UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION Idaho Power Company Docket No. ER0- PREPARED DIRECT TESTIMONY OF RONALD D. SCHELLBERG ON BEHALF OF IDAHO POWER COMPANY EXHIBIT IPC- March 00
Exhibit No. IPC- Page of UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION Idaho Power Company Docket No. ER0 - DIRECT TESTIMONY OF RONALD D. SCHELLBERG FOR IDAHO POWER COMPANY I. INTRODUCTION Q. Would you state your name, address and present occupation? A. My name is Ronald D. Schellberg and my business address is West Idaho Street, Boise, Idaho. I am employed by Idaho Power Company ( Idaho Power or the Company as a System Planning Leader in the Grid Planning and Operations Department. Q. Please describe your educational background and professional experience.
Exhibit No. IPC- Page of 0 A. I received my Bachelor of Science in Electrical Engineering from Washington State University in Pullman, Washington in. That same year I joined Idaho Power, taking an engineering position in the Distribution Planning Department. In, I joined the System Planning Department as an engineer. I assumed a supervisory position in the System Planning Department in, and I now supervise the entire group. My job requires me to both study and direct the study of the bulk high voltage transmission system of Idaho Power. Due to interactions between the Idaho Power transmission system and the other transmission systems of the Western Electric Coordinating Council (WECC, I am frequently involved with the issues that affect the combined transmission systems of the Western Interconnection. I am currently a member of the WECC Planning Coordination Committee and the WECC Reliability Subcommittee. I also represent WECC at the North American Electric Reliability Council on the Planning Committee and Resource Issues Subcommittee. 0 Q. What are your duties as System Planning Leader as they relate to the current proceeding? A. My position requires me to both study and direct the study of the bulk high voltage transmission system of Idaho Power. This requires familiarity with Idaho Power s present and future transmission construction. In my position, I am also involved in the administration of the Company s Open Access Transmission Tariff (OATT. Q. What is the purpose of your testimony in this proceeding?
Exhibit No. IPC- Page of A. As Idaho Power s transmission policy witness in this proceeding, I will provide an overview of the Company s filing, explain why the Company is revising its OATT transmission rates, and describe the changes to the tariff. As part of my explanation of why the Company is submitting this filing, I will briefly describe the major transmission upgrades that Idaho Power has recently constructed, as well as outline its plans for the future. 0 Q. Are any other persons filing testimony on behalf of the Company in this proceeding? A. Yes. Ms. Patricia Nichols, at my request, has prepared the Company s transmission revenue requirement and rate design information along with the supporting Cost of Service Statements AA through BM for Period I (00 and BG, BH and BL for Period II (00. Mr. Dennis Gribble is sponsoring testimony as to the point estimate for Idaho Power s rate of return on common equity and the Company s capitalization structure. Dr. William Avera, of FINCAP, Inc., is providing testimony in which he recommends the reasonable cost of equity range for Idaho Power in today s capital markets. II. PURPOSE OF FILING 0 Q. Please describe Idaho Power s present OATT. A. Idaho Power provides Point-to-Point Transmission Service and Network Integration Transmission Service to the Commission jurisdictional customers under its current
Exhibit No. IPC- Page of OATT. Present rates were established in as a result of a settlement in Docket No. ER-0-000, and recover a fixed transmission revenue requirement (network rates or fixed rates (point-to-point rates. Idaho Power s filing in that case was based on a test year. 0 Q. Please provide an overview of Idaho Power s filing in this docket. A. Idaho Power is replacing the fixed rates and revenue requirement contained in its existing OATT with comprehensive formula rates. These formula rates will calculate Idaho Power s transmission cost of service, which will then be used to set point-topoint rates and the annual network revenue requirement. 0 Q. Why is Idaho Power proposing formula rates? A. Idaho Power is proposing formula rates so that its charges for transmission service more accurately reflect the costs that the Company incurs in providing services, including costs incurred from substantial transmission construction. For example, between and 00, Idaho Power s transmission plant in service increased from $0 million to $0 million, and annual transmission operation and maintenance expenses increased from $0. million to $. million. The proposed formula rates would take these increased costs into account. The existing rates have fallen far behind the increase in Idaho Power s transmission costs, resulting in a substantial underrecovery of Idaho Power s costs.
Exhibit No. IPC- Page of 0 Q. Please describe Idaho Power s transmission system. A. The Idaho Power transmission system is designed to provide sufficient transmission capacity to integrate Idaho Power s generation resources with its load and to meet Idaho Power s firm wheeling obligations. Idaho Power s generation resources are largely located on the western and eastern ends of the system, and its load is primarily located in the middle. From the west, Idaho Power uses its five 0 kv Brownlee-Boise lines to move its western resources to load. Idaho Power s Jim Bridger thermal generation in the east is delivered to the load via three kv Jim Bridger lines. In the center of the system (at a substation named Midpoint, a kv line from the south integrates Idaho Power s Valmy thermal generation, which is located in Northern Nevada on the Sierra Pacific Power Company system. Idaho Power s Boardman thermal resource is located in north central Oregon and is delivered to Idaho Power via the Bonneville Power Administration s LaGrande interconnection. Exhibit No. IPC- attached to my testimony provides a map of Idaho Power s transmission system. 0 Q. Please describe the major construction projects that have contributed to the growth in Idaho Power s transmission infrastructure. A. Idaho Power has been investing in transmission upgrades to keep up with substantial growth in the use of its system. Many of these upgrades have involved improvements to Idaho Power s backbone transmission system. Since, these backbone system improvements have included:
Exhibit No. IPC- Page of Project Cost (in millions 0 Brownlee-Ontario-Caldwell 0 kv $0. Boise Bench-Locust 0 kv $. Bus reconfiguration at Brownlee $. Bus reconfiguration at Boise Bench $. Brownlee-Oxbow # 0 kv $. Goshen kv Series Capacitor Upgrade $. Locust-Caldwell 0 kv line $. Second Locust 0/ kv Transformer $. Nampa 0/ kv Transformer and 0 kv Line Tap* $.0 Idaho Power has also constructed other transmission facilities and transmission capital improvements during this period. 0 Q. Does the Company plan to continue to strengthen its transmission system? A. Yes. The Company has substantial transmission improvements under construction, and plans additional improvements in the near future. The Company is implementing the Borah West path upgrade next year (00 to support planned wind and geothermal resource development in the Burley/American Falls area. This project is expected to cost approximately $. million. In 00, a 0 kv upgrade between Mountain Home and Boise (expected to cost approximately $ million is planned. Overall, the capital budget forecast for transmission construction in the next five years is $ million. * The Nampa 0 kv addition is scheduled for completion in May of 00.
Exhibit No. IPC- Page of III. DESCRIPTION OF FILING Q. Has Idaho Power Company prepared revised tariff sheets reflecting the proposed changes? A. Yes. Both a black-lined version of the revised tariff sheets and a clean copy of the revised sheets are included as part of the filing. 0 0 Q. Please describe the changes relating to the new rates. A. In general, changes are proposed to the tariff language to reflect the formula rate. Specific changes include the following: The addition of definitions for Service Year and Tariff to Section ; The revision of Schedule to reflect the formula rate and the addition of provisions to recover taxes and fees, regulatory expenses and other; The addition of Appendix A Determination of the Transmission Provider s Formula Rate For Firm Point-To-Point Transmission Service, to Schedule ; The revision of Schedule to reflect the formula rate and the addition of provisions to recover taxes and fees, regulatory expenses and other; The addition of Appendix A Determination of the Transmission Provider s Formula Rate For Non Firm Point-To-Point Transmission Service, to Schedule ; The addition of Schedule - Charge Provisions For Network Integration Transmission Service;
Exhibit No. IPC- Page of The addition of Appendix A to Schedule Determination of The Transmission Provider s Annual Formula Revenue Requirements For Network Transmission Service; The addition of an introductory paragraph to Section, similar to Section ; The revision of Section. so that it refers to Schedule ; and Significant modifications to Attachment H so that it sets forth the new rate formula methodology for determining the Company s Total Transmission Revenue Requirement. 0 Q. Does this conclude your direct testimony in this case? A. Yes.