20110114James Smith Reb.pdf

BEFORE THE IDAHO PUBLIC UTILITIES 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 )
)
Case No. PAC-E-10-07
Rebuttal Testimony of
JAMES R. SMITH
(Economic Value of Monsanto Interrptible Products)
On Behalf of
Monsanto Company
January 14, 2011
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1 ECONOMIC VALUATION OF MONSANTO PRODUCTS:
2 Q PLEASE STATE YOUR NAME, EMPLOYER AND BUSINESS ADDRESS.
3 A My name is James R. Smith. I am employed by Monsanto Company at the Soda
4 Springs Plant and my business address is P.O. Box 816, Soda Springs, Idaho
5 83276.
6 Q ARE YOU THE SAME JAMES SMITH WHO PREVIOUSLY FILED
7 DIRECT TESTIMONY ON DECEMBER 22, 2010 ON BEHALF OF
8 MONSANTO COMPANY?
9 A Yes.
10 Q WHAT ISSUE ARE YOU ADDRESSING IN YOUR REBUTTAL
11 TESTIMONY?
12 A I am rebutting Mr. Keith Hessing's testimony, testifying on behalf of the Idaho
13 Public Utilities Commission Staff ("Staff'). I am addressing Mr. Hessing's
14 testimony concering the value for System Integrty Interrptions.
15 Q MR. HESSING ADDRESSES THE VALUE OF THE SYSTEM
16 INTEGRITY INTERRUPTION ON PAGE 3, LINE 12 THROUGH PAGE 4,
17 LINE 12 OF HIS TESTIMONY AND ACCEPTS THE COMPANY'S
18 $100,000 ESTIMATE OF THE VALUE OF THIS PRODUCT BASED ON
19 THE RESULTS OF A FRONT OFFICE MODEL RUN. DO YOU AGREE
Smith, Di-Reb - 1
Monsanto Company
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THAT THE PROPOSED VALUE OF $100,000 PER YEAR is FAIR AND
REASONABLE FOR THE TWELVE HOURS OF SYSTEM INTEGRITY
INTERRUPTION?
No. The 2008 Electric Service Agreement, Exhibit No. 251 in the attached Exhibit
A at paragraph 3 provides:
PacifiCorp may request System Integrty Interrptions of up to 162
MW if the system integrty interrption is voltage related and up to
95 MW if the system integrty interrption is caused by a double
contingency event. A double contingenèy event shall mean the
forced outage of two or more PacifiCorp generating units totaling
500 MW or more of capacity. ... Under emergency conditions,
such interrption may occur without advance notice to Monsanto.
Otherwise, PacifiCorp shall give Monsanto not less than two hours
notice of the potential for interrption for system integrty
purposes and advance notice when such interrption wil end.
Paragraph 3.1 provides:
System Integrty Interrptions shall be available to PacifiCorp all
hours of ever day, and have priority over any other interrption or
curtailment option implemented at that time.
While Monsanto has been and will remain flexible in providing curtailment options
to PacifiCorp that provide the greatest benefit to PacifiCorp and the system,
Monsanto is only willing to do so if it receives fair and reasonable value in retu
that adequately compensates Monsanto for the adverse impacts of the interrption
which includes lost production, disruption of production, maintenance and related
activities, which increase operating expenses and poses risk of damage and
increased maintenance expenses for equipment.
The value proposed by Monsanto in the testimony of Mr. Collins provides
fair and reasonable value for Monsanto's curtailment products, but the Company's
proposed value for system integrty interrptions, in particular, does not. Monsanto
Smith, Di-Reb - 2
Monsanto Company
1 would forego providing any system integrty interrptions at the Company's
2 proposed value.
3 Q IF MONSANTO NO LONGER PROVIDES SYSTEM INTEGRITY
4 UNDER A FUTURE AGREEMENT, THEN WOULD MONSANTO
5 CONTINUE TO "BE CONSIDERED FIRST" FOR INTERRUPTION IN
6 AN UNPLANNED EVENT?
7 A No. As Mr. Hessing noted in his testimony "any and all customers are subject to
8 interrption to preserve system integrty" (emphasis added). Thus, if Monsanto is
9 to be treated no differently than other customers, it should no longer "be
10 considered first." PacifiCorp must look to interrpting other customers before
11 interrpting Monsanto since consistently placing Monsanto at the "front of the
12 line" would be discriminatory and unfair.
13 Q DO YOU HAVE ANY OTHER COMMENT ON THE STAFF'S
14 TESTIMONY REGARDING MONSANTO'S INTERRUPTIBLE RATE?
15 A Yes. The increase found in the Commission's recent Interlocutory Order together
16 with Mr. Hessing's valuation of $ 1 4.2 milion would result in an increase of $8.6
17 milion or over 20% to Monsanto:
Table 1.
Staffs Impact to Monsanto ($ Milions)
Firm Revenues
Interrptible Valuation
Net Revenues
Present
$59.5--
$42.4
Pro osed
$65.2
14.2
$47.3
Increase
$5.7ti
$8.6
Smith, Di-Reb - 3
Monsanto Company
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The proposed net revenues of$47.3 million is $36.85 per MWh, an amount which
is higher than PacifiCorp charges either of its other two interrptible customers.
For example, as Ms. Iverson explained in her direct testimony, the other two
interrptible customers wil pay rates in 2011 ranging from $32.84 to $33.49 per
MWh. Monsanto offers more value to PacifiCorp than either of those other two
interrptible customers in terms of larger size, more hours, faster response,
unconstrained timing and flexibility, and so should be priced lower not higher
than its other interrptible customers.
DOES THIS CONCLUDE YOUR REBUTTAL TESTIMONY
Yes.
Smith, Di-Reb - 4
Monsanto Company