Analyst, Southern California Edison
Company. Dennis worked in Southern California Edison's
economics department on matters of economic growth and
energy pricing, cost of service and econometric and statistical
analysis.
PhD, M.A., Claremont Graduate School
B.A., California State University, Chico
Dr. Peseau has conducted studies on regulatory revenue requirements, cost of
service, rate of return, system planning and resource plans and general financial
feasibility analyses in the states of
Alaska
California
Colorado
Idaho
Maryland
Minnesota
Montana
Nevada
New York
Oregon
Virginia
Washington
Washington, DC
Wyoming
He has participated in energy matters before the Federal Energy Regulatory
Commission, the federal Bonneville Power Administration, and in Alberta, Canada
and Pemex in Mexico City.
En Gateay Pa I of2
~~
Energy Gateway
Bnng Ne Tra to th Wet
At Is foin on our na's ei translssl sy, es In th wes wh th ha be ve liInveent In new tranission Infrastructu fo nearf 20 years. Dung th tim, pola counl an el
dem In the reion hav all grown slgnlflnt. Th transis syem is reng ca In may pice and Isbo 1f ot.
fl Is ie th way to chang tht. In May 201, Pa I8 th En Gate Tran Ei -an ambios, rnlt-y $6 bllon-pfs Ifveen. pl that wll ad appl'xt 2,00 mire of ne trnsmio fine
acr th Wes. Enery Gatewa, and projec pinne by other ent, wll allYle coaint and adre cut andfuture gr of many ki.
Tod, costc: Is unday on on En Gatey se and oure, si an pe pr coùe fo
several othe. Major semen are schele to be In serv by 2014.
Amo It be, En Gaay wl pr ac to covent enrg sorc and cone ar wh rewab
en depmt polbllt are st, as shown In th re ma of wind (PO!'), solr, biomass and geothermal
(POf) pontt. lern more ab how Energy Gateway supports renewable resource development (PDf)
Äl wi polaio and eney dend gro, inme In our trsmis sys al Is dr by our Integrated
Resource Plan. this plan idenif a ne fo mor trasmis li to dever elty fr new geneat re -eler fr ne generati plnts, or to proide a pa fo ad eny purc fro ot entll In th reio.
The Energy Gaeway map sho th lnual seme addlons to the transmlson syste to compl the expasl li It
potlal fu buHd. Dendi on reional, thir-part and lol parttl, th fial JIne may vary so. Pacll Is
taking ever reab ste to accoodate brod renal transmlssl ne bu wll, at minimum, build Energy Gaeway
to flrst me our comitment to provid ou customrs with sa, rellle and reasonly pr elril ser.
Re mo ab this Impoant Investmnt In the Energy Gateway (act sheet (PDF), or get answe to frequently asked
(PDF).
Unks to Enev Gaay and lol transiss projct set infoon can be fond be. We up th PMes
relarl as new Inforatin becoes availabl.
Energy Gateway Seme
Seg A ~ Walla Walla
Gateway Central
sement B - Populus to Terminal
5etC-
semeC-
Gateway West
Segen 0 ~
SeE -
Gateway South5eF -
seg G - Mona to Crystal
to Populus
Monsanto Company
Exhibit 221 (DEP-1)
Page 1 of 2
Case No. PAC-E-10-07
Witness: Dennis E. Peseau
5eenG.SeH.
to Red 8utte
to Captain Jack
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~li tl(~t $lftl lfl
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Tlts IN Is lo ltt.!1 ,(ilfCQtt Ot"l and ttflu tht txpasi nttSU'"I co COftvtt EI! G11_,
to Itt taU ('padl1 of 60 MW. Il ml111 rtt tbl filùl lOlt Of (o"ltnKtio uqc~.
02010 Padeo, 1I sury of MidAmetiè3n
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(Upd FerWI 19,2010)
Company
Monsanto Company
Exhibit 221 (DEP-1)
Page 2 of 2
Case No. PAC-E-10-07
Witness: Dennis E. Peseau
tONIQ
Ga Wes Pa 1 of2
~~IC
Gateway West
Ene us Is on th ri and de Is fa apin th lflt of th exls elel sy.. Tl gro co fr
bo ne an exiting custrs. Indivual, come toay are usng 26 peent mo elit tl thy dl 20 ye
ago. To mee thi in dend, new fac ar ne.
As part of Pa's Energy Gateway Trasm Einsi Proec, Idah Po an Rocky Mon Po ar plnin
t-o bu . ne hI-v trasm line ac sothrn Wyin and sorn Id. Th pr called Gateway
West , wl metd. apXIte 1,100 ml an supp prnt an Mu ne of cu. Th pro also wienhce eli1 sy rellabl In th ser ares of bo copani. In ad1t, Gaay wes wl en el
gene fr ex and ne ren:, lnng wind, to be deivere to curs thou th re.
Th pro ro fo Gateay Wes Windstar to Populus sement exts fr ea Wy to a hub ne OBy,
Idah, wh It wil conne wi a seen that will cònln thgh to wester Idah. The pr ro for th Populus to
Hemingway se runs fro II plned transmiio hub near Downe, Idah, ac the state to a po sott ofBo, Idao.Proj Tl. Pu SC - lun 200
. EnvtntlImp Stant pr - 200 . 2012. Pu ou - Jun 200 - prt æm
. Peit and obnlng rits of way - 2011 - 2014
. Esimted lin In se fo cuto - 2014 . 2018
AcIIn Ab th Pro
Undr the Na Enme Po Act, th Bureu of la Maement Is currtl ti an EAYta Impt
Statemet on Gaay wet - a prs tha ben In June 200 wi opn hose Puic SCopng metis. Bl has ovht
of this proes and hOed th meets to colled ofl public co. For mo inrmaio, plse viit BU,"'s Web
site.
Gateway Wes ma can be vi be:
.map
.
. Land
Further Infoti alo can be fond on our Gateway West newsletter (PDf) or at our Gateway West Web sIte
Pubc Parciti
Publ Input Is an Impant pa of the tralo Itne develpme prs and Is welco li l! stag. In adti to
pub, grp and inivdual meins, pr materils and neleter also have ben sent to landwner and otr
Intereted partes.
Th Bure of Land Manment he op hose mein June 200 .$ part of th environt revie prss fo tl
prject. Roky Mountain Powe and Idaho Po ho additional me In Debe 200 to gatr Input frlandner and other Inteed pa In Motper, Murpy, Poello and Twin fal, Idah, and In Glrok, Keme,
RawUs and Roc Spris, WyoIng. Fow-up landne mengs were thn he In Douglas, Glnrk an Sinclair,
Wyong, and In Amern FaUs, Brneu, Bui1, Gong, Gr View, Kuna, Meba and Twin Fas, Idho. Fo a more
coensive iisting of the vari outreac efrt, plase see the meeting list (PDF).
To submit an offl puIc comet on the Gateav West TransmISsion li Prec, plse co the Bl diy at:
Buræu of land ManaQlteay we Pr
P. O. 8ø 20879
Chenne, WY 8203
Oi-m Gateway. .West. .WYMall~b!m.gov
To co us ab thIs transIsn prec pl call 801-220-4221 or e-mail ConstllictionProjectstSpacifcorp.com. Pl
be sure to Inde the prec nam --Gateway Wes- - In your Inquiry.
Monsanto Company
Exhibit 222
Page 1 of 1
Case No. PAC-E-10-07
Witness: Dennis E. Peseau 10l101t:lIw.pifi.oooggw.btm
Gatewa So Pa I otl~~
Gateway South
Wlt enrgy us on the ri and el de fast appch th liIt of th exlstf trls$l syem, newfacUlt are need to mee the groin ne. Th groth In dend fo e1eel enrg co fr bo ne an exting
cutoers Indial, conrs toay are using 26 pent mo elc:dty than they did 20 ye ago.
As part 01 Pacp's Enrg Gaay TransmSio exio Prot" th copany Is pfnl to buil a Ngh-vtransmi Nne pr acros sothe Wyoin, poaly crin nowest Coldo, throh Ut to a po no oflas veas, Nead. this Hne sent" Gatey Soh, wil be apmaly 80 mil io, suly prnt and fu
nes of customers an enhnd ele system re thro th re. In ad, th pr wltl enbl de
of exiting and new generating rerc, Inlu wi, to mo cuomrs.
The pr rou fo Gateay Soh, Aeolus to Mona, ex fr east Wyomng to a hub ner Moa, uth, Wler It
WØ cone wl an sement that cotinu th sojm ut.
The pr roe for Ga So, Mona to Cryal, Is fr a ne su th wil be bu ner Mq, Utah,
conecin to mol sutas thr sothwe Utah to a pont no 01 La veas, Nead.
Sigurd to Ree Bute, llnor transmi il tht Is pa of the Gaway Soh pr wHl strt In SIgurd. Ut, an
conue south to th Re Butte SUbstaio nor of St. Ge, Utah.
Gaeway Soth ma wi be avale fong Pu Sc In Sprf 2010.
Proj Tim
. Pu SC - August/5ebe2010
. Infol Mengs - Augstseem 2010
. Enviroental Impll Stmet - Decer 200-2015
. Estma line In servic for cutom - 2011-2019
Puc Part
Pu In Is a ve Impoant part of tbls proc and WI be we at al stages of this tran lie deel.
Pulic SClng meetngs are exped to be he as part of the enviromental review pro. The Burea of land Manemnt
wHI ovrsee th pros under the Natial Enviental Poic Ad and wltl host these meeings to co ofal public
coments on the prject fo the draft EnvIronmental Impact Stateent.
Adtl Info Ab th Proec
Th comny wel yor coments at al stes of th tlmllon Hne delot. For mo infoat, plse call
us at (SOL) 220-4221 or e-ma ConstructlonProjectsq'pacifìr.rp.cöff. Ple be sure to ind the prec name --En
Gateay Soth" - In yor Inquir.
(Upda ¡anoarv 14, 2010)
Ci2010 PiCO, . sury of MldAmem:an Energv Holdings Company
Monsanto Company
Exhibit 223 (DEP-3)
Page 1 of 1
Case No. PAC-E-10-07
Witness: Dennis E. Peseau
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øi fu liea. OI Debe16.l), øi of th pa in Ii ~ exaåeCit Stio urgi th.~ tô aptle loi ~ co0a.ip
16 "cotret." On JuWJ i 7, 2(), th Co~C) c:ve fl ~ ~_ to
coØl. th $~on Bas up ..aq re of .tb loå .Acaon tl ~
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Monsanto CompanyORDBtlNO.2973 1 Exhibit 224 (DEP-4)
Page 1 of 3
Case No. PAC-E-10-07
Witness: . Dennis E. Peseau
30)Pad \lll coe to pr .Ji.~ PI aeBlto ti...
euscedwêârd the th cut Coss mlel Bd cd.
3t) WM ~ JH geeron ft in ex oltGO MW ea wia
dole lie of to or mo ye Pacfior _ MBC wi ia It fo
Pi (Rs) or oter coly wi Bt law ie an ør Ii
pe to prt ofne pn re fò PaCo.
32) Nol ÎI tl acuiti eoil sl be ii . a wI of
PaftCo's or MBC'. riahts to re co tr fo li th
is th subjec of any cotmenta.
.,
U)Unesan..pria prvibylto,~OD ~òt~l'lÇ~~ ta MRC~ PllfiCc..ei.th ~ to us tt
fó1lusprfoadnite th.cotmtL noCOllolubôuld $ive
MBC an PllifC~rp wrtt nofin òf anY \'aton by eill ~~fth
comitmen inê .mths ~lieaon. If àUbfaur is èO Widù _ (10)~m...dt~. for tìlur to lil~rct or fivi)(S) ~ .~ fo oê~
th Cosion shuld take no acon. 'l Colhlt tha\l todeere i(tl~ve acon bas aaliec or .èOdi viti. ~çor
PafiColJllåy reuCI fo case an oxteonoftllipe. JfMBCöt
PacfiCoip tìli lQcorrec lIdi vilati witb th ~ ~.fr lImodüed byanYCoSlon~aproved.teon'tl Co.ØlYøêtolI peal før violation ofa Coon~, ...~MBCor
PaeiftCo, as åJwed unerst laws im relatons
~4) 1:ipiQJÃlvegtMBC anPac bave~~~ion proeè tl~ miabty~r.litatetb~ Qf~ll
~, orenablelilrter sys~opat.Sllec to~ni antlc
availability Qfmaterlš,eqtu~an ri--f~WlY, .MB _ PacliCØ
cottguse thei be effort to açeve th followi trssoø.ns
iiitre tmtòveritøt:
~~~
a) lat C URe (:-73 millon) - Ia Pat C ca by 30 MW (Û' SoB.
Idah to Norer Uta). Th taet colen date for th pr ia 2010. Ths
prec:
. en relibilty beuse it ia trfer caty beee th eM ød
wes cctr ar,
...
i Whil ME iw immer ltf in th cIls of Pafi'l .... ae Il'" Mt ti
sin tl ~ efdi tret it is po th up t\ te a pal! iI
int ROt be eovc optil fo cutors or ab to be ci by th ta.. If_ ai
oc, M!Cpl to pr III alvc to th ~ wiØia~ be TlCo ma mvesqaw th rebl øf any de by WECI _ on ør mo
ofdi id t: mvctmls is no co-eve or opti ro CUto.
IDAHO COTMS
CASH NO. 'Ae-ß-oS~8
OlI_NO.1997)
6 Monsanto Company
Exhibit 224 (DEP-4)
Page 2of3
Case No. PAC-E-10-07
Witness: Dennis E. Peseau
'.
c) 0 Ie M ex fo th Accrated Distbuon C1 Pu Pro ac a1
sttes win be ln by $1.5 million pe ye for fivo ye afer th clos of th
tracon, an
l) MBHCanPacfiCo will supo th Bovil. Po Adnisl hi it
dllopeu of ll-ten Piueimcb a$çØutlitioiW fi .ØU ll." O\te
frm BPA's~,PaeifiCoip will initiate a pr tocoii~vel)'dc_
ptts,.~~fiÇoip. PacifiC9 wil contiti its Paal ~ S~çe ~
.LL its Wiprviontb ~lows .trmissioncusomen walter prec
..trae up to ~~r1lnutesbero~any hour.1ì wÎii.notit' ~csto di
proifitprpoes êhanges to1hes two elemets orit OATT.
...
I
~.
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d) extsion oftl O& investment ac aU stte fb the Savi SAIlliat Jb
thee aditi ye at an estimated co of $2 milion per ye.
IDAHO COMENT
CASE NO. PAC-B--8
OlWBI NO. 2913
7 Monsanto Company
Exhibit 224 (DEP-4)
Page 3 of3
Case No. PAC-E-10-07
Witness: Dennis E. Peseau
ENERGY GATEWAY
Copaati Cost per Mile
Gateway Central
34SkV $81.5/135
Reinil1 Ene Gatey
SOkV
($6,00801.$)/1865 ..
Neda Powerls OH l.SO $50.6/235
Assumptns:
1. Gatewy Cetral Investment of $801.5 mllDo
2. Se ie of 135 mi
3. Ene Gateway Investmet of $6 bi
4. Enel' Gateway lenø of 200 miles
5. Nevada Power's ON Une Investent of $50.6 mmton
6. On line semet length of 235 miles
Exbit 2x (DEP-S)
=$5.94 miHio pe mne
$2.79 milllo pe mi
=$2.17 mlln pe mlle
Monsanto Company
Exhibit 225 (DEP-5)
Page 1 of 1
Case No. PAC-E-10-07
Witness: Dennis E. Peseau
&c_(O
Western U.S. Propo 50+ Transmlsslo Uns
Soce: Venty Mas
fJ Tx jo 50YQlin Tf\ss Un PnGøita So
Gat We
Hg P1nsEic T..,~ llMo Sk T~ In (M)Ni Tra Aq() In$o In PiSo~~PiTramE",~
Ze Tra U1 Pm
Monsanto Company
Exhibit 226 (DEP-6)
Page 1 of 1
Case No. PAC-E-10-07
Witness: Dennis E. Peseau
...
PAC-E-! 0-71R Mou Po
Juy 1,2010Mon Da Re 4.S
M..sato Data Reues 4.5
Wh fi wo t1 Oay Ce se if ei or bo of1l So aMWes sets ar no eo?
R. to M...to Data.. 4.5
If Gay Sout indor Gay Wes we no eo Gaway Cc wilcoti to prvi sipfi befi to th Coy's cuer. Pl iefe to
paes Di-3 an Di-4 in th di teony of
Dal T. Ge bew.· =:=:~ss=t~~~::::
limte caty an cIte opelitB.
. Mee th immed ae to: (1) Imve sys relity in th ar anmai co widi naon eleeCl sy relit sl byinlin ne tnss caty to enur th sy Cf su
trio outa BO ofTen Sub wit culq loa,
genti or in PafiCo's Ea Cotrl Ar an Deghbotrmisson bø autty er; an (2) Imve th Coy's abiity tope ma on trsson faliti be Popus an Ternaby ha altetive tnsson path th allo faites to be ta off-line
an maintin.. Mee th tr caty an reiability reuits to deive re
to lods.
. Provide PacifCo with gr flexbility when co t\tu planre to me ai' grwi de fo en \\ me cu
an fu en reui th may be mate by st BA fe
reguation.
. Faclitate th ingr of poal new energy re in Wyo U"
Idah an Orego an Be su ecnomc deveop in th sttes.
Fur, Gateway Ce wil re tl im to cu du symdist Ple re to pa Di-9, Di- i 0, Di- i i in âe dút tey ofDa T. Oe.l.
IllSpDø T. OeDI T. Oe
Monsanto Company
Exhibit 227 (DEP-7)
Page 1 of 1
Case No. PAC-E-10-07
Witness: Dennis E. Peseau