BEFORE THE NEW MEXICO PUBLIC REGULATION COMMISSION

Transcription

1 BEFORE THE NEW MEXICO PUBLIC REGULATION COMMISSION IN THE MATTER OF THE APPLICATION ) OF ROOSEVELT COUNTY ELECTRIC COOPERATIVE, ) INC. FOR PERMISSION TO REFUND MONIES TO ) MEMBERS THROUGH ITS FUEL AND PURCHASED ) POWER COST ADJUSTMENT CLAUSE ) ) Case No. 16-0:!Jl1d- UT ) ROOSEVELT COUNTY ELECTRIC COOPERATIVE, INC. ) ) ) ) Applicant. ) AFFIDAVIT STATE OF NEW MEXICO COUNTY OF Roosevelt ) ) SS. ) I have read the foregoing Direct Testimony, an / i is true and accurate ba my own knowledge and belief.

2 CASE NO. llp- OOll (}... -UT Q. PLEASE STATE YOUR NAME AND BUSINESS ADDRESS. 2 A: Jerry W. Paitin, 121 N. Main Street, Po1tales, New Mexico 3 Q. BY WHOM AND IN WHAT CAPACITY ARE YOU EMPLOYED? 4 A: I am employed by Roosevelt County Electric Cooperative, Inc. ("RCEC") as the General 5 Manager and Executive Vice-President. 6 Q. HOW LONG H A VE YOU HAD YOUR CURRENT POSITION? 7 A: I was officially appointed to the position on November 15, 1991 and have held the position 8 since that time. 9 Q. PLEASE DESCRIBE YOUR DUTIES AND RESPONSIBILITIES AS THE 10 GENERAL MANAGER AND EXECUTIVE VICE PRESIDENT. 11 A. As the General Manager, I am responsible for the n01mal day-to-day operations and 12 decision making of RCEC, including oversight of all departments, the execution and 13 application ofall approved plans, programs ans policies adopted by the Board oftrnstees 14 and the overall organization ofrcec. As the Executive Vice-President, I am an officer of 15 RCEC and authorized to execute all contracts and other instrnments authorized by the 16 Board oftrnstees. 17 Q. WHAT IS THE PURPOSE OF THIS PROCEEDING? 18 A: This proceeding is initiated to request permission from the New Mexico Public Regulation 19 Commission ("Commission" or "NMPRC") to flow ce1tain refund amounts back to the 20 members ofrcec through the balancing account in our monthly fuel and purchased power 21 cost adjustment calculation. This refund is the result of successful outcomes in numerous 22 proceedings in which RCEC pa1ticipated before the Federal Energy Regulatory 23 Commission ("FERC''). RCEC was actively engaged in these proceedings as either a Co

3 CASE NO. ILP - 00('7 d- -UT Complainant or Intervenor. Expenses incurred to paiticipate in these proceedings were 2 defe1ted per our agreement with the Conunission staff, as discussed in detail, below. 3 Q. PLEASE IDENTIFY THE FERC PROCEEDINGS IN WHICH RCEC 4 PARTICIPATED. 5 A: The FERC proceedings in which RCEC participated and for which expenses were deferred 6 included: 7 a. ER04-l RE: Xcel Energy Services Inc. Request for Changes m 8 Transmission Rates; 9 b. EL RE: Cooperative Complaint Requesting Investigation and Hearing 10 of Cost-based Rates and Fuel Adjustment Clause Charges, and Establishment 11 of Refund Effective Date; 12 c. ER05-l68 RE: SPS Filing for Changes in the Fuel Cost Adjustment Clause 13 Applicable to Wholesale Full Requirements Customers; 14 d. EL RE: Public Service Company of New Mexico Complaint that 15 Southwestern Public Service Company's wholesale rates are excessive, unjust, 16 unreasonable and is unduly discriminatory and/or preferential; and, 17 e. ER RE: Southwestern Public Service Company Filing to change 18 wholesale rates and rate design to be effective February 1, f. ER08-3 l 3 - RE: Southwestern Public Service Company Filing to establish a 20 formula transmission tariff to be effective July 6, 2008; 21 Q. PLEASE SUMMARIZE THE POSITION OF RCEC IN THIS PROCEEDING. 22 A. As a result ofthe active participation by RCEC in these FERC proceedings over the course 23 of many years, the membership of RCEC has already benefitted and will receive a 2

4 CASENO. I LV ~/d- -UT significant additional benefit in the fo1m of refunds. The benefits to RCEC members 2 consist of both refunds, which are the subject of this filing, and lower wholesale power 3 rates which resulted and were received over the course of the FERC proceedings. During 4 these FERC proceedings, RCEC successfully negotiated and settled various issues with 5 Southwestern Public Service Company (SPS), its former full requirements power supplier, 6 involving wholesale power, transmission, fuel and other business practices related to the 7 wholesale power supply rates charged to RCEC. At the onset of the various FERC cases, 8 RCEC requested pe1mission from the New Mexico Public Regulation Conunission 9 (NMPRC) to defer the expenses associated with RCEC's pa1t icipation in the FERC 10 proceedings until such time as the cases were concluded. The objective was to protect 11 RCEC members from incutting any higher rates until such time as they might be able to 12 fully realize the benefits of such litigation. The NMPRC staff sent us a letter authorizing 13 us to defer litigation expenses w ith the proper final disposition of these defejted costs to 14 be made upon conclusion of the FERC proceedings and upon the filing of application for 15 such determination with the NMPRC. A copy of this letter is attached to my testimony as 16 Exhibit CTP-1.0n October 29, 2015, the FERC issued an order approving a negotiated 17 global settlement with SPS ofthe FERC cases. This marked the official te1mination ofthe 18 FERC cases. The refund amount reflects the balance remaining after RCEC has deducted 19 the costs and expenses incurred for these proceedings that have been accounted for on 20 RCEC's books under Account 186 per the NMPRC's directive. RCEC now makes 21 application with the NMPRC to refund these amounts to the members of RCEC. 3

5 CASE NO. Ilx - QQ/] ~ -UT Q. PLEASE PROVIDE AN ACCOUNTING OF THE LEGAL AND CONSULTING 2 EXPENSES INCURRED FOR WHICH YOU SEEK TO RECOVER AT THIS 3 TIME. 4 A: RCEC incurred a total of $254, in legal and consulting expenses associated with 5 these FERC cases. RCEC received refunds as a result of active patticipation, negotiations 6 and settlements totaling $427, The net defeited amount due to be refunded to the 7 membership of RCEC is $173, Each of the charges and refunds are itemized on 8 Exhibit CTP-2, attached hereto. RCEC can make copies ofthe paid invoices available upon 9 request. 10 Q. DID RCEC KEEP THE COMMISSION APPRISED OF THESE EXPENSES 11 DURING THE COURSE OF THE FERC LITIGATION? 12 A: RCEC had numerous discussions with NMPRC staff throughout the FERC proceedings to 13 provide updates on the progress of our efforts. These detailed discussions and briefing 14 sessions involved three other cooperatives with similar issues. Staff was also actively 15 involved in our deliberations concerning the eventual decision to tenninate our full 16 requirements contract with SPS and become members of Western Fanners Electric 17 Cooperative. 18 Q. WHAT OTHER COSTS OR BENEFITS WERE ASSOCIATED WITH THE 19 OUTCOME OF THE FERC PROCEEDINGS THAT THE RCEC MEMBERS 20 WILL INCUR OR RECEIVE THE BENEFIT FROM? 21 A: Over the course of the FERC proceedings, some issues were settled with resulting lower 22 wholesale power rates, transmission rates or fuel charges than otherwise were originally 23 demanded by SPS. Therefore, each time there was a settlement of an issue involving rates 4

6 CASE NO. /{p UT for power, trans1nission or fue l, the members of RCEC benefited from these lower rates 2 and fuel charges from SPS. This is particularly significant given that wholesale purchased 3 power represented 57 percent of the total expenses for RCEC in Over the course of 4 the proceedings, I estimate that wholesale purchased power represented between 60 to 65% 5 of the total expenses. RCEC members will also benefit going forward from the date ofthe 6 global settlement with lower wholesale power costs. The global settlement agreement 7 provides, among other things, that SPS will reduce the return on equity ("ROE") factor in 8 our wholesale power contract from 10.5% to 10.0% effective October 20, 2014 and further 9 will reduce the base ROE used in SPS's transmission fonnula rate from 10.77% to 10.0%, 10 also effective October 20, In addition, the global settlement agreement provides that 11 SPS will implement lower depreciation rates applicable to our wholesale rate, effective 12 January 1, Therefore, RCEC members have already benefitted and will continue to 13 benefit from the global settlement going forward. 14 To be fair, RCEC members did incur some limited, additional costs associated with 15 pa1ticipation in the cases. These costs, which were not defeited, consisted primarily of 16 employee payroll and expenses to attend FERC hearings and settlement meetings. I was 17 primarily the only employee attending the meetings on behalfof RCEC. 18 Q. HOW DID RCEC RECOVER THE EXPENSES THAT WERE NOT DEFERRED? 19 A. Expenses not deferred were primarily travel, meals and my salary, which was expensed 20 under RCEC' s Administrative and General Expense Account Q. WHY DID THE RCEC WAIT UNTIL NOW TO SEEK RECOVERY OF THE 22 EXPENSES ASSOCIATED WITH THESE FERC PROCEEDINGS AND TO 5

7 CASE NO. /lr - D.211'ff. -UT REFUND THE MONIES OBTAINED AS A RESULT OF THE SUCCESSFUL 2 OUTCOME? 3 A: As indicated above, the FERC only recently issued an order approvmg the global 4 settlement of the cases on October 29, This order is attached as Exhibit CTP-3. 5 Following the issuance of the order, the pa11ies were required to withdraw ce11ain 6 pleadings, whereby the attorneys for RCEC withdrew four such previously filed pleadings 7 on December 11, Since that time, RCEC staffhas spent considerable time reconciling 8 all of the charges to make ce11ain all of the charges are correct and we could file the 9 necessary information in this proceeding to accurately reflect the costs and benefits ofthe 10 litigation. These FERC cases have spanned over a decade. Unfo 1unately, the process 11 within the FERC does tend to be cumbersome. The administrative process does not operate 12 quickly and often there are long periods oftime between the initiation of a proceeding and 13 the ultimate decision. 14 Q. ARE THERE ANY OTHER LITIGATION EXPENSES WHICH THE RCEC IS 15 STILL DEFERRING IN CONNECTION WITH FERC LITIGATION OR ANY 16 OTHER LITIGATION INVOLVING DISPUTES WITH YOUR PAST OR 17 PRESENT POWER SUPPLY CONTRACTUAL RELATIONSHIPS? 18 A: No, there are no other litigation expenses being deferred by RCEC. 19 Q. PLEASE IDENTIFY THE MANNER IN WHICH YOU PROPOSE TO RECOVER 20 COSTS INCURRED IN THE FERC PROCEEDINGS AND REFUND MONIES 21 THAT WERE RECOVERED AS A RESULT OF THE OUTCOME OF THESE 22 PROCEEDINGS. 6

8 CASENO. /(p -OOlt d- -UT A: RCEC proposes to refund the monies to our members tlu ough the use of our Fuel and 2 Purchased Power Cost Adjustment Clause (FPPCAC) balancing account subject to 3 NMPRC approval. Currently the NMPRC has approved RCEC's use ofa six month rolling 4 average fuel factor approved in Case No UT. Placing the monies within the 5 FPPCAC balancing account will have the effect of reducing the FPPCAC factor charged 6 to members on a per kilowatt-hour (kwh) purchased basis. 7 Q. OVER WHAT TIME PERIOD WILL COSTS BE RECOVERED AND MONIES 8 FULLY REFUNDED TO MEMBERS? 9 A: RCEC proposes to return the monies over the course of a 12 month period by placing equal installments within the FPPCAC Balancing Account. 11 Q. PLEASE EXPLAIN WHY THE PROPOSED REFUND AND COST RECOVERY 12 METHODOLOGY IS JUST AND REASONABLE TO MEMBERS. 13 A: RCEC believes by placing 12 equal installments within the FPPCAC Balancing Account, 14 all members of RCEC, including seasonal members, will benefit from the cooperative's 15 successful participation in the FERC proceedings. 16 Q. WERE OTHER ALTERNATIVES CONSIDERED AND REJECTED BY THE 17 RCEC? 18 A: RCEC considered issuing checks to all current customers based on kwh purchased over 19 some period such as the cunent month, but that would be difficult, unnecessarily expensive 20 and could potentially be deemed discriminatory by members especially depending on the 21 timing of approval and given RCEC's seasonal irrigation members. 22 RCEC considered the use of a rate rider to return the monies but again this would be 23 difficult to calculate and could potentially be deemed discriminatory as discussed above. 7

9 CASE NO. I(jJ -00(1 d- -UT RCEC considered placing the full amount within the FPPCAC Balancing Account as a 2 one-time payment and then allow the monies to be returned. This retmn would primarily 3 occur over a six-month period with a higher proportion ofthe return weighted towards the 4 initial month and progressively declining over the following months. Depending on the 5 timing ofdoing so, all members may not see a resulting benefit such as seasonal iitigation 6 members. RCEC discussed the cmtent proposed approach with NMPRC Staff and believe 7 the proposed methodology is preferred and in the best interests of the RCEC membership 8 as a whole. 9 Q. IS RCEC CURRENTLY IN COMPLIANCE WITH ALL THE APPLICABLE 10 PROVISIONS OF THE COMMISSION'S RULE 550? 11 A: Yes, RCEC is cmtently in compliance with Rule 550 and has an approved variance to use 12 a six-month rolling average methodology as approved on December 16, 2015 in Case No UT. 14 Q. WHY IS THE RCEC REQUESTING THAT THIS REFUND METHODOLOGY BE 15 APPROVED WITHOUT A HEARING? 16 A: The operation ofthe fuel clause affords an efficient and economical means ofreturning the 17 monies to members without incmting substantial additional legal expenses to have a fonnal 18 proceeding. 19 Q. DOES THIS CONCLUDE YOUR TESTIMONY? 20 A: Yes 21 8

10 VENDOR DATE INVOICE# GL # GL # GL # GL # GL # GL # GL # GL # Trani minion Cue s.ectlon 206ilnalysls SPS SPS 2008 Case ER Case ER Case EROS--19 TRANS RATE Case ER Case ER GENERATION CASE Case EL / GDS ASSOCIATES, INC. 03/ GDS ASSOCIATES, INC. 03/ / GOLDEN SPREAD ELECTRIC COOP. INC. 03/2005 STMT 03/2005 1, /2005 JE , GOLDEN SPREAD ELECTRIC COOP. INC. 03/2005 STMT-03/2005 3, GDS ASSOCIATES, INC. 04/ , OUNCAN,WEINBERG,GENZER&PEMBROKE 04/ , GDS ASSOCIATES, INC. 04/ LEA COUNTY ELECTRIC COOP (GOS ASSOC.) OS/ LEA COUNTY ELECTRIC COOP (GDS ASSOC.) OS/200S LEA COUNTY ELECTRIC COOP (GOS ASSOC.) OS/200S GOS ASSOCIATES, INC. OS/ GOS ASSOCIATES, INC. OS/ , GOS ASSOCIATES, INC. 06/ GDS ASSOCIATES, INC. 06/ LEA COUNTY ELECTRIC COOP (GDS ASSOC) 07/ GDS ASSOCIATES, INC. 07/ OUNCAN,WEINBERG,GENZER&PEMBROKE 07/ , GOS ASSOCIATES, INC. 07/ ,S45.94 OUNCAN,WEINBERG,GENZER&PEMBROKE 08/ LEA COUNTY ELECTRIC COOP (GOS ASSOC.) 08/200S GOS ASSOCIATES, INC. 08/ GDS ASSOCIATES, INC. 08/ S 2, OUNCAN,WEINBERG,GEN ZER&PEMBROKE 09/200S , GDS ASSOCIATES, INC. 09/200S 4S GDS ASSOCIATES, INC. 09/ , GOS ASSOCIATES, INC. 11/2005 4S /2005 1, GOS ASSOCIATES, INC. 11/2005 4S909 3S /2005 STMT-11/200S 4,4S8.37 LEA COUNTY ELECTRIC COOP (GOS ASSOC.) 11/ S03-0l-01 1, GDS ASSOCIATES, INC. 12/ GOS ASSOCIATES, INC. 12/ SSl.09 GDS ASSOCIATES, INC. 12/ ,2S9.53 CORRECT FERC CASE EXPENSES 12/2005 JE (15,254.73) 12/ , GDS ASSOCIATES, INC. 01/ OUNCAN,WEINBERG,GENZER&PEMBROKE 01/ GDS ASSOCIATES, INC. 01/ OUNCAN,WEINBERG,GENZER&PEMBROKE 01/ , LEA COUNTY ELECTRIC COOP (GDS ASSOC.) 01/ / , GDS ASSOCIATES, INC. 03/ S 8.09 GDS ASSOCIATES, INC. 03/ OUNCAN,WEINBERG,GEN ZER&PEMBROKE 03/ , OUNCAN,WEINBERG,GENZER&PEMBROKE 03/ S89.47 GOS ASSOCIATES, INC. 03/ SS0.64 GOS ASSOCIATES, INC. 03/ ,074.18

11 03/ , DUNCAN, WEINBERG,GENZER&PEMBROKE 03/ , DUNCAN, WEINBERG,GENZER&PEMBROKE 03/ , / / , / GDS ASSOCIATES, INC. 04/ GOS ASSOCIATES, INC. 04/ , / , / , DUNCAN, WEINBERG,GENZER&PEMBROKE 05/ GDS ASSOCIATES, INC. 05/ / , FRED SAFFER & ASSOC I NC. 05/ , DUNCAN, WEINBERG,GENZER&PEMBROKE 05/ GDS ASSOCIATES, INC. 06/ DUNCAN, WEINBERG,GENZER&PEMBROKE 06/ GDS ASSOCIATES, INC. 06/ / , / , / S8 2, DUNCAN, WEINBERG,G ENZER&PEMBROKE 07/ DUNCAN, WEI NBERG,GENZER&P EMBROKE 07/ S27.64 GDS ASSOCIATES, INC. 07/ GOS ASSOCIATES, INC. 07/ S9 DUNCAN, WEI NBERG,GENZER&PEMBROKE 07/ , DUNCAN, WEI NBERG,GENZER&PEMBROKE 07/ , DUNCAN, WEI NBERG,GENZER&PEMBROKE 07/ , / ,1S / S5 GOS ASSOCIATES, INC. 08/ / GOS ASSOCIATES, INC. 08/2006 S / , / / , DUNCAN, WEI NBERG,G ENZER&P EMBROKE 08/ / DUNCAN, WEINBERG,GENZER&PEMBROKE 10/ / DUNCAN, WEINBERG,G ENZER&P EMBROKE 10/ , DUNCAN, WEINBERG,G ENZER&P EMBROKE 11/ , DUNCAN, WEI NBERG,GENZER&P EMBROKE 11/ / , DUNCAN, WEI NBERG,GENZER&PEMBROKE 12/ , XCEL ENERGY 12/2006 CK (4,239.17) 12/ , / , DUNCAN, WEI NBERG,GENZER&PEMBROKE 12/ , / , DUNCAN, WEI NBERG,G ENZER&P EMBROKE 02/ DUNCAN, WEI NBERG,GENZER&PEMBROKE 02/2007 CK (13,721.24) CORRECT OVERPYMT DUNCAN 02/2007 JE ,621.05

12 FERC CASE PRORATED EXPENSE DUNCAN,WEI NBERG,GENZER&PEMBROKE SPS POWER BILL REVISED SPP RATE CASE DUNCAN,WEI NBERG,GENZER&PEMBROKE DUNCAN,WEI NBERG,GENZER&PEMBROKE SPS POWER BILL REFUND FERC DUNCAN, WEI NBERG,GENZER&PEMBROKE DUNCAN,WEI NBERG,GENZER&PEMBROKE J.W. WILSON & ASSOC INC. DUNCAN,WEI NBERG,GENZER&PEMBROKE J. W. WILSON & ASSOC INC. J.W. WILSON & ASSOC INC. 02/ / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / /2008 OS/ /2008 OS/ / / / / / / / / / / / / / / / / , , ,76S , JE (101.70) l,78s , S 11.3S FJE FJE (10,720.76) , S JE JE S S S S S31 1, ,086.0S , , , S6 2, , , ,429.SO 1,S92.S l,2so.oo 1, , , , ,596.33

13 09/ / , / , / FRED SAFF ER & ASSOC INC. 10/ , / , / , / , DUNCAN,WEINBERG,GENZER&PEM BROKE 11/ / / / , / / / , / , DUNCAN, WEINBERG,GENZER&PEMBROKE 01/ / / , / , / , / , DUNCAN,WEINBERG,GENZER&PEM BROKE 02/2009 STMT-02/13/ XCEL ENERGY 02/2009 ck # (281, ) 02/ , / / / , / , / / , / , / , / / , / DUNCAN, WEINBERG,GENZER&PEMBROKE 07/ / , DUNCAN, WEINBERG,GENZER&PEMBROKE 08/ , / DUNCAN, WEIN BERG,GENZER&PEMBROKE 09/ DUNCAN, WEINBERG,GENZER&PEMBROKE 09/ DUNCAN, WEINBERG,GENZER&PEMBROKE 10/ , / , DUNCAN, WEINBERG,GENZER&PEMBROKE 12/ , / , DUNCAN, WEINBERG,GENZER&PEMBROKE 02/ , DUNCAN, WEINBERG,GENZER& PEMBROKE 03/ , / , DUNCAN, WEINBERG,GENZER&PEM BROKE 05/ , / , DUNCAN, WEINBERG,GENZER&PEMBROKE 07/ /

14 XCEL ENERGY 08/2010 CK# (141,978.86) 09/ /2010 JE (1,180.00) 10/ / / / / DUNCAN, WEI NBERG,GENZER&PEMBROKE 08/ / DUNCAN, WEI NBERG,GENZER&PEMBROKE 09/ DUNCAN, WEI NBERG,GENZER&PEMBROKE 11/ DUNCAN, WEINBERG,GENZER&PEMBROKE 12/ DUNCAN, WEINBERG,GENZER&PEMBROKE 12/2011 JE CORRECT 2011 A/P INVOICE 01/2012 JE (2,287.23) TOTALS 23, , (419,978.15) , , , (173,461.10)