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Home My WebLink About20120420Widmer Direct.pdfBEFORE THE IDAHO PUBLIC SERVICE COMMISSION IN THE MATTER OF THE APPLICATION OF ROCKY MOUNTAIN POWER FOR AUTHORITY TO INCREASE RATES BY $2.6 MILLION TO RECOVER DEFERRED NET POWER COSTS THROUGH THE ENERGY COST ADJUSTMENT MECHANISM Z1? 2O r1O: 3 - - CASE NO. ID PAC-E-12-.03 DIRECT TESTIMONY OF MARK T. WIDMER ON BEHALF OF fl (C April 19, 2012 I I. INTRODUCTION AND QUALIFICATIONS 2 Q. PLEASE STATE YOUR NAME AND BUSINESS ADDRESS. 3 A. My name is Mark T. Widmer and my business address is 27388 S.W. Ladd Hill Road, ru Sherwood, Oregon 97140. 5 Q. PLEASE STATE YOUR OCCUPATION, EMPLOYMENT, AND ON WHOSE 6 BEHALF YOU ARE TESTIFYING. 7 A. I am a utility regulatory consultant and Principal of Northwest Energy Consulting, LLC 8 ("NWEC"). I am appearing on behalf of Monsanto. 9 Q. PLEASE SUMMARIZE YOUR QUALIFICATIONS AND APPEARANCES. 10 A. With NWEC, I provide consulting services related to electric utility system operations, 11 energy cost recovery issues, revenue requirements, and avoided cost pricing for 12 qualifying facilities. Since forming NWEC, I have provided testimony in dockets 13 regarding recovery of net power costs through general rate cases and power cost 14 adjustment mechanisms and avoided cost methodologies in Wyoming and net power 15 costs and the prudence of resource acquisitions in Washington. I have also participated 16 in Georgia Power Fuel Cost Recovery dockets for the Georgia Public Service 17 Commission Staff. Prior to forming NWEC, I was employed by Pacifi Corp. While 18 employed by PacifiCorp, I participated in and filed testimony on power cost issues in 19 numerous dockets in Wyoming, Oregon, Utah, Washington, Idaho, and California 20 jurisdictions over a 10 plus year period. At the time of my departure from PacifiCorp, I I was the Director of Net Power Costs. My full qualifications and appearances are 2 provided in Appendix A. 3 II. PURPOSE OF TESTIMONY 4 Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY? 5 A. My testimony is filed in support of Monsanto's petition for reconsideration of an 6 adjustment for excessive forced outages for boiler tube failures proposed in Monsanto's 7 reply to PacifiCorp's comments filed on March 30, 2012. 8 Q. DID THE IDAHO PUBLIC UTILITY COMMISSION CONSIDER THE 9 PROPOSED ADJUSTMENT? 10 A. No. Pursuant to the Commission's decision -1 , Monsanto's proposed excessive outage 11 adjustment was not considered because Monsanto's reply comments were filed after the 12 comment deadline, the Commission's deliberation and because procedural rules do not 13 allow for a party to respond to a reply. 14 Q. WERE THERE EXTENUATING CIRCUMSTANCES WHICH CAUSED A 15 DELAY IN FILING THE PROPOPOSED ADJUSTMENT WITH THE OTHER 16 ADJUSTMENTS INCLUDED IN MONSANTO'S COMMENTS FILED ON 17 MARCH 19,2012? 18 A. Yes. Monsanto received the Company's response to Monsanto's first data request set 19 dated March 1, 2012 for Data Request 8 on March 13, 2012, which indicated there may 20 be a problem with boiler tube failure forced outages. Monsanto's second data request set See Idaho Commission Order No. 32507 page 9, footnote 3 Widmer, DI— Page 2 1 was filed on March 15, 2012 to obtain more detailed information to determine whether 2 Monsanto would propose a forced outage adjustment. The Company responded to 3 Monsanto's second data request on March 16, 2012. To complicate matters, Monsanto 4 inadvertently referenced the wrong discovery response in Monsanto data request 33. 5 Monsanto informed PacifiCorp of the correct reference on March 16, 2012 and received 6 the revised response on March 20, 2012, the day of the comment deadline. Monsanto 7 filed its original comments on the ECAM on March 19, 2012 to comply with the 8 Commission's requirement that comments be filed by March 20, 2012 and therefore, was 9 not able to incorporate the proposed adjustment in its comments. In the end, under the 10 compressed time frame under modified procedure there was simply not enough time to 11 conduct necessary discovery and do a thorough review of the ECAM filing despite 12 Monsanto's efforts to promptly request and the Company's good faith efforts to provide 13 information as quickly as possible. Monsanto has filed a petition for reconsideration to 14 provide an opportunity for the Commission to consider the excess outage adjustment 15 discussed below in addition to the issues raised in the testimony of Ms. Iverson. 16 Q. PLEASE EXPLAIN YOUR CONCERNS WITH BOILER TUBE FAILURES. 17 A. PacifiCorp's thermal plant forced outage experience compared to industry averages for 18 Company owned and operated generation plants sized 400-599 MW for NERC boiler 19 tube failure codes 1040, 1050, 1070, and 1080 were significantly worse than comparable 20 industry averages for various plants. Widmer, DI— Page 3 I Q. ARE FORCED OUTAGE LEVELS THAT SIGNIFICANTLY EXCEED 2 INDUSTRY AVERAGES REPRESENTATIVE OF PRUDENT OPERATIONS? 3 A. No. While some variances above industry averages is not cause for alarm, significantly 4 exceeding industry averages is not acceptable and is not representative of prudent 5 operations. Table 1 below shows PacifiCorp's performance during the ECAM test year 6 for plants that significantly exceeded industry averages. Table 1 Excessive NERC Outages -Boiler Tube Failures PacifiCorp NERC Average /1 Average Variance Coal Units:'NERC MWH Lost PacifiCorp MWH Lost From Size Code Per Unit-Year Plants 12.3 Per Unit-Year NERC Avg. 400-599 1040 11,207 Hunter 49,681 443.29% Bridger 53,502 477.39% 400-599 1050 9,648 Hunter 47,145 488.669(o Huntington 33,053 342.59% 400-599 1070 4,700 Huntington 10,276 218.64% 400-599 1080 9,831 Huntington 28,530 290.20% /1 Source Monsanto 33-1st Supplemental /2 Plants that exceeded the industry average by more than 100% /3 PacifiCorp owned and operated plants 7 As shown, these outages exceeded industry averages by a range of approximately 219% 8 to 489%. Widmer, DI - Page 4 I Q. DOES TABLE 1 ENCOMPASS ALL INSTANCES WHERE PACIFICORP 2 PLANTS EXCEEDED INDUSTRY AVERAGES FOR THESE NERC CODES? 3 A. No. Table 1 only includes plant that exceeded industry averages by more than 100% so 4 that it would only capture extreme divergences from industry averages. 5 Q. WHAT IS YOUR RECOMMENDATION? 6 A. The Commission should disallow recovery of the excessive forced outages shown in 7 Table I. The PacifiCorp impact is a reduction of approximately $7.0 million and is 8 shown on Exhibit 206 (MTW-1). The Idaho retail customer, Monsanto and Agrium 9 impacts are reductions of $303,073, $173,773 and $6,602 respectively and are shown on 10 Exhibit 207 (MTW-2). 11 Q. DOES THIS CONCLUDE YOUR TESTIMONY? 12 A. Yes. Widmer, DI - Page 5 Idaho Case No. PAC-E-12-03 Appendix A Mark T. Widmer QUALIFICATIONS OF MARK T. WIDMER, PRINCIPAL, NORTHWEST ENERGY CONSULTING, LLC FORMAL EDUCATIONAL I received my Bachelor of Science degree in Business Administration from Oregon State University, 1980 PROFESSIONAL EXPERIENCE After graduating from Oregon State University, I began my 27 year career at PacifiCorp, a regulated electric utility. From 1980 through 1986 I held several positions in the revenue requirement area. Those positions included Accountant, Rate of Return Accountant, Senior Rate of Return Accountant, Assistant Rate of Return Analyst and Rate of Return Analyst. In those roles I performed the following duties: • Developed rate of return analysis and revenue requirement adjustments using accounting and statistical data analysis models, exhibits and general support for results of operation witness. • Developed forecasting approaches and assisted with preparation of special studies for long range forecasting, discovery requests and regulatory audits. • Prepared discovery responses, and assisted with testimony development. • Coordinated detailed analysis requirements of regulatory agencies with other departments. • Prepared monthly analysis of revenues, expenses, utility plant in-service and quarterly report for public service commissions. • Audited vouchers, expense accounts and working fund drafts; reconciled accounts. In 1986 I was promoted to Senior Economic Regulation Analyst, a position I held to 1993. In that position I performed the following duties: • Coordinated and reviewed the preparation of results of operations reports, revenue requirements, testimony and exhibits. • Prepared and directed preparation of rate case responses to discovery requests, regulatory reports and special studies. • Internal and external company representative on revenue requirement issues. • Prepared financial planning studies that measured financial impact of resource acquisitions. Page 1 Idaho Case No. PAC-E-12-03 Appendix A Mark T. Widmer In 1993 I accepted a position in the Net Power Cost Department as a System Planner, a position I held to 1995. In that role I performed the following duties: • Prepared net power cost studies that simulated the company's system for general rate cases, resource acquisitions and regulatory reporting. • Prepared avoided cost studies and rates for commission filings and prospective qualifying facility projects. • Prepared net power cost discovery responses and testimony for rate cases, deferred accounting, prudence of resource acquisitions and other regular proceedings. In 1995 I was promoted to the position of Principal System Planner, I held until 2000. In that role I performed the following duties: • Planned and supervised preparation of net power cost studies that simulated the company's system, calculated avoided cost prices and special studies of wholesale transactions. • Prepared and coordinated preparation of discovery responses, testimony and issue papers. • Negotiated or assisted with the negotiation of net power cost settlements in state general rate cases and power cost adjustment mechanism proceedings. • Internal and external company representative on net power cost and avoided cost issues and regulatory proceedings. • Five and 10 year budget and planning process coordination for Global Sales and Marketing organization. • Prepared and presented expert witness testimony in state regulatory proceedings. • Participated in the negotiation and/or renegotiation of qualifying facility avoided cost prices. • Assisted in rate case and avoided cost strategy development for regulatory proceedings. • Prepared economic analysis of proposed wholesale power sales and purchase power transactions. In 2000 I was promoted to Regulatory Manager and in 2004 I was promoted to Director of Net Power Costs, a position I held until I left PacifiCorp in January 2008. In those positions I managed a staff of up to four analysts. In both roles I had essentially the same breadth of responsibility and performed the following functions: • Directed and planned recovery of up to $1.0 billion of net power costs through general rate cases and power cost adjustments mechanism filings in the company's Oregon, Utah, Wyoming, Washington, Idaho and California jurisdictions. • Directed development, settlement among parties and regulatory approval of a new avoided cost methodology for large qualifying facility projects for the Wyoming jurisdiction. Page 2 Idaho Case No. PAC-E-12-03 Appendix A Mark T. Widmer • Directed regulatory reporting of net power costs. • Directed, prepared and presented expert witness testimony on avoided costs and net power costs in state regulatory proceedings. • Directed preparation of net power cost studies that simulated system operations, exhibits, discovery responses, other filing support for rate cases and economic analysis of wholesale transactions including sales, purchase power and generation plant acquisitions. • Developed Power Cost Adjustment Mechanism for the Wyoming jurisdiction,participated in negotiated settlement among parties and obtained commission approval. • Developed and obtained commission approval of Energy Cost Adjustment Clause in California. • Managed development of new avoided cost methodology for large qualifying facilityprojects in Utah. • Managed development and enhancement of new production dispatch model and obtained approval from regulators. In January 2008 I formed Northwest Energy Consulting, LLC to provide regulatory consulting services to a broad range of energy users, energy producers, agencies and qualifying facility developers/projects. The testimony that I present is based upon information obtained in discovery or other publicly available information sources. All of the analyses that I perform are consistent with my education training and experience in the electric utility industry. Testimony and Expert Witness Appearances of Mark Widmer Year Case Jurisdiction Party Utility Subject 1997 97-035-01 UT PacifiCorp Net Power Costs, Production Dispatch Modeling 1999 99-035-01 UT PacifiCorp Net Power Costs, Production Dispatch modeling 1999 UIE-99 1832 WA PacifiCorp Net Power Costs, Production Dispatch Modeling 1999 20000-ER WY PacifiCorp Net Power Costs, Production -145-99 Dispatch Modeling Page 3 Idaho Case No. PAC-E-12-03 Appendix A Mark T. Widmer Testimony and Expert Witness Appearances of Mark Widmer Year Case Jurisdiction Party Utility Subject 2000 UE- 111 OR PacifiCorp Net Power Costs, Production Dispatch Modeling 2000 20000-ER WY PacifiCorp Net Power Costs, Production -162-00 Dispatch Modeling 2001 UE- 116 OR PacifiCorp Net Power Costs, Production Dispatch Modeling 2001 01-035-01 UT PacifiCorp Net Power Costs, Excess Net Power Costs 2001 01-03-026 CA PacifiCorp Net Power Costs, Production Dispatch Modeling, 2001 20000-EP WY PacifiCorp Power Cost Adjustment, 01-167 Excess Power Costs 2001 UM-995 OR PacifiCorp Excess net power costs Cost of Hunter I Outage 2002 00-035-23 UT PacifiCorp Excess Net Power Costs Cost of Hunter 1 Outage 2002 20000-ER WY PacifiCorp Net Power Costs, Deferred Net 02-184 Power Costs, Cost of Hunter 1 Outage 2002 UE- 134 OR PacifiCorp Net Power Costs, Production Dispatch Modeling 2002 UIE-024 17 WA PacifiCorp Excess Net Power Costs 2002 PAC-E-02-01 ID PacifiCorp Net Power Costs, Production Dispatch Modeling 2003 20000-ER WY PacifiCorp Net Power Costs, Production 03-198 Dispatch Modeling 2003 20000-El WY PacifiCorp Power Cost Adjustment 03-205 Page 4 Idaho Case No. PAC-E-12-03 Appendix A Mark T. Widmer Testimony and Expert Witness Appearances of Mark Widmer Year Case Jurisdiction Party Utility Subject 2003 UE-032065 WA PacifiCorp Net Power Costs, Production Dispatch Modeling 2003 UE 147 OR PacifiCorp Net Power Costs, Production Dispatch Modeling 2003 01-03-026 CA PacifiCorp Net Power Costs, Production Dispatch Modeling 2003 03-2035-02 UT PacifiCorp Net Power Costs, Production Dispatch Modeling 2004 04-035-42 UT PacifiCorp Net Power Costs, Production Dispatch Modeling 2004 20000-EP WY PacifiCorp Purchase Power Adjustment 04-211 2004 UM-1129 OR PacifiCorp Avoided Cost Methodology, Avoided Cost Rates 2004 UM 1081 OR PacifiCorp Direct Access 2005 A05-11-022 CA PacifiCorp Net Power Costs, Production Dispatch Modeling 2005 UE-170 OR PacifiCorp Net Power Costs, Production Dispatch Modeling 2005 UM 1193 OR PacifiCorp Hydro Deferral 2005 PAC-E-05-01 ID PacifiCorp Net Power Costs, Production Dispatch Modeling 2005 UE- 173 OR PacifiCorp Power cost Adjustment 2005 UE-05684 WA PacifiCorp Net Power Costs, Production Dispatch Modeling, PCA 2005 20000-ER WY PacifiCorp Net Power Costs, Production 05-230 Dispatch Modeling Page 5 Idaho Case No. PAC-E-12-03 Appendix A Mark T. Widmer Testimony and Expert Witness Appearances of Mark Widmer Year Case Jurisdiction Party Utility Subject 2005 20000-ER WY PacifiCorp Purchased Power Adjustment 05-226 2005 05-035-102 UT PacifiCorp Power Cost Adjustment 2006 HE- 179 OR PacifiCorp Net Power Costs, Production Dispatch Modeling, Power Cost Adjustment 2006 06-035-21 UT PacifiCorp Net Power Costs 2006 UE-06 1546 WA PacifiCorp Net Power Costs, Production Dispatch Modeling, Power Cost Adjustment 2006 20000-250 WY PacifiCorp Avoided Cost Methodology EA-06 2007 HE- 191 OR PacifiCorp Net Power Costs, Production Dispatch Modeling 2007 20000-276 WY PacifiCorp Avoided cost rates 2007 PAC-E-07-05 ID PacifiCorp Net Power Costs, Production Dispatch Modeling 2007 20000-ER WY PacifiCorp Net Power Costs, Production -277-07 Dispatch Modeling 2007 CA PacifiCorp Net Power Costs, Energy Cost Adjustment Clause 2007 07-035-93 UT PacifiCorp Net Power Costs, Production Dispatch Modeling 2008 20000-315- WY WIEC PacifiCorp Power Cost Adjustment EP-08 Mechanism 2009 20000-341- WY WIEC PacifiCorp Baseline NPC, Power Cost EP-09 Adjustment Mechanism Page 6 Idaho Case No. PAC-E-12-03 Appendix A Mark T. Widmer Testimony and Expert Witness Appearances of Mark Widmer Year Case Jurisdiction Party Utility Subject 2009 UE-090205 WA Public Council PacifiCorp Net Power Costs, Prudence Resource Acquisition 2009 20000-342- WY WIEC /WPPC PacifiCorp Avoided Cost Methodology EA-09 2009 20000-103 WY Frontier Oil Cheyenne Power Cost Adjustment Mech. -EA-09 2009 20000-352- WY WIEC PacifiCorp Net Power Costs, Avoided Costs ER-09 2010 PAC-E-10-07 ID Monsanto PacifiCorp Net Power Costs, Production Dispatch Modeling 2011 PAC-E- 11-12 ID Monsanto PacifiCorp Net Power Costs, Production Dispatch Modeling 2011 20000-389- WY WIEC PacifiCorp Power Cost Adjustment EP-11 Mechanism 2011 20000-384 WY WIEC PacifiCorp Net Power Costs, Production ER-10 Dispatch Modeling 2011 10-035-124 UT HIEC PacifiCorp Net Power Costs, Production Dispatch Modeling Page 7 Idaho Case No. PAC-E-12-03 Exhibit 206 (MTW-1) Mark T. Widmer PacifiCorp /2 NERC Average /I Average Variance /3 Number Cummulative Annual Annual Coal Units NERC MWH Lost PacifiCorp MWH Lost From Of PacifiCorp MWH Variance Market Fuel NPC /7 Size Code Per Unit Year Plants /2 Per Unit Year NERC Ave. Units Per Plant From NERC /4 Price /5 Price /6 Adjustment 400-599 1040 11,207 Hunter 49,681 38,473 3 115,420 31.49 15.50 1,845,566 Bridger 53,502 42,294 4 169,178 31.49 20.35 1,884,641 400-599 1050 9,648 Hunter 47,145 37,498 3 112,493 31.49 15.50 1,798,756 Huntington 33,053 23,405 2 46,809 31.49 15.90 729,755 400-599 1070 4,700 Huntington 10,276 5,576 2 11,152 31.49 15.90 173,854 400-599 1080 9,831 Huntington 28,530 18,699 2 37,397 31.49 15.90 583,027 Total NPC Adjustment 7,015,599 /1 Source Monsanto 33-1st Supplemental /2 Adjustments included only for plants that exceeded the industry average by more than 100% /3 PacifiCorp average MWH lost per unit year less NERC average MWH lost per unit year. /4 Number of PacifiCorp units per plant times variance from NERC average /5 Mr. Duvall Exhibit 1, Tab Adjusted Actual NPC, STE sales price /6 Mr. Duvall Exhibit 1, Adjusted Actual NPC /7 Annual market price less annual fuel price times cummulative MWH variance from NERC N N 12 l a w II t E Q II 1t 1 t• 11 9 I L : 1W ' g gi g 1? -. 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