HomeMy WebLinkAbout20090529Elam Direct.pdfBEFORE THE r~ ("'1\,¡. ': ,)
12: 41
IDAHO PUBLIC UTILITIES COMMI~l1.Qlt
f':..... ¡. ':,~IN
IN THE MATTER OF THE APPLICATION )
OF AVISTA CORPORATION FOR THE ) CASE NO. AVlJE-09-1/
AUTHORITY TO INCREASE ITS RATES) AVU-G-09-1
AND CHARGES FOR ELECT~C AND )
NATURAL GAS SERVICE TO ELECTRIC )
AND NATURAL GAS CUSTOMERS IN THE )STATE OF IDAHO. )
)
)
DIRECT TESTIMONY OF MATT ELAM
IDAHO PUBLIC UTILITIES COMMISSION
MAY 29,2009
1 Q.Please state your name and business address for
2 the record.
3 A.My name is Matthew Elam. My business address is
4 472 West Washington Street, Boise, Idaho.
5 Q.By whom are you employed and in what capacity?
6 A.I am employed by the Idaho Public Utilities
7 Commission (Commission) as a Utilities Analyst in the
8 Engineering Section of the Utilities Division.
9 Q.What is your education and experience?
10 A.I graduated from Boise State University in 2004
11 earning a Bachelor of Arts degree in Economics. I also
12 earned a minor in Sociology. Following graduation I was
13 accepted into the Albertsons Management Development Program
14 where I worked as a Business Analyst in Finance and
15 Corporate Planning before transitioning to Research and
16 Market Analysis. My primary duties included demographic
17 profiling, modeling, and demand forecasting for the purposes
18 of determining ROIC (Return on Invested Capital). In early
19 2007 I accepted a Business Analyst position with geoVue Inc.
20 where I consulted companies in a similar capacity and would
21 later be promoted to a Senior Business Analyst and Modeler.
22 Q.What is the purpose of your testimony?
Under the direction of Randy Lobb, Utilities23A.
24 Administrator, I will discuss the Company's Jurisdictional
25 Separations, Customer Class Cost of Service, Weather Revenue
CASE NOS. AVU-E-09-1/AVU-G-09-1
OS/29/09
ELAM, M. (Di) 1
STAFF
"
1 Normalization, and Revenue Allocation. i will discuss
2 Staff's proposal to adjust the Schedule 150 Weighted Average
3 Cost of Gas (WACOG), and provide rate recommendations for
4 the natural gas service Schedules (Schedule 101, Schedule
6
5 111/112, Schedule 131/132, and Schedule 146).
7
Q.Please summarize your testimony in this case.
A.I accept the Company's Jurisdictional Separations
8 Methodology, allocators and the results they produce using
9 Staff's adjusted accounting information. Those results are
10 presented in Staff witness Donn English's testimony. I
11 recommend maintaining the current cost of gas embedded in
12 base rates rather than shifting Schedule 150 costs into base
13 rates as proposed by the Company. I am proposing that the
14 Schedule 150 Weighted Average Cost of Gas (WACOG) be
15 adjusted downward to a level that offsets the Schedule 101
16 base rate increase proposed by Staff. This (WACOG)
17 adjustment will maintain the current rates for Schedule 101
18 and reduce rates for Schedules 111/112, and Schedules
19 131/132.
20 I accept the Company's proposal to change the
21 weather revenue normalization methodology from an annually
22 updated 25-year average for normal degree days to an
23 annually updated 30-year average for normal degree days.
25
24 Based on Staff's overall increase in natural gas revenue, I
CASE NOS. AVU-E-09-1/AVU-G-09-1
OS/29/09
ELA, M. (Di) 2
STAFF
1 propose that individual class base rates move closer to cost
2 of service and that no class receive a decrease.
3 I accept the Company's rate design proposals given
4 Staff's revenue requirement with the exception of increasing
5 the Monthly Basic Charge for Schedule 101.
6 Jurisdictional Separations
7
8
Q.What is the purpose of Jurisdictional Separations?
A.The Jurisdictional Separations process identifies
9 the appropriate share of total Company costs and revenues to
10 assign to Idaho customers for determining the Idaho
12
11 Jurisdictional revenue requirement.
Q.Have there been any changes to the Company's
13 system and jurisdictional procedures since the Company's
14 last general natural gas rate case, Case No. AVU-G-08-01?
15 A.No. As pointed out by the Company in testimony,
16 the current methodology was implemented in 1994 and has not
17 changed.
18 Q.Do you accept the Company's Jurisdictional
20
19 Separations Study?
A.Yes. I accept the methodology and allocation
21 factors proposed by the Company. However, other Staff
22 witnesses have proposed adjustments to the accounting data
23 and the Return on Equity. Staff proposes an Idaho
24 Jurisdictional revenue requirement increase of $1,894,000
25 shown on Staff Exhibit No. 109 to Staff witness Donn
CASE NOS. AVU-E-09-1/AVU-G-09-1
OS/29/09
ELA, M. (Di) 3
STAFF
1 English's testimony. This is a 2.89% increase, which is
2 calculated based on Staff's proposal to maintain the current
3 cost of gas embedded in base rates rather than shifting the
4 Schedule 150 costs into base rates as proposed by the
5 Company.
6 Class Cost of Service
7 Q.What is the purpose of the customer class cost of
8 service study?
9 A.A customer class cost of service study is an
10 engineering-economic study which separates the Idaho
11 Jurisdictional revenue requirement among the various Idaho
12 rate classes according to the revenue, expenses, and rate
13 base associated with providing natural gas service to
14 designated groups of customers.
15 There are three basic steps involved in a cost of
16 service study known as functionalization, classification,
17 and allocation.
18 Functionalization is the first process that
19 segregates expenses and rate base into production,
20 underground storage, and distribution categories.
21 Classification is the second process that
22 classifies expenses and rate base into demand, commodity, or
23 customer related. Demand (capacity) related costs are
24 allocated to rate schedules on the basis of each schedule's
25 contribution toward system peak demand. Commodity (energy)
CASE NOS. AVU-E-09-1/AVU-G-09-1
OS/29/09
ELA, M. (Di) 4
STAFF
1 related costs are allocated based on each rate schedule's
2 share of commodity consumption. Customer related items are
3 allocated to rate schedules based on the number of customers
4 wi thin each schedule.
5 Allocation is the final process of assigning the
6 costs to various rate schedules by utilizing the allocation
7 factors selected for each specific cost item. These factors
8 are derived from usage and customer information associated
9 with the test period results of operations.
10 Q.Is the Company proposing to change the Cost of
11 Service method accepted by the Commission in AVU-G- 04 - 01?
12 A.No.
13 Q.Do you accept the Company's customer class cost of
14 service study?
15 A.Yes.
16 Weather Revenue Normlization
17 Q.What is the purpose of the weather revenue
lS normalization process in a natural gas rate case?
19 A.The purpose of the Company's weather revenue
20 normalization adjustment is to calculate the revenue change
21 given the difference in natural gas usage (in therms) required
22 to adjust actual loads during the twelve months ended
23 September 200S test period to the therms expected to be
24 consumed under normal weather conditions. This adjustment
25 incorporates the elasticity of heating on weather sensitive
CASE NOS. AVU-E-09-1/AVU-G-09-1
OS/29/09
ELA, M . (D i) 5
STAFF
1 customer groups. By comparing ten years of data on billed
2 usage per customer and billing period heating degree days in
3 a regression analysis, the Company estimates its weather
4 sensitivity factors. The resulting seasonal weather
5 sensitivity factors (use per customer per heating degree
6 day) are applied to monthly test period customers and the
7 difference between a normal heating degree days and monthly
8 test period observed heating degree days.
9 Q.How does Company witness Knox define the
10 appropriate number of heating degree days to be considered
11 normal?
12 A.The Company has proposed basing normal heating
13 degree days on a rolling 30-year average of heating degree-
14 days reported for each month by the National Weather Service
15 for the Spokane airport weather station. For heating, the
16 30 years are included on a heating season basis, July
17 through June. This will be a rolling average, therefore for
18 each year the normal values will be adjusted to capture the
19 next heating season with the oldest data dropping off,
20 thereby encapsulating the most recent information available
22
21 at the end of each calendar year.
Q.Has the Company proposed any changes in the
23 weather normalization adjustment methodology since the
25
24 Company's last general rate case in Idaho (AVU-E-08-01)?
A.Yes. In Case No. AVU-G-08-01 the Company used a
CASE NOS. AVU-E-09-1/AVU-G-09-1OS/29/09 ELA, M. (Di) 6
STAFF
1 25-year rolling average to determine the normal number of
2 heating degree days for each month. In this case an
3 additional 5 years have been included in the rolling average
4 calculation.
5 Q.Why has the Company decided to change this
7
6 methodology?
A.The Company says the change is in response to
8 concerns in another jurisdiction that a rolling 25-year
9 average may be insufficient to determine "normal" weather
10 conditions. The Company also conducted an analysis
11 revealing that while both a rolling 30-year average and a
12 rolling 25-year average capture the long-term trend in
13 regional temperatures, the rolling 30-year average showed
15
14 less variability.
Q.Do you agree with the Company's assessment that it
16 is necessary to define normal weather conditions using a
18
17 rolling 30-year average?
A.No. I reviewed the information that was provided
19 by the Company in response to Production Request No. 80 and
20 found the reasoning for the change questionable.
21 The Company maintains that using a rolling 30-year
22 average to define normal weather conditions represents a
23 better approximation because it shows less variability in
24 climactic cycles. The conclusion I've drawn is that it' s
25 important to capture normal climactic cycles when defining
CASE NOS. AVU-E-09-1/AVU-G-09-1
OS/29/09
ELA, M. (Di) 7
STAFF
1 normal weather conditions . The rolling 25-year average is a
2 shorter time frame that better illustrates the normal
3 climactic cycles.
4 In addition, the utilities regulated by the Idaho
5 Commission are beginning to file more frequent general rate
6 cases, therefore capturing the most recent climactic cycles
7 between filings is even more important than if utilities
8 were waiting several years to file.
9 Q.Why hasn' t Staff recommended the Company maintain
10 the same weather revenue normalization methodology in this
11 case?
12 A.In response to Staff's Production Request No. 80,
13 the Company was asked to compare the increase in revenue
14 required under a rolling 25-year average and a rolling 30-
15 year average for both the gas and electric filing. The net
16 difference was negligible, the electric revenue required to
17 meet the Company's revenue requirement decreased by $27,000
18 and the gas revenue required to meet the Company's revenue
19 requirement increased by $17,000. Therefore, Staff
20 recommends that the Commission accept the Company's proposed
21 weather normalization but direct the Company and Staff to
22 continue evaluating the methodology in future rate cases.
23 Revenue Allocation
24 Q.What is the purpose of the Revenue Allocation
25 process in a natural gas rate case?
CASE NOS. AVU-E-09-1/AVU-G-09-1
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ELA, M. (Di) 8
STAFF
1 A.Allocating revenue is the process of assigning
2 each customer class a revenue increase using the results of
3 the Customer Cost of Service Study as a guideline. The Cost
4 of Service Study results represent a starting point in the
5 assessment of appropriately determining the revenue
7
6 requirement for various rate classes.
8 recommend in order to meet the Idaho Jurisdictional revenue
Q.What customer class revenue allocation do you
10
9 requirement?
A.It is my recommendation that no class receive a
11 base rate decrease and that all classes move toward cost of
12 service. This diminishes rate shock and assigns revenue
14
13 responsibili ty based on costs incurred.
Q.How has Company witness Knox allocated the revenue
16
15 of its Idaho gas special contract customers?
A.The Company currently has two special contract
17 customers that receive transportation service under
18 Schedules 147 and 159, IMCO and Clearwater Paper. Rates for
19 these customers are not being adjusted in this case, they
20 were individually negotiated under long-term fixed contracts
21 in order to cover any incremental cost and retain margin.
22 The Company has eliminated the possibility of
23 stranded costs by depreciating the incremental facilities
24 used to serve its special contract customers. Therefore,
25 the net contribution from these special contract customers
CASE NOS. AVU-E-09-1/AVU-G-09-1
OS/29/09 ELA, M. (Di) 9
STAFF
1 has been segregated from general rate revenue and allocated
2 back to all the other rate classes by relative rate base.
3 Staff has reviewed the contribution associated with the
4 Company's special contract customers and determined that it
5 has been appropriately allocated and applied to the other
6 customers.
7 Q.Do you have an exhibit illustrating the revenue
9
8 requirement from Staff's proposed Cost of Service results?
11
10 No. 120.
A.Yes. These results are contained in Staff Exhibit
Q.Have you prepared an exhibit that shows the rates
13
12 that result in your revenue proposal?
A.Yes. I have prepared Staff Exhibit No. 121. In
14 addition I have prepared Staff Exhibit No. 122 that compares
15 Staff's Revenue Allocation proposal to Avista' s Revenue
16 Allocation proposal.
18
17 WACOG Adjustment
Q.What is the purpose of determining the Weighted
20
19 Average Cost of Gas (WACOG)?
A.The WACOG is the Company's forward-looking net
21 price of purchased gas, transportation, and storage embedded
22 in base rates and included in the Purchase Gas Cost
23 Adjustment (Schedule 150). Typically, Schedule 150 and the
24 Gas Rate Adjustment (Schedule 155) are adjusted on November
25 1st of each year as part of the Purchased Gas Cost
CASE NOS. AVU-E-09-1/AVU-G-09-1
OS/29/09 ELA, M. (Di) 10
STAFF
1 Adjustment (PGA). The Gas Rate Adjustment is an
2 amortization rate established to refund or surcharge
3 customers the difference between the Company's actual gas
4 costs (commodity price of gas, transportation, and storage)
5 and the WACOG established in the previous PGA filing.
6 Customers get either a surcharge when market prices are
7 higher than the previous year's anticipated WACOG or a
8 credi t when market prices are lower than the previous year's
9 anticipated WACOG.
10 Q.How is the WACOG included in the monthly billing
11 rate customers pay?
12 A.The WACOG is collected in two parts, one part is
13 collected in the base rate determined by the Commission in
14 the AVU-G-04-01 case, and the other is collected in Schedule
15 150. The monthly billing rate customers pay is determined
16 by combining Schedules 150, 155 and 191 to both the portion
17 of base rate determined in the AVU-G-08-01 case unrelated to
18 the WACOG, and the base rate portion of the WACOG.
19 Currently the total gas costs make up $0. 88013/therm of the
20 billing rate for Schedules 101, and 111/112. The amount
21 included in base rates is $0. 53312/therm and the remainder
22 is collected through Schedule 150. Total gas costs make up
23 $0. 78646/therm of the Schedule 131/132 billing rate because
24 there is not a demand component given the Schedule is
25 interruptible. The amount collected in base rate is
CASE NOS. AVU-E-09-1/AVU-G-09-1
OS/29/09
ELA, M. (Di) 11
STAFF
1 $0. 44989/therm and the remainder is collected through
2 Schedúle 150. Each component (Schedules 150, 155, 191, and
3 the two parts of base rate) of the billing rate can be seen
4 in Staff Exhibit 123.
5 The total commodity portion collected in base
6 rates and Schedule 150 for all the Schedules is
7 $. 78646/therm (the total demand portion for Schedules 101,
8 and 111/112 is $.09367). The commodity portion collected in
9 base rate is $. 44989/therm.
10 Q.Has the Company proposed an adjustment to the net
11 WACOG included in Schedule 150 and the billing rate
13
12 customers pay monthly?
A.No. However the Company is proposing to move the
14 current Schedule 150 adjustment into base rate schedules.
15 Schedules 101, and 111/112 base rates would increase from
16 $0. 53312/therm to $0. 88013/therm while Schedule 150
17 decreases by a proportional amount of $. 34701/therm
18 ($0. 88013/therm-$0. 53312/therm). Schedules 131/132 base
19 rates would increase from $0. 44989/therm to $0. 78646/therm
20 while Schedule 150 decreases by a proportional amount of
21 $.33657 /therm ($0. 78646/therm-$0. 44989/therm). The net
22 effect of this change has no impact on the monthly billing
23 rate, it simply reallocates the WACOG from Schedule 150 to
24 base rate Schedules.
25 Q.Do you agree wi th the Company's proposal?
CASE NOS. AVU-E-09-1/AVU-G-09-1
OS/29/09 ELA, M. (Di) 12
STAFF
1 A.No. The base rate is intended to reflect the
2 Company's estimate of future costs, when this is more
3 accurate customers experience less extreme volatility in PGA
4 adjustments. Given current market volatility and the recent
5 decline in commodity prices, I propose maintaining the
6 current natural gas costs included in base rates.
7 Q.Have you proposed an adj ustment to the net WACOG
8 included in Schedule 150 that offsets the increase you have
9 proposed in base rates?
10 A.Yes. I propose to offset the base rate increase
11 recommended by Staff in this case by adjusting the commodity
12 portion of the WACOG to $.76047 /therm instead of the current
13 commodity portion of the WACOG of $. 78646/therm. For
14 Schedules 101 and 111/112, the total cost of gas would be
15 $. 85414/therm instead of $. 88013/therm. For Schedules
16 131/132, the total cost of gas would be $.76047 /therm
17 instead of $. 78646/therm.
18 Q.How have you proposed to adjust the Schedule 150
19 Weighted Average Cost of Gas (WACOG) component to offset the
20 base rate increase proposed by Staff?
21 A.I propose adjusting the WACOG to a level that
22 offsets the Schedule 101 increase customers receive in base
23 rates given the proposal by Staff from the Cost of Service
24 Study. According to the Cost of Service Study, the Company
25 would receive approximately $1,460,034 in revenue by
CASE NOS. AVU-E-09-1/AVU-G-09-1
OS/29/09
ELA, M. (Di) 13
STAFF
1 increasing base rates to Schedule 101 (General Service)
2 customers. The corresponding WACOG decline in order to
3 offset the revenue increase in base rates is approximately
4 3.0% or $. 02599/therm. This adjustment in the WACOG
5 maintains current Schedule 101 billing rates by decreasing
6 the billing rates for Schedules 111/112 (Large General
7 Service), and 131/132 (Interruptible Service). Schedule 146
8 (Transportation Service) would not be impacted by the change
9 in the WACOG and would receive the increase in base rates
10 dictated by Staff's proposal from the Customer Cost of
11 Service Study.
12 Q.Why is it reasonable to adjust the WACOG in order
13 to offset the Schedule 101 base rate increase proposed by
14 Staff?
15 A.This year, wholesale prices have continued to drop
16 well below the WACOG currently embedded in rates. The more
17 expensive storage gas purchased by the Company at last
18 summer's high price levels has been sold and the Company is
19 beginning to purchase natural gas at lower, favorable prices
20 for the coming year, both for inj ection into underground
21 storage and at hedged forward prices for delivery throughout
22 the year.
23 In order to prevent the Company from over
24 collecting from customers in its Schedule 155 Purchased Gas
25 Adjustment Account and having to refund customers through a
CASE NOS. AVU-E-09-1/AVU-G-09-1OS/29/09 ELA, M. (Di) 14
STAFF
1 credit in November, Staff views it appropriate to adjust the
2 WACOG now through Schedule 150. The base rate revenue
3 requirement increase proposed by Staff is small. Therefore,
4 the resulting offset in the WACOG is minor and would only
5 preemptively adjust the WACOG to a level Staff views will be
6 inevitably lower in the fall when the Company comes in for
7 its annual PGA filing. By adjusting the WACOG now through
8 Schedule 150, the Company can eliminate unnecessary
9 fluctuations in the retail prices customers pay, prevent a
10 growing deferral account balance that will be credited to
11 customers in Schedule 155 later, and collect the revenue
12 requirement proposed by Staff in base rates.
13 Q.How will your proposal to adjust the WACOG through
14 Schedule 150 affect Schedule 146 (Transportation Service)
15 customers?
16 A. This adjustment will not impact Schedule 146
17 customers. Schedule 146 customers take transportation
18 service at the distribution level and purchase their own
19 natural gas and interstate pipeline transportation. To the
20 extent these customers have hedged their natural gas
21 purchases; they are beginning to see price level reductions.
22 If they have not hedged their natural gas purchases they
23 have already seen price level reductions and will continue
24 to do so. Therefore, it is Staff's proposal to determine
25
CASE NOS. AVU-E-09-1/AVU-G-09-1OS/29/09 ELA, M. (Di) 15
STAFF
1 Schedule 146 customer rates based on the Cost of Service
2 results from Staff's adjusted revenue requirement.
3 Q.Has Staff been tracking the Schedule 155 Purchased
4 Gas Adjustment Accounts in the PGA monthly reports submitted
5 by the Company in compliance with Order No. 30646?
6 A.Yes. According to the Company's most recent May
74th PGA report which shows a snapshot of this year's account
8 balances up until March 31st, the total balance owed to
9 customers through a credit is $6,463,503. Since the
10 Company's January 6th amortization rate went into effect,
11 the current credit balance due to customers from last year's
12 PGA period is $3,577,048. Based on this year's costs since
13 October 1st, the amount that will be credited to customers
14 in the next PGA is $2,886,455. Since the amortization rate
15 is not dropping the deferral balance as quickly as its
16 growing, it is Staff's view that there will be a substantial
17 credit due to customers in the fall since this year's market
18 prices have dropped significantly from where the Company
19 anticipated natural gas prices to be in this year's WACOG.
20 Q.Are you aware of the Company's filing on May 14,
21 2009 to adjust the amortization rate (s) in Schedule 155 to
22 refund additional deferred amounts accumulated since
23 November 2008 (December-April) to customers over a 12-month
24 period?
25 A.Yes.
CASE NOS. AVU-E-09-1/AVU-G-09-1
OS/29/09 ELA, M. (Di) 16
STAFF
1 Q.Does this change your recommendation in this case?
2 A.No. My adjustment is to the WACOG in Schedule 150
3 not the amortization rate (s) in Schedule 155.
4 Rate Design
5 Q.What are Staff's objectives in evaluating rate
6 design?
7 A.Staff's objectives are that base rates recover the
8 revenue requirement of each customer class given the class
9 revenue requirement recommendations shown in Staff Exhibit
10 120; send an appropriate cost based price signal to
11 customers encouraging the wise and efficient use of energy;
12 provide rate stability and avoid unnecessary complexity or
13 changes.
14 Q.Do you have an exhibit illustrating your rate
15 proposals?
16 A.Yes. These are shown on Staff Exhibit No. 121.
17 Schedule 101 (General Service)
18 Q.What rate design does Company witness Hirschkorn
19 recommend for Schedule 101?
20 A.Without including the percentage increase
21 associated with the Company's proposal to shift some of the
22 Schedule 150 commodity costs into the energy charge base
23 rate, the Company is proposing to increase the Energy
24 Charges by 2.9% per therm. The Company is proposing an
25
CASE NOS. AVU-E-09-1/AVU-G-09-1
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ELA, M. (Di) 17
STAFF
1 overall increase in the Basic/Customer Charge of 6.3% or
3
2 $.2500 per month.
Q.Do you agree with the Company's proposed rate
5
4 design changes?
A.No. I agree with the Energy Charge changes as
6 adjusted for Staff's proposal to maintain the current cost
7 of gas in base rates, given the base rate class cost of
8 service revenue requirement increase of 2.9%, and as
9 adjusted for the WACOG decrease of approximately 3.0%.
10 However, I do not agree with the increase in the monthly
11 Basic/Customer Charge. I recommend that the customer charge
12 for this class remain unchanged.
13 Staff has maintained the position that the
14 Basic/Customer Charge should collect meter reading and
15 billing fixed costs. With the Basic/Customer Charge at
16 current levels, the Company is collecting more than meter
17 reading and billing costs.
18 In addition, the Company is proposing to increase
19 the Basic/Customer Charge by 6.3% while the proposed base
20 rate increase to the class without including the proposal to
21 shift some of the Schedule 150 commodity costs is 3.1%.
22 This increase is disproportionate and unnecessary given the
23 small increase in class revenue requirement, and the
24 decrease in the WACOG proposed by Staff.
25
CASE NOS. AVU-E-09-1/AVU-G-09-1OS/29/09 ELA, M. (Di) 18
STAFF
2
1 Schedule 111/112 (Large General Service)
Q.What rate design does Company witness Hirschkorn
3 recommend for Schedule 111/112?
4 A.Without including the percentage increase
5 associated with the Company's proposal to shift sòme of the
6 Schedule 150 commodity costs into the energy charge base
7 rate, the Company is proposing to increase the Energy
8 Charges for the first tier by 3.0% and increase the
9 remaining three tiers by a uniform 2.5%. The Company is
10 proposing an overall increase in the Minimum Charge of 4.2%
12
11 or $7.00 per month.
Q.Do you agree with the Company's proposed rate
14
13 design changes?
Yes. I agree with the Energy Charge and MinimumA.
15 Charge increase as adjusted for Staff's proposal to maintain
16 the current cost of gas in base rates, given the class cost
17 of service base rate revenue requirement increase of 3.0%,
18 and as adjusted for the WACOG decrease of approximately
20
19 3.0%.
Q.When designing rates has Staff considered the
21 Company's concern that changing the breakeven relationship,
22 or the level of usage where the bill for Schedule 101 is
23 equivalent to the bill for Schedule 111, could result in
25
24 unnecessary shifting of customers between the Schedules?
A.Yes. However, one preventative solution the
CASE NOS. AVU-E-09-1/AVU-G-09-1
OS/29/09
ELA, M. (Di) 19
STAFF
1 Company could take to address the concern of unnecessary
2 customer shifting between Schedule 101 and Schedule 111
3 would be to designate Schedule 101 as a "Residential General
4 Service" schedule similar to the other natural gas provider
5 in the State. Staff views this solution as a reasonable way
6 to divide residential and commercial use customers.
8
7 Schedule 131/132 (Interruptible Service)
Q.What rate design does Company witness Hirschkorn
9 recommend for Schedule 131/132?
10 A.wi thout including the percentage increase
11 associated with the Company's proposal to shift some of the
12 Schedule 150 commodity costs into the energy charge base
13 rate, the Company is proposing to increase the Energy
14 Charges by 1.7%. The Company is proposing an overall
15 increase in the Annual Minimum Deficiency Charge of 10.6% or
17
16 1.598 cents per thermo
Q.Do you agree with the Company's proposed rate
19
18 design changes?
A.Yes. I agree with the Energy Charge and Annual
20 Minimum Deficiency Charge increase as adjusted for Staff's
21 proposal to maintain the current cost of gas in base rates,
22 given the base rate class cost of service revenue
23 requirement increase of 2.0%, and as adjusted for the WACOG
24 decrease of approximately 3.0%.
25
CASE NOS. AVU-E-09-1/AVU-G-09-1
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ELA, M. (Di) 20
STAFF
1 Schedule 146 (Transportation Service)
2 Q.What rate design does Company witness Hirschkorn
3 recommend for Schedule 146?
4 A.The Company is proposing to increase the Energy
5 Charges by 11.3%, and increase the Annual Minimum Usage by
6 3,128 therms.
7 Q.Do you agree with the Company's proposed rate
8 design changes?
9 A.Yes. I agree with the Energy Charge and Minimum
10 Usage increase as adjusted for Staff's proposed base rate
11 class cost of service revenue requirement of 2.8%.
12 Q.Is it possible to make a comparison between the
13 Schedule 146 base rate increase and the other Schedules?
14 A.No. Schedule 146 is not comparable to the other
15 Schedules because it is a distribution transportation
16 Schedule. Schedule 146 does not include the cost of gas or
17 interstate pipeline transportation, whereas the other sales
18 service schedules do. These customers have third party
19 marketer obligations, fees, and inherent risks of managing
20 their purchasing strategies in a fluctuating natural gas
21 market. These variables make it impossible to qualify,
22 quantify, or compare a rate increase to the increases of the
23 other Schedules.
24 Q.Does this conclude your direct testimony in this
25 proceeding?
CASE NOS. AVU-E-09-1/AVU-G-09-1
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ELA, M. (Di) 21
STAFF
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A.Yes, it does.
CASE NOS. AVU-E-09-1/AVU-G-09-1
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STAFF
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: EXhibit No. 123
¡: Case No. AVU-E-09-1
AVU-G-09-1
M, Elam, Staff
OS/29/09
-..-
CERTIFICATE OF SERVICE
I HEREBY CERTIFY THAT I HAVE THIS 29TH DAY OF MAY 2009,
SERVED THE FOREGOING DIRECT TESTIMONY OF MATT ELAM, IN CASE
NOS, AVU-E-09-1 & AVU-G-09-1, BY ELECTRONIC MAIL TO THE FOLLOWING:
DAVID J. MEYER
VICE PRESIDENT AND CHIEF COUNSEL
A VISTA CORPORATION
PO BOX 3727
SPOKANE WA 99220
E-MAIL: david.meyer(iavistacorp.com
DEAN JMILLER
McDEVITT & MILLER LLP
PO BOX 2564
BOISE ID 83701
E-MAIL: joe(imcdevitt-miler.com
CONLEY E WARD
MICHAEL C CREAMER
GIVENS PURSLEY LLP
PO BOX 2720
BOISE ID 83701-2720
E-MAIL: cew(igivenspursley.com
mcc(igivenspursley,com
BETSY BRIDGE
ID CONSERV ATION LEAGUE
710 N SIXTH STREET
PO BOX 844
BOISE ID 83701
E-MAIL: bbridge(iwildidaho.org
CARRIE TRACY
1265 S MAIN ST, #305
SEATTLE WA 98144
E-MAIL: carre(inwfco,org
KELL Y NORWOOD
VICE PRESIDENT - STATE & FED, REG,
AVISTA UTILITIES
PO BOX 3727
SPOKANE WA 99220
E-MAIL: kelly.norwood(iavistacorp.com
SCOTT ATKINSON
PRESIDENT
IDAHO FOREST GROUP LLC
171 HIGHWAY 95 N
GRANGEVILLE ID 83530
E-MAIL: scotta(iidahoforestgroup.com
DENNIS E PESEAU, Ph,D,
UTILITY RESOURCES INC
SUITE 250
1500 LIBERTY STREET SE
SALEM OR 97302
E-MAIL: dpeseau(iexcite.com
ROWENA PINEDA
ID COMMUNITY ACTION NETWORK
3450 HILL RD
BOISE ID 83702-4715
E-MAIL: Rowena(iidahocan,org
BRAD MPURDY
ATTORNEY AT LAW
2019N 17TH ST
BOISE ID 83702
E-MAIL: bmpurdy(ihotmai1.com
Jo~
SECRETARY?
CERTIFICATE OF SERVICE