20090529Crowley Direct.pdf

McDevitt & Miller LLP
Lawyers
rRE(~t: 1
[phone]
[phone] (Fax)
420 W. Bannock Street
P.O. Box 2564-83701 2009 tiAY 29 Pl1 I: 35 Chas. F. McDevittBoise, Idaho 83702 Dean J. (Joe) Miler
May 29, 2009
Vìa Hand Delivery
Jean Jewell Secreta
Idaho Public Utities Comnssion
472 W. Washigton St.
Boise, Idao 83720
Re: Idaho Forest Group LLC.
Case No. AVU-E-09-01
Dear Ms. Jewell:
Enclosed for fig, are nie (9) copies of the Testiony and exhbit of Lar A. Crowley, with a copy
desigated as "Reporter's Copy". A computer disc contag the testiony and exhbit is also enclosed.
Kidly retu a fie staped copy of ths letter and Testiony.
Very Truy Yours,
McDevitt & Mier LLP~L
Dean J. Mier
DJM/hh
Enclosures
n:r: /"'t r: 1
; ",,:.. \-.- j -j
"flO.n ~~..y.?Q P~'i I: 35£,;,. :i rL 1,,.~_ j l _ _
Dean J. Miler (ISB No. 1968)
McDEVITT & MILLER LLP
420 West Banock Street
P.O. BOX 2564-83701
Boise, Idaho 83702
Tel: [phone]
Fax: [phone]
joe(Qmcdevitt-miler.com
Attorney for Idaho Forest Group, LLC.
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE Case No. A VU-E-09-01
APPLICATION
OF A VISTA CORPORATION FOR THE
AUTHORITY TO INCREASE ITS RATES
AND CHARGES FOR ELECTRIC AND
NATURAL GAS SERVICE TO
ELECTRIC AND NATURAL GAS
CUSTOMERS IN THE STATE OF
IDAHO.
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
DIRECT TESTIMONY OF LARRY A. CROWLEY
May 29, 2009
ORIGINAL
1 Q. Please state your name and business address.
2 A. My name is Lar Crowley and my business address is 5549 South Cliffsedge
3 Avenue, Boise, Idaho 83716.
4 Q. By whom are you employed and in what capacity?
5 A. I am the founder and Director of The Energy Strategies Institute, Inc., a
6 consulting company consisting of a network of experienced professionals with
7 diverse experience and interests, specializing in energy and utility matters. The
8 Institute is dedicated to developing and implementing practical solutions for
9 energy service providers and customers. The Institute provides regulatory and
10 litigation support, industr restructuring support including economic and financial
11 analysis, and business and organizational development analysis and
12 implementation support. The Institute also offers assistance and facilitation with
13 energy and utility strategic planing initiatives, resource planing studies, and
14 strategic, financial and feasibility studies for mergers and acquisitions and new
15 business development. Regulatory services include costing/pricing studies,
16 preparation of direct testimony and testifying in support of the studies provided.
17 The Institute offers regulatory expertise with the preparation of exhibits and
18 testimony for jurisdictional separation and revenue requirement studies, class cost
19 of service studies, unbundled cost studies, and rate design studies. Major clients
20 include the Idaho Forest Group, Grangevile, Idaho; The Washington Group
21 International, Boise, Idaho; Wisconsin Electric Power Company, Milwaukee,
22 Wisconsin; Duquesne Light Company, Pittsburgh, Pennsylvana; Montana-
23 Dakota Utilities, Bismarck, North Dakota; The US Deparent of Energy, Offce
Crowley, Di i
Idaho Forest Group LLC
1 of Renewable Energy and Energy Effciency, Washington, D.C.; The
2 International Energy Agency, Pars, France; and The World Ban, Washington,
3 DC.
4 Q. Please describe your educational background and professional experence.
5 A. I have a Bachelor of Science degree in Economics from the University of
6 Marland, College Park, Marland. My professional experience consists of over
7 30 years of senior-level positions with a number of electrc or dual fuel utilities.
8 Durng that time, I testified as an exper witness before the Idaho Public Utilities
9 Commission, the Oregon Public Utilities Commission, the Nevada Public Service
10 Commission, the Colorado Public Utilities Commission, the Wisconsin Public
11 Utilities Commission, the Michigan Public Service Commission, the North
12 Dakota Public Serice Commission, the Montana Public Serice Commission, the
13 Texas Public Utility Commission, the Pennsylvana Public Utility Commission,
14 and the Federal Energy Regulatory Commission. A sumar of my professional
15 experience is attached to this testimony as Exhibit 201.
16 Q. On whose behalf are you testifyng in this proceeding?
17 A. I am testifyng on behalf of the Idaho Forest Group (IF G), a Schedule 25
18 customer of Avista Utilities.
19 Q. Please describe IFG's operations in Avista's electrc service area.
20 A. IFG operates a large lumber mil in Grangevile, Idaho. Through its predecessor
21 corporation, Bennett Forest Industres, it began its operation at the Grangevile
22 location in 1995, and expanded its facilities in 2005/2006. IFG currently employs
23 160 persons, making it the largest private employer in the Grangevile area, and
Crowley, Di 2
Idaho Forest Group LLC
1 consequently, IFG is an important contrbutor to the economy of Idaho County
2 and the surounding area. For example, it purchases approximately 24,000
3 trckloads oflogs per year from varous state, federal and private landowners and
4 it provides approximately 6,500 trckloads of chips and sawdust per year to the
5 Clearater Pulp Mil in Lewiston, Idaho. In calendar year 2008, IFG purchased
6 almost 23,220,000 kWh of electrc energy from Avista at a cost of almost
7 $1,084,000.
8 Q. What is the purpose of your testimony?
9 A. The purose of my testimony is to recommend that a uniform percentage increase
10 (or decrease) be applied to any increase (or decrease) ultimately approved by the
11 Commission in this proceeding.
12 Q. Please explain your reasons for recommending a uniform percentage increase (or
13 decrease) in this proceeding.
14 A. The Company's last rate case was approved by the Commission in its Order No
15 30647 dated September 30,2008. The approved rates became effective on
16 October 1,2008. In its order, the Commission noted that "neither Avista nor Staff
17 believes major changes in rate design are waranted given the imprecise and dated
18 nature of the Company's cost of service studies." With the exceptions of
19 increasing the residential monthly basic charge from $4.00 to $4.60 per month
20 and the smaller percentage increase to Schedule 25P, all other "rate components
21 are (were) increased by a uniform percentage to generate the required revenue."
22 Q. Did Order No. 30647 provide fuer guidance to Avista regarding cost of
23 service?
Crowley, Di 3
Idaho Forest Group LLC
1 A.Yes, the Order provides, "We direct the Company in its next general rate case to
2 provide updated load data as par of its COS study, or in the alternative, show
3 how the lack of such an update affect COS-based revenue allocations to customer
4 classes" (pg. 13).
5 Q.Has A vista filed more precise cost of service studies in this proceeding?
6 A.No. However, Avista has stated that it is in the process of developing or
7 acquiring updated class load data which wil allow it to prepare more precise class
8 cost of service studies in futue rate cases. Until such time as the Company has
9 more precise or updated class load information, a uniform percentage increase (or
10 decrease) would maintain the curent relative rate differentials among the
11 Company's rate classes.
12 Q.How would the unform percentage increase (or decrease) be applied in the
13 proceeding?
14 A.I am proposing that essentially the same approach the Commission approved in
15 the Company's last rate case be applied only without any exceptions previously
16 noted. That would result in all rate components in all rate schedules being
17 increased (or decreased) by a uniform percentage adequate to generate the
18 required revenue in this proceeding.
19 Q.Does that conclude your testimony?
20 A.Yes it does.
Crowley, Di 4
Idaho Forest Group LLC
Larry A. Crowley, President and Direcr
The Energy Stategies Institute, Inc.
PROFESSONAL EXPERIENCE
I have 30 years of senior-level utilty operating, planning and regulatory experienæ. My regulatory
experience includes the preparation of exhibits and testimony for jurisdictional separation and revenue
requirement studies, class cost of serviæ studies, unbundled cost studies, and rate design studies for
filing before various regulatory commissions. I have appeared as an expert witness before the Idaho
Public Utilties Commission, the Oregon Public Utilties Commission, the Nevada Public 5erviæ
Commission, the Colorado Public Utilties Commission, the Wisconsin Public Utilties Commission, the
Michigan Public Serviæ Commission, the North Dakota Public 5erviæ Commission, the Montana Public
Service Commission, the Texas Public Utilty Commission, the Pennsylvania Public Utilty Commission, and
the Federal Energy Regulatory Commission.
My principal clients include Wisconsin Elecric Power Company, Milwaukee, Wisconsin; Montana-Dakota
Utilties Company, Bismarck, North Dakota; Duquesne Light Company, Pittburgh, PA; The US Department
of Energy, Offce of Renewable Energy and Energy Effciency, Washington, D.C.; The Washington Group
International, Boise, Idaho; The J.R. Simplot Company, Boise, Idaho; the Idaho Forest Group, Hayden,
Idaho; United Elecic Co-op, Heyburn, Idaho; Lost River Electric Cooperative, Mackay, ID; Eagle Water
Company, Eagle, Idaho; Sithe Global Power, LLC, Houston, TX; Idaho Power Company, Boise, Idaho; The
Electric Department of the City of Weiser, Idaho; The International Energy Agency, Paris, France; The
World Bank, Washington, DC; Teton Springs Water & 5ewer Company, Victor, ID; The Solar Elecric
Power Association, Washington, DC; and the German Development Bank, (KfW), Berlin, Germany.
The Energy Strateies Institute, Inc.
Present
Octber 1999 to
Founder and Director of a consulting company and network of experienced professionals with diverse
interests speializing in energy and utilty rate and regulatory matters, dedicated to developing and
implementing practical solutions for energy service providers and customers. The Institute provides
regulatory and litigation support, industry restructuring support including economic and financial analysis,
and business and organizational development analysis and implementation support. The Institute also
offers assistanæ and faciltation with energy and utilty strategic planning initiatives, resource planning
studies, and strategic, financial and feasibilty studies for mergers and acquisitions. The Institute delivers
value through the application of senior-level industry experienæ and a team-base philosophy that result
in the development and transfer of knowledge to its clients.
Idaho Power Resourcs Corporation July 1996 to October
1999
A wholly owned subsidiary of Idaho Power Company, responsible for developing domestic and
international non-regulated business initiatives to provide future revenue and earnings growth.
President
Established, organized and led a new independent business division including establishment of the
entity, selecion and training of staff, systems implementation and day-to-day management of the
entity. The entity consisted of eight engineers, ecnomists and technologists. I was also responsible
for $3.5 milion annual operating budget for preparation of strategic plans, business plans including
due dilgence and analysis for mergers and acquisitions, and research, development and deployment
EXHIT 201 cre, Di..1.14
of new technologies such as PEM fuel cells and solar energy systems.
· Developed exensive business plans for energy-related project in Brazil, Argentina, Peru and
Indonesia, including acquisitions of operating elecric distribution systems, new and existing
hydroelecric generating project, information and communication technologies, and the
application of renewable energy technologies in remote areas of developing countries. Plan
formulation was accomplished by identification of specific and unique market opportunities
through personal contact and research.
· Marketed the capabilties of Idaho Power Company and its subsidiaries to various South
American entities resulting in first year sales of $4.5 millon.
· Responsible for formulating strategies and directing the due dilgence related to the
acquisition of various unregulated subsidiaries with annual revenues in excess of $18.0 millon.
· Negotiated a Memorandum of Understanding with the Ministry of Energy of Brazil to examine
the posibilties of developing large-scale electrification project in the remote areas of Brazil.
· Negotiated an exclusive Memorandum of Understanding with the Government of Indonesia
for the provision of energy services in the remote areas of Indonesia under the jurisdiction of the
Ministry of Transmigration.
· Participated in a number of high-level trade missions to South America representing domestic
energy interests. These trips to Brazil, Argentina, Bolivia and Peru were sponsored by the US
Agency for International Development and other industry-specific trade associations such as the
US National Hydropower Assoiation and the US Export Council for Renewable Energy.
Honors
· Invited by the Minister of Energy of Brazil to attend the first annual conference held in Brazil
on renewable energy and energy effciency and to participate as a panelist at that conference.
· Co-hosted the 1997 Renewable Energy in the Americas Conferenæ (REIA 97) with the
Minister of Energy of BraziL. This conference was held in Rio de Janeiro in July 1997 and
attended by over 350 senior representatives for North, Central and South American energy
companies, utilties, government agencies, NGOs and multilateral financing organizations.
· Invited by the US Departent of Energy and then-Secretary of Energy Hazel O'Leary to
participate as a panelist/presenter at the Second Annual Meeting of the Energy Ministers of the
Western Hemisphere - August 1997.
. Invited to travel with US Secretary of Commerce (Daley) as a member of a trade mission to
Brazil, Argentina and Chile - May 1997.
. Invited to travel with the US Seretary of Energy (Pena) to the Third Annual Meeting of the
Energy Ministers of the Western Hemisphere held in caracas, Venezuela in January 1998, and to
participate on various discussion panels during the conference.
. Invited to participate at a number of international renewable energy conferences hosted by
The World Bank and the US Agency for International Development.
Idaho Power Company March 1979 to October 1999
Idaho Power Company is the largest investor-owned elecric utilty serving in Idaho with 2004 revenues of
$844.5 milion, total plant investment of approximately $3.2 bilion and over 440,000 customers.
senior Manager, Strateic Planning January 1991 to October
1999
As senior Manager of Strategic Planning, I reported directly to the Chairman of the Bord and CEO of
the company. I was responsible for direcing all corporate strategic planning activities of the
company, including regulatory initiatives and merger and acquisition activities. I was responsible for
the preparation of the annual economic forecast use by the major business units of the company in
the preparation of their annual business plans, operating budgets and capital requirements. I was
also responsible for overseeing the company's research and development programs and project
2
EXHarr ioi cNW, Di..i.u
dealing with new technologies or improvements in operating practices.
· Developed a rate mechanism that tracks and recovers changes or fluctuations in the
company's cost of production (PCA), including formulation of the concept, plan and the regulatory
strategy to seure approval of the regulatory commissions having jurisdiction over the company.
· Direced the litigation team that participated in the PacifiCorp/Utah Power merger appearing
before the Idaho PUC and the Federal Energy Regulatory Commission. Negotiated the settlement
agreement between the parties, resulting in significant benefits to Idaho Power Company
including firm transmission serviæ in Utah, ownership of a major strategic substation, additional
transmission revenue and favorable reslution of a number of pending regulatory disputes.
· Negotiated a comprehensive transmission services agreement between the company and
Bonnevile Power Administration that resulted in annual revenues of approximately $1.5 millon.
· Identified new business opportunities for the company and prepared the requisite business
plans and analysis.
· Responsible for the acquisition and integration of the Prairie Power Electric Cop assets and
service territory with the Idaho Power system.
Honors
· Recognized for developing Idaho Power Company's innovative "first-of-its-kind" solar energy
program that won unanimous approval from the regulatory commissions. This efort established
Idaho Power as a domestic and international leader with renewable energy technologies.
· seleced by the lEA Executive Committee to chair the Organizing Committee for the highly
acclaimed 1995 International Executive Conference on Photovoltaics (Solar Energy) sponsored by
the International Energy Agency and hosted by Idaho Power Company.
· Seleced by the US Department of Energy to represent the United States on the Organizing
Committee for the 1999 International Executive Conference on Photovoltaics that was organized
under the auspices of the International Energy Agency.
Manager, Power Management 1986 to 1991
· Responsible for the management of a department consisting of 45 senior level engineers,
analysts and technical expert dealing with generation resurce planning, transmission system
planning, wholesale power marketing and wholesale bilateral contract development and
administration.
. Responsible for directing all regulatory activities with the Federal Energy Regulatory
Commission dealing with wholesale power and transmission serviæs rates, terms and conditions
and related contract approvals.
. Responsible for negotiating wholesle power contract and transmission service agreements
that generated $40MM in annual revenues and rates of return for Idaho Power exceeding the
average ROR for the company by 500 to 600 basis points.
Manager of Rates and Regulatory Affairs 1979 to 1986
. Responsible for preparing all materials required for the company's rate filings before the
Idaho, Oregon and Nevada state regulatory commissions having jurisdiction over the company, as
well as the Feeral Energy Regulatory Commission.
. Developed a multi-jurisdictional cost-of-service/revenue requirements model that was
accepted by all state and federal commissions having jurisdiction over the company.
. Developed a series of innovative class cost of service and rate design models.
. Developed and direced a load research program for the company.
Wisconsin Elecric Power Company 1978 to 1979
Projec Coordinator, Rate Department
I was responsible for all rate and regulatory filings before the Wisconsin and Michigan Public Utilty
Commissions and the Federal Energy Regulatory Commission. These activities included preparing
3
EXHIBr 201 C..,1M
papiou
".
.. i
jurisdictional separation and revenue reuirement studies, cost-of-serviæ studies, rate design studies,
lod resarch information and the testimony related to these studies as required by the commissions
in support of retail and wholesale rate filings. I develope the first computerized cost-of-serviæ
model for the company that was accepted by all three commissions having jurisdictn over the
company.Sotheast Colorado Power Assiation 1971 to 1978
General Manager
I was the Chief Operating Offær of an elecric distribution cooperative with 50 employee.
Responsible to the Bord of Direcors for all matters relating to the operation of the coperative
including financial planning, marketing, budgeting, quality of service and all regulatory procings
beore the Colorado Public Utilties Commission.
EDUCATION
Bahelor of SCience - Economics, University of Maryland Colle Park, Maryland
LANGUAGE SKILLS
Fluent in Spanish, (FSI rating of 4)
CONTACT INFORMATION
Larry A Crowley, President & Direcor
The Energy Strategies Institute, Inc.
5549 S Cliffge Avenue
Boise, 10 83716
Phone: [phone]
Fax: [phone]
Mobile: [phone]
E-mail: crowleyla(âaol.com
4
EXHarr 281 Cro, DiPq40U