BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA

Transcription

1 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA In the Matter of the Application of PACIFICORP (U 901 E) for Authority to Recover Costs Recorded in the Catastrophic Event Memorandum Account. Application No (Filed April 28, 2017) MOTION OF PACIFICORP (U 901 E) TO ADMIT INTO THE RECORD PREVIOUSLY SERVED TESTIMONY AND ACCOMPANYING EXHIBITS PACIFICORP Cynthia Hansen Mifsud 825 N.E. Multnomah St., Suite 1800 Portland, OR Telephone: (503) Facsimile: (503) Dated: November 1, 2017 Attorney for PacifiCorp

2 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA In the Matter of the Application of PACIFICORP (U 901 E) for Authority to Recover Costs Recorded in the Catastrophic Event Memorandum Account. Application No (Filed April 28, 2017) MOTION OF PACIFICORP (U 901 E) TO ADMIT INTO THE RECORD PREVIOUSLY SERVED TESTIMONY AND ACCOMPANYING EXHIBITS In accordance with Rule 13.8(c) of the Commission s Rules of Practice and Procedure and Administrative Law Judge Semcer s October 18, ruling, PacifiCorp, d.b.a. Pacific Power (PacifiCorp), submits this motion to admit into the record of this proceeding PacifiCorp s previously served testimony and accompanying exhibits. Judge Semcer s ruling directed that this motion be filed within two weeks of October 18, 2017; this motion is timely filed. I. INTRODUCTION On April 28, 2017, PacifiCorp filed A to recover $3,215,208 in California-allocated revenue requirement associated with $4,652,848 of Catastrophic Event Memorandum Account ( CEMA )-eligible cost, to be amortized over a two-year period beginning April 1, On June 5, 2017, ORA timely protested A On August 4, 2017, PacifiCorp submitted an amendment to A in order to correct two erroneous contextual statements regarding total costs incurred and total company revenue requirement relative to the California revenue requirement. A prehearing conference was held on August 8, - 1 -

3 2017. On August 18, 2017, a Scoping Memo was issued establishing a schedule for ORA s audit completion and settlement discussions; an alternate schedule was established in the event the Parties could not reach a settlement. Following discovery, ORA issued its Report on the Results of Examination for PacifiCorp s Catastrophic Event Memorandum Account evaluating the Application ( Audit Report ) on September 1, Based on its findings in the Audit Report, ORA recommended the removal of $48,082 in straight-time labor expenses for out-of-state crews from PacifiCorp s CEMA-eligible costs. PacifiCorp and ORA met and conferred regarding the recommended adjustment and subsequently entered into settlement discussions. PacifiCorp and ORA filed an executed settlement agreement and motion for Commission approval on October 20, Because PacifiCorp and ORA are the only parties to A , no additional proceedings are necessary in this matter. II. TESTIMONY AND EXHIBITS SUBJECT TO THIS MOTION PacifiCorp asks the Commission to admit the following testimony and exhibits submitted in support of A into the record for this proceeding: Exhibit No. Title Party Date Served Witness PAC/100 PAC/101 PAC/102 PAC/200 Direct Testimony of Heidemarie C. Caswell Duration of Customer Outages During January 2017 Winter Storms Outages Experienced During January 2017 Winter Storms Direct Testimony of Shelley E. McCoy PacifiCorp April 28, 2017 H. Caswell PacifiCorp April 28, 2017 H. Caswell PacifiCorp April 28, 2017 H. Caswell PacifiCorp April 28, 2017 S. McCoy - 2 -

4 PAC/201 Total Revenue PacifiCorp April 28, 2017 S. McCoy Requirement PAC/202 Summary of PacifiCorp April 28, 2017 S. McCoy Expenditures PAC/203 Proposed Rate Spread PacifiCorp April 28, 2017 S. McCoy and Rates III. SUPPORT FOR MOVING THE TESTIMONY INTO THE RECORD OF THIS PROCEEDING Rule 13.8(c) provides in pertinent part that prepared testimony may be offered into evidence by written motion in the absence of an evidentiary hearing. Because PacifiCorp and ORA, the only parties to this proceeding, have settled all issues related to A , no evidentiary hearings are required. The declaration of Cynthia Hansen Mifsud, attesting that the prepared testimony offered into evidence by this motion is true and correct, is included as Attachment A to this motion. The requirements of Rule 13.8(c) are satisfied. IV. CONCLUSION PacifiCorp moves to admit its prepared testimony and supporting exhibits into the record in lieu of submitting testimony under direct examination at a hearing. Respectfully submitted November I, 2017, at San Francisco, California. PACIFICORP Cynthia Hansen Mifsud 825 N.E. Multnomah St., Suite 1800 Portland, OR Telephone: (503) Facsimile: (503) cynthia.hansen@pacificorp.com By QiM.~~ Cynthia Ha~sen Mifsud...::::: Attorney for PacifiCorp - 3 -

5 ATTACHMENT A DECLARATION OF CYNTHIA HANSEN MIFSUD IN SUPPORT OF MOTION TO ADMIT PREPARED TESTIMONY

6 DECLARATION OF CYNTHIA HANSEN MIFSUD IN SUPPORT OF MOTION TO ADMIT PREPARED TESTIMONY I, Cynthia Hansen Mifsud, state: 1. I am senior attorney for PacifiCorp. 2. On April 28, 2017, PacifiCorp submitted its Application to Recover Costs Recorded in the Catastrophic Event Memorandum Account (A ). 3. In support of its Application, PacifiCorp submitted prepared direct testimony of Heidemarie C. Caswell and Shelley E. McCoy, along with supporting exhibits sponsored by each witness. 4. PacifiCorp and the Office of Ratepayer Advocates are the only parties to this proceeding. 5. The parties have entered into a settlement agreement, which settles all issues raised in this proceeding. 6. The California Public Utilities Commission did not hold an evidentiary hearing in this proceeding. 7. The prepared direct testimony and supporting exhibits listed in PacifiCorp's Motion to Admit Prepared Testimony Into the Record are true and correct. I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Executed this _\ - day of N ej twiliev: 2017' at\) & [ t-\&...v\ ~.., Oregon. Cynthia Hanse Mifsud 32 l 9/003/Xl94953.vl Attorney for PacifiCorp

7 Application No Exhibit No. PAC/100 Witness: Heidemarie C. Caswell BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA PACIFICORP Direct Testimony of Heidemarie C. Caswell April 2017

8 PAC/100 Caswell/i TABLE OF CONTENTS WITNESS QUALIFICATIONS /2017 WINTER STORMS... 2 DESCRIPTION OF THE COMPANY S DROUGHT-RELATED FIRE HAZARD MITIGATION EFFORTS BOLES FIRE ATTACHED EXHIBITS Exhibit PAC/101 Duration of Customer Outages During January 2017 Winter Storms Exhibit PAC/102 Outages Experienced During January 2017 Winter Storms

9 PAC/100 Caswell/ WITNESS QUALIFICATIONS Q. Please state your name, business address and present position with PacifiCorp (Company). A. My name is Heidemarie (Heide) C. Caswell. My business address is 825 N.E. Multnomah, Suite 1500, Portland, Oregon My present position is Director - Transmission and Distribution Asset Performance, a department within the Engineering Services and Asset Management business unit. Q. Please briefly describe your education and business experience. A. I am a professional engineer, licensed in the State of Washington. I received a Bachelor of Science in Civil Engineering in 1987 from the University of Washington. I have been employed with PacifiCorp since 2002, during which time I have been responsible for reliability engineering, reliability reporting and reliability tool and project development. Before that I held positions in Planning and Engineering at Puget Sound Energy and its predecessor company, Washington Natural Gas Company. Q. Please describe your present duties. A. My primary responsibilities include evaluating, investigating, reporting on and developing tools for both the transmission and distribution networks that PacifiCorp owns and operates. I am also responsible for technical support during rulemaking activities that impact the transmission and distribution organizations within the states the Company serves, which include California, Idaho, Oregon, Utah, Washington, and Wyoming. I hold leadership positions within the Institute of Electrical and Electronic Engineers (IEEE) Distribution Reliability Working Group, the North Direct Testimony of Heidemarie C. Caswell

10 PAC/100 Caswell/ American Transmission Owner s Forum and the North American Electric Reliability Corporation s (NERC) Performance Analysis Subcommittee. Q. What is the purpose of your testimony? A. The purpose of my testimony is to describe the effects of following catastrophic events that resulted in costs being recorded in the Company s catastrophic events memorandum account (CEMA): 1. The December 2016 and January 2017 series of winter storms (2016/2017 Winter Storms); 2. California s drought emergency declared in 2014 that led to drought-related fire hazard mitigation requirements; and 3. The 2014 Boles Fire with respect to more recent rebuilding efforts. 2016/2017 WINTER STORMS Q. What catastrophic events occurred during the 2016/2017 Winter Storms that resulted in costs being recorded in the Company s CEMA? A. Beginning on December 9, 2016, a series of storms damaged PacifiCorp facilities in Del Norte County, impacting the Company s service in its Crescent City operating district. Most of the costs incurred by PacifiCorp in connection with this weather event resulted from responding to the effects of a severe storm occurring December 21-22, Major storm activity continued in northern California from January 3, 2017, through January 23, 2017, impacting the Company s operations throughout PacifiCorp s northern California service territory and requiring the Company to deploy additional resources to restore service. Direct Testimony of Heidemarie C. Caswell

11 PAC/100 Caswell/ On January 23, 2017, Governor Brown declared two separate states of emergency in a number of California counties as a result of the effects of the 2016/2017 Winter Storms. The first state of emergency was declared for the December 2016 storm cycle that impacted Del Norte County in PacifiCorp s service territory. A second state of emergency was declared for the January 2017 winter storms that impacted PacifiCorp s service territory in Siskiyou, Modoc and Shasta counties. See Appendix D to the Application for a copy of Governor Brown s declarations. On January 31, 2017, the Company notified the California Public Utilities Commission (Commission) that PacifiCorp had started recording costs for responding to storm effects from weather experienced during the 2016/2017 Winter Storms in the Company s CEMA. See Appendix C to the Application for a copy of the notice sent to the Commission. Q. Did these events meet the requirements for activating CEMA? A. Yes. The purpose of the CEMA is to record all costs incurred by the Company associated with catastrophic events. Under Resolution E-3238, CEMA may be used to record costs of: (a) restoring utility service to its customers; (b) repairing, replacing or restoring damaged utility facilities; and (c) complying with governmental agency orders in connection with events declared disasters by competent state or federal authority. As previously discussed, the Governor of the State of California declared two states of emergency for the 2016/2017 Winter Storms, and the Company met its requirement to notify the Commission that it would begin recording costs in its CEMA. Direct Testimony of Heidemarie C. Caswell

12 PAC/100 Caswell/ Q. Please describe the 2016/2017 Winter Storms and their impacts on service to customers. A. During December 2016 and January 2017, extreme weather descended on the northern California coast. Major storm events occurred throughout the service area the Company operates in; however, widespread customer interruptions were mostly contained to Crescent City (in Del Norte County) in the case of the December 21-22, 2016 storm. In other regions of PacifiCorp s service territory (including Siskiyou, Modoc and Shasta counties) widespread outages occurred between January 3-6, 2017, January 7-12, 2017, and January 18-23, As a result of the December 2016 storms, approximately 800 Crescent City customers lost power. As a result of the series of storms in January 2017, over 300 individual outages occurred in PacifiCorp s northern California service territory, resulting in 42,197 customer interruptions (as certain customers may have experienced multiple interruptions due to the repeated waves of weather damage). Q. Describe PacifiCorp s response to the 2016/2017 Winter Storms and whether the response was necessary and reasonable. A. The Company s response to the 2016/2017 Winter Storms was necessary and reasonable. Customers need for electricity is at its peak when these weather events occur which makes prompt and effective restoration of power critical. With the heavy snow, low temperatures, wind and rain conditions that were experienced, the Company had to deploy significant additional resources to promptly restore power and mitigate public health and safety hazards that were created by storm related damage to the Company s electrical system. Direct Testimony of Heidemarie C. Caswell

13 PAC/100 Caswell/ Certain of these actions included remediating potentially hazardous conditions, responding to outages resulting from the extreme weather, clearing vegetation, repairing or replacing damaged facilities and communicating with customers about the progress of our restoration efforts. In furtherance of these efforts, PacifiCorp and contract personnel worked around the clock in extremely hazardous conditions, in many cases hiking through waist-deep snow and using snow cats to reach remote areas. In order to expedite restoration efforts, PacifiCorp mobilized internal crews and equipment from Oregon and California, as well as contract resources and resources available under mutual assistance agreements. Q. While a state of emergency declaration was ordered by Governor Brown, was the local impact experienced within PacifiCorp s California service territory unusual enough to warrant this treatment? A. Yes. Extraordinary efforts were required of the Company to respond to the 2016/2017 Winter Storms and restore service. For example, in certain areas of Siskiyou County, large amounts of snow accumulated in a short period of time, causing significant damage to the Company s distribution and transmission system and access issues for linemen. According to locally stationed National Weather Service personnel, between 39 percent and 82 percent of the average annual snowfall occurred within one to four days in January The following table illustrates the relative strength of the January 2017 storms based on data collected from several locations within Siskiyou County. Direct Testimony of Heidemarie C. Caswell

14

15 PAC/100 Caswell/ Q. Can you explain what impact the 2016/2017 Winter Storms had upon Company resources? A. The Company plans for and maintains sufficient resources to respond to outages. During the December 2016 storm, the damage to the local transmission system, which was responsible for a single outage that impacted a large number of customers, was repaired using existing resources working overtime. During the January 2017 storms, over a period of 16 days, the Company experienced an average of 19 outages per day ten times the average outage rate in PacifiCorp s northern California service territory and more than six times the outage rate of a major event. As a result, PacifiCorp was required to deploy additional resources to restore power in its California service territory, as explained in more detail below. The outages experienced during the January 2017 storms is illustrated in Exhibit PAC/102 which shows the time periods for which customers were without power, outage counts and accrual of customer minutes interrupted that were occurring within storm waves. As shown on the graphic, early on January 3, 2017, with the onset of heavy snow, a first wave of outages occurred which impacted just under 5,000 customers. As soon as power was restored to all affected customers on January 6, 2017, outages ramped up again on January 7, Service was restored by January 12, 2017; however, on January 18, 2017, the final storm cycle occurred resulting in new outages. Service restoration efforts in response to this storm were completed on January 23, Thereafter, additional work was required to replace facilities damaged by the storms and make permanent repairs. Direct Testimony of Heidemarie C. Caswell

16 PAC/100 Caswell/ Q. What procedures does the Company follow when responding to emergencies, including storms, wildfires and outage events? A. The Company has its Emergency Response Plan (Emergency Plan) on file with the Safety Enforcement Division, as proscribed by Commission General Order 166. PacifiCorp executes its Emergency Plan when emergencies arise. Each of the Company s regional operating districts in PacifiCorp s northern California service territory respond to emergencies in a manner consistent with the guidelines in the Emergency Plan with respect to assessing damage, detailing necessary repairs and evaluating the extent of customer outages. In following these procedures, the operating districts are able to effectively prioritize work to restore service to customers efficiently in order to meet the Company s service commitment to PacifiCorp s customers. When very severe storms or other emergencies occur that require additional resources or a more coordinated response, the Company follows the Emergency Plan s escalation procedures. The degree of escalation and the internal organizations that are brought into the response to the event depend on the extent of damage and type and level of support needed by local operational staff. Support provided by other internal organizations may include gathering and analyzing data; making decisions that protect life, property and the environment; managing the emergency; disseminating restoration related decisions to affected external agencies, customers, the affected communities and internal Company resources; and facilitating resource deployment decisions, typically through the use of internal personnel, or when needed, through contractor procurement and mutual assistance processes. To the Direct Testimony of Heidemarie C. Caswell

17 PAC/100 Caswell/ extent they receive support from these other internal organizations, local operations teams are freed up to focus their efforts on coordinating the larger response teams required to address the situation on the ground. Q. How did the Company implement its Emergency Plan to assess and respond to the 2016/2017 Winter Storms? A. The Company implemented the key components of its Emergency Plan by augmenting its local response teams with additional resources. For its response to the December 2016 storms in Del Norte County, PacifiCorp utilized all of its Crescent City response personnel on an overtime basis until power was restored to all customers. The equipment damaged during the heavy rain and wind was a local transmission line brought down when wind-borne vegetation struck the conductor. As a result, 1 pole, 12 insulators, 2 crossarms and 28 splices were required to restore power. In responding to the January 2017 storms, PacifiCorp augmented its core team of 38 California service territory field employees with 17 additional field employees from outside California, as well as 40 contractor field resources that worked to restore outages during the entire storm event. Twenty-four additional vegetation management resources also supported these efforts by clearing trees and limbs in the area of downed conductor and broken structures. In total these teams replaced 14 poles, 25,350 feet of conductor, 427 insulators, 358 splices, 107 crossarms, 97 cutouts and 14 transformers. After power was fully restored, resources remained deployed for several weeks to perform work necessary to replace damaged facilities and make permanent repairs. Direct Testimony of Heidemarie C. Caswell

18 PAC/100 Caswell/ Throughout the 2016/2017 Winter Storms, dispatch and customer service personnel (who provide assistance to local staff) also worked overtime to provide support to crews and customers. DESCRIPTION OF THE COMPANY S DROUGHT-RELATED FIRE HAZARD MITIGATION EFFORTS Q. Please describe the drought-related fire hazard mitigation efforts required by the Commission. A. On January 17, 2014, Governor Brown proclaimed a state of emergency and directed state officials to take all necessary actions to prepare for conditions that could result from the drought. On February 18, 2014, PacifiCorp received a letter from the Commission s Acting Director of the Safety Enforcement Division (SED) stating the following: Due to the increased [chance] of large and devastating fires in California, I hereby direct you and your company to take all practicable measures necessary to reduce the likelihood of fires started by your facilities. This may include, but is not limited to the following actions: Increased inspections in fire threat areas Re-prioritization of corrective action items Modification to protective schemes The letter further stated that during the state of emergency, corrective action associated with the Federal Energy Regulatory Commission and California s Department of Forestry and Fire (CalFire) vegetation requirements should not be deferred. On March 18, 2014, PacifiCorp notified the Commission s Executive Director that PacifiCorp was activating CEMA for the drought-related fire hazard mitigation measures required by the Commission. In addition, the Company has Direct Testimony of Heidemarie C. Caswell

19 PAC/100 Caswell/ provided annual and quarterly reports to the Commission regarding its droughtrelated fire hazard mitigation measures and in its annual reports has notified the Commission that the Company continues to record these costs in its CEMA. Q. What measures did the Company implement in response to the Commission directive? A. On March 18, 2014, April 30, 2015 and April 30, 2016, PacifiCorp submitted to the Commission annual reports setting forth the Company s drought-related fire hazard mitigation plans. Consistent with these plans, PacifiCorp implemented a number of mitigation measures including the following items: 1) increased patrolling and vegetation management for targeted facilities; 2) re-inspection of high risk drought areas and correction of targeted condition types within drought-impacted areas; 3) installation of distance-reporting relays on specific transmission lines; 4) acceleration of No Test policy implementation, where prior to re-energizing faulted lines, a physical patrol is conducted to ensure no physical damage has occurred to facilities; and 5) outfitting field resources with additional fire suppression equipment. As directed by SED, the Company provided quarterly updates of work completed in response to those plans. Copies of the annual plan and quarterly status reports are provided in Appendix C to the Application. Q. Has the Company previously sought recovery for the drought-related fire hazard mitigation costs recorded in its CEMA? A. Yes. On March 27, 2015, the Company filed A to recover costs recorded Direct Testimony of Heidemarie C. Caswell

20 PAC/100 Caswell/ in its CEMA for the drought-related fire hazard mitigation efforts recorded through March 10, The Commission approved the Company s request in D Q. Over what time period were the drought-related fire hazard mitigation costs that are included in this instant Application incurred? A. The costs included in this Application were incurred during the period beginning on March 11, 2015 and ending on March 31, Q. Was the work performed on the Company s electric facilities extensive? A. Yes. As the Company reported in its quarterly status reports submitted to the SED, since March 11, 2015, PacifiCorp patrolled an extra 10,666 overhead structures, inspected 23,547 structures, corrected 771 outstanding conditions that were identified as possible fire risks and performed additional fire-mitigation vegetation management on 17 transmission and 12 distribution circuits. BOLES FIRE Q. Please describe the Boles Fire. A. On September 15, 2014, the Boles Fire started near the town of Weed, California. Fanned by winds in the area, the fire quickly spread and evacuation efforts began for the areas of Weed, Shastina, and Carrick. Local fire resources were augmented by regional resources to contain the fire as rapidly as possible. Emergency response was supported by regional first response personnel, such as PacifiCorp employees, who interacted with each other to ensure timely support actions were taken. PacifiCorp s local field personnel and management and region dispatch responded to the event at approximately 1:38 p.m. PacifiCorp field personnel were put on stand-by and local management coordinated with local fire officials to determine when assessments of Direct Testimony of Heidemarie C. Caswell

21 PAC/100 Caswell/ damage could commence. At 6:30 p.m. the Pacific Power Emergency Action Center (PPEAC) convened and immediately put all PacifiCorp line personnel, foresters, mechanics and logistics staff on stand-by in Klamath Falls, Medford and Grants Pass, Oregon, ready to be dispatched to the affected area upon determination of safe access to the area to assess the damage and restore service. Crews, equipment and support personnel were dispatched to the area on September 16 and restoration activities commenced in areas that could be accessed. Q. Did the Governor declare a state of emergency as a result of the Boles Fire? A. Yes. On September 17, 2014, Governor Brown declared a state of emergency due to the effects of the King and Boles fires. On October 8, 2014, PacifiCorp notified the Commission that it had activated its CEMA to record costs associated with the Boles Fire. Q. Has the Company previously sought recovery for the Boles Fire-related costs recorded in its CEMA? A. Yes. On March 27, 2015, the Company filed A to recover costs recorded in its CEMA, including costs for the Boles Fire through March 10, The Commission approved the Company s request in D Q. Over what time period were the Boles Fire-related costs that are included in this instant Application incurred? A. The costs included in this application were incurred after March 10, Q. What additional costs were incurred since March 10, 2015? A. A large neighborhood (many of which were residences) located in Weed, California was completely destroyed in the fire. Specifically, CalFire s incident report indicates Direct Testimony of Heidemarie C. Caswell

22 PAC/100 Caswell/ that the fire destroyed 157 single residences and 8 commercial structures and damaged 7 structures. Because it took the community an extended period of time to rebuild the destroyed structures, the installation of the replacement electric facilities was delayed. These efforts continued into 2016 and resulted in additional CEMAeligible costs incurred after March 10, Q. Does this conclude your direct testimony? A. Yes. Direct Testimony of Heidemarie C. Caswell

23 Application No Exhibit No. PAC/101 Witness: Heidemarie C. Caswell BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA PACIFICORP Exhibit Accompanying Direct Testimony of Heidemarie C. Caswell Duration of Customer Outages During January 2017 Winter Storms April 2017

24

25 Application No Exhibit No. PAC/102 Witness: Heidemarie C. Caswell BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA PACIFICORP Exhibit Accompanying Direct Testimony of Heidemarie C. Caswell Outages Experienced During January 2017 Winter Storms April 2017

26 Exh bit PAC/102 Page 1 of 1 Witness: Heidemarie C. Caswell PacifiCorp Outages Experienced During January 2017 Winter Storms

27 Application No Exhibit No. PAC/200 Witness: Shelley E. McCoy BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA PACIFICORP Direct Testimony of Shelley E. McCoy April 2017

28 TABLE OF CONTENTS PAC/200 McCoy/i WITNESS QUALIFICATIONS... 1 REVENUE REQUIREMENT... 2 ACCOUNTING PROCEDURES /17 Winter Storm Costs... 5 Drought-related Fire Hazard Mitigation Efforts Boles Fire Costs... 7 REVISED PROTOCOL... 8 RATE SPREAD AND SURCHARGE... 8 ATTACHED EXHIBITS Exhibit PAC/201 Total Revenue Requirement Exhibit PAC/202 Summary of Expenditures Exhibit PAC/203 Proposed Rate Spread and Rates

29 PAC/200 McCoy/ WITNESS QUALIFICATIONS Q. Please state your name, business address, and present position with PacifiCorp (Company). A. My name is Shelley E. McCoy, and my business address is 825 NE Multnomah Street, Suite 2000, Portland, OR I am currently employed as the Manager of Revenue Requirement for the Company. Q. Please describe your education and business experience. A. I earned my Bachelor of Science degree in Accounting from Portland State University in In addition to my formal education, I have attended several utility accounting, ratemaking, and leadership seminars and courses. I have been employed by the Company since November of My past responsibilities have included general and regulatory accounting, budgeting, forecasting, and reporting. Q. What are your responsibilities as Manager of Revenue Requirement? A. My primary responsibilities include overseeing the calculation of the Company s revenue requirement and the preparation of various regulatory filings in Washington, Oregon, and California. I am also responsible for the calculation and reporting of the Company s regulated earnings and the application of the inter-jurisdictional cost allocation methodologies. Q. Have you testified in previous regulatory proceedings? A. Yes. I provided testimony before the Washington Utilities and Transportation Commission in the Company s most recent rate filing, Docket No. UE Direct Testimony of Shelley E. McCoy

30 PAC/200 McCoy/ Q. What is the purpose of your testimony? A. The purpose of my testimony is to describe the calculation of the Company s California-allocated revenue requirement associated with the following Catastrophic Event Memorandum Account (CEMA) events: (i) damage to the Company s utility facilities resulting from the 2016/2017 winter storms in northern California, (ii) drought-related fire mitigation measures, and (iii) the 2014 Boles Fire (collectively, the CEMA Events ). Specifically, I provide testimony on the following matters: The calculation of the $3.2 million revenue increase requested in this application required for the Company to recover its California-allocated revenue requirement associated with the costs incurred as a result of the CEMA Events. A description of the accounting procedures and costs incurred as a result of the CEMA Events. A brief description of the Revised Protocol allocation methodology applied in this proceeding in determining the California-allocated revenue requirement. A description of the proposed rate spread and surcharge. REVENUE REQUIREMENT Q. Please describe how the Company developed the revenue requirement in this application. A. The methodology and costs used to calculate the revenue requirement for this filing are consistent with the Company s prior CEMA applications that were audited and approved by the California Public Utilities Commission (Commission). The calculation was developed beginning with actual cost data from the Company s Direct Testimony of Shelley E. McCoy

31 PAC/200 McCoy/ accounting system associated with the CEMA Events. These cost components include distribution and transmission capital investments, associated depreciation expense, and distribution and transmission operation and maintenance (O&M) expenses. In addition, franchise taxes and bad debt expense associated with the revenue increase were included based on the percentages included in PacifiCorp s 2009 rate case filing, Application (A.) Page 1 of Exhibit PAC/201 reflects the total revenue requirement impact of these costs on a total-company basis and as allocated to the Company s California jurisdiction. Q. How has the Company calculated the return on rate base and depreciation expense included in the revenue requirement calculation? A. The return on rate base is calculated using the Company s current authorized capital structure and costs applied to the April 2017 average net plant. Page 3 of Exhibit PAC/201 reflects the monthly plant balances. Depreciation expense has been calculated by applying the Company s composite California depreciation rate to the plant balances. Q. Are there any considerations to possible insurance recovery offsets to the amounts requested in this application? A. No. In 2011, the Company s captive insurance policy expired. Currently, the Company s insurance policy has deductibles set at $10 million. The Company does not anticipate any insurance recovery for the expenses incurred as the result of the events discussed in this application because they are below the Company s deductible. Direct Testimony of Shelley E. McCoy

32 PAC/200 McCoy/ Q. Has the Company included associated carrying charges in this application? A. No. The Company has chosen not to include carrying charges in this application. ACCOUNTING PROCEDURES Q. How did PacifiCorp account for costs related to the CEMA Events? A. When crews are dispatched to respond to a new event, clerks at the district office set up new work orders to record both capital and expense costs related to distribution and transmission repairs. As work progresses and additional resources are needed, additional work orders are created to cover resources such as dispatchers and call center personnel. These orders are centrally combined into an order group so that related costs can be gathered and monitored on a total level as well as on each of the category levels. All work is charged to the appropriate work orders by the personnel involved, as are materials, contractors, and other costs. Only those costs associated with the event are charged to the work orders. Q. How does the Company ensure that all costs booked to these work orders are incremental and accurate? A. The Company s operating budgets are developed based on project work to be completed related to normal business operations. Recovery from these and other extraordinary events are not included in these budgets. Therefore, most costs related to these events are considered incremental and are tracked through separate work orders as described above. Managers at the district office are responsible for reviewing and approving the charges and purchases to the work orders to ensure accuracy. To further isolate incremental costs, the Company excluded all regular time hours charged to the CEMA Events by California based employees and all Direct Testimony of Shelley E. McCoy

33 PAC/200 McCoy/ material handling charges from the Company s logistics department. 2016/2017 Winter Storm Costs Q. What costs were incurred by the Company related to the 2016/2017 winter storms? A. Through April 2017, total incremental storm related costs were $3,501,819. This total is comprised of $2,987,217 of expense and $514,602 of capital. These amounts are in line with the estimates the Company provided to the Commission s Executive Director Timothy Sullivan for storm related efforts in PacifiCorp s letter dated January 31, 2017, informing Mr. Sullivan that PacifiCorp had begun booking costs related to the northern California 2016/2017 winter storms in its CEMA account. A copy of this letter is provided in Appendix C to the application. Q. Please provide more detail related to the 2016/17 winter storm costs. A. Exhibit PAC/202 provides a detailed breakdown of the costs associated with the 2016/2017 winter storms. The costs are divided between capital and expense and are shown by major cost category. The labor category includes straight-time and overtime pay for non-california based employees and only overtime pay for California based line craft workers, estimators, general foremen, mechanics, and administration and warehouse personnel. The employee expenses category includes lodging, meals, and travel costs. The materials category includes all line materials, transformers, vehicle costs, and wood products used in recovery efforts. The contractor category includes all external contract labor, helicopter charters, tree trimmers, and flaggers. Direct Testimony of Shelley E. McCoy

34 PAC/200 McCoy/ Drought-related Fire Hazard Mitigation Efforts Q. What costs were incurred by the Company related to the drought-related fire hazard mitigation efforts? A. Total incremental drought-related fire hazard mitigation costs were $968,403 for the period March 11, 2015 through March 31, This total is comprised of $773,873 of expense and $194,530 of capital. In a letter dated March 18, 2014, PacifiCorp informed the Commission s then Executive Director Paul Clanon that PacifiCorp had begun booking costs related to the fire hazard mitigation efforts to its CEMA account. A copy of this letter is provided in Appendix C to the application. In subsequent annual reports submitted to the Commission s Executive Director Timothy Sullivan and Fadi Daye in the Safety Enforcement Division, PacifiCorp has continued to inform the Commission that it is booking these costs to its CEMA account. Q. Please provide more detail related to the drought-related fire hazard mitigation costs. A. Exhibit PAC/202 provides a detailed breakdown of the costs associated with the drought-related fire hazard mitigation efforts. The costs are divided between capital and expense and are shown by major cost category. The labor category includes straight-time and overtime pay for non-california based employees and only overtime pay for California based line craft workers, estimators, general foremen, mechanics, and administration and warehouse personnel. The employee expenses category includes lodging, meals, and travel costs. The materials category includes all line materials, transformers, vehicle costs, and wood products used in recovery efforts. Direct Testimony of Shelley E. McCoy

35 PAC/200 McCoy/ The contractor category includes all external contract labor, helicopter charters, tree trimmers, and flaggers. Q. Has the Company previously filed for recovery of costs related to the droughtrelated fire hazard mitigation efforts? A. Yes. The Company filed A to recover costs incurred through March 10, This application is requesting recovery of costs incurred from March 11, 2015 through March 31, Boles Fire Costs Q. What residual costs were incurred by the Company related to the 2014 Boles Fire? A. As described in the testimony of Ms. Heidemarie C. Caswell, after March 10, 2015, the Company incurred residual costs related to the 2014 Boles Fire. These costs are in addition to those previously requested in A filed by the Company in The total incremental fire related capital costs were $182,626. There were no residual expense items related to this fire. Q. Please provide more detail related to the 2014 Boles Fire costs. A. Exhibit PAC/202 provides a detailed breakdown of the costs associated with the 2014 Boles Fire. The labor category includes straight-time and overtime pay for non- California based employees and only overtime pay for California based line craft workers, estimators, general foremen, mechanics, and administration and warehouse personnel. The materials category includes all line materials, transformers, vehicle costs, and wood products used in recovery efforts. The contractor category includes all external contract labor, helicopter charters, tree trimmers, and flaggers. Direct Testimony of Shelley E. McCoy

36 PAC/200 McCoy/ REVISED PROTOCOL Q. What allocation methodology has been applied in the calculation of the California revenue requirement request in this application? A. The Company applied the Revised Protocol allocation method to calculate California s revenue requirement in this application. This allocation method is consistent with the method applied in the Company s 2005 and 2009 rate case filings and in the Company s Energy Cost Adjustment Clause (ECAC) and Post Test Year Adjustment Mechanism (PTAM) filings. The California percentages used in this filing are the same as the percentages included in A Using this allocation method, distribution O&M expense and capital investments, and associated depreciation expense are directly assigned to California operations. Transmission O&M expenses and capital investments, and associated depreciation expense are allocated using the System Generation (SG) factor, which is a weighted average of California s contribution to total system energy (25 percent) and total system peak (75 percent). As shown on page 1 of Exhibit PAC/201, using the allocation factors described above, the total company revenue requirement associated with CEMA Events has been allocated to the Company s California jurisdiction. RATE SPREAD AND SURCHARGE Q. How does the Company propose to spread the revenue requirement among the customer classes and collect the revenue requirement from customers? A. Because the costs included for recovery in this filing are primarily distributionrelated, PacifiCorp proposes to spread the revenue requirement to customer classes Direct Testimony of Shelley E. McCoy

37 PAC/200 McCoy/ based on each class share of distribution revenues. The Company proposes to collect revenues over two years through kilowatt-hour based charges in Schedule S-96, Surcharge to Recover Costs Recorded in Catastrophic Event Memorandum Account. The proposed rate spread and rates are provided in Exhibit PAC/203. Appendix A to the application contains proposed Schedule S-96, a statement of present and proposed rates, and a table showing the impact of the proposed rates on each customer schedule. The overall impact of the proposed rates is an increase of 1.3 percent. Q. How long will the proposed surcharge be in place? A. The surcharge will be effective until the full amount proposed in this filing is collected from ratepayers. This is expected to be approximately two years. This is not a permanent change to base rates. Q. Does this conclude your direct testimony? A. Yes. Direct Testimony of Shelley E. McCoy

38 Application No Exhibit No. PAC/201 Witness: Shelley E. McCoy BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF CALIFORNIA PACIFICORP Exhibit Accompanying Direct Testimony of Shelley E. McCoy Total Revenue Requirement April 2017

39 Exhibit PAC/201 Page 1 of 6 Witness: Shelley E. McCoy PacifiCorp California Catastrophic Event Memorandum Account (CEMA) Application Total Revenue Requirement Total Company Factor Factor % California Allocated Capital Investment - Distribution 317,397 CA % 317,397 Captial Investment - Transmission 192,977 SG % 3,388 Depreciation Reserve - Distribution (3,697) CA % (3,697) Depreciation Reserve - Transmission (3,852) SG % (68) Accumulated DIT Balance - Distribution (39,871) CA % (39,871) Accumulated DIT Balance -Transmission (38,761) SG % (681) Net Rate Base 424, , % 11.77% Pre-Tax Return on Rate Base 49,907 32,527 Distribution Expense 3,103,841 CA % 3,103,841 Transmission Expense 657,249 SG % 11,540 Subtotal of Operating Expenses 3,761,090 3,115,381 Depreciation Expense - Distribution 8,941 CA % 8,941 Depreciation Expense - Transmission 3,349 SG % 59 Rev. Reqt. Before Franchise Tax & Bad Debt 3,823,287 3,156,908 Franchise Taxes (1.3%) 50,621 41,798 Bad Debt Expense (0.513%) 19,985 16,502 Total Revenue Requirement 3,893,893 3,215,208 (1) (2)

40 Exhibit PAC/201 Page 2 of 6 Witness: Shelley E. McCoy California Catastrophic Event Memorandum Account (CEMA) Application Total Revenue Requirement Results of Operations Format 12 Months Ending April Months Ending April 2017 Results with Price Results with Price Total Company Price Change Change California Allocated Price Change Change Operating Revenues: General Business Revenues - 3,893,894 3,893,894-3,215,209 3,215,209 Total Operating Revenues - 3,893,894 3,893,894-3,215,209 Operating Expenses: Transmission 657,249 11,540 Distribution 3,103,841 3,103,841 Customer Accounting - 19,985 19,985-16,502 16,502 Customer Service & Info - - Total O&M Expenses 3,761,090 19,985 3,781,075 3,115,381 16,502 3,131,883 Depreciation 12,290 9,000 Taxes Other Than Income - 50,621 50,621-41,798 41,798 Income Taxes - Federal (1,298,636) 1,277,399 (21,237) (1,075,050) 1,054,755 (20,295) Income Taxes - State (176,463) 173,577 (2,886) (146,081) 143,324 (2,758) Deferred Income Taxes- Distribution 32,329 32,329 Deferred Income Taxes- Transmission 6, Total Operating Expenses: 2,336,803 1,521,582 3,858,385 1,935,688 1,256,378 3,192,066 Operating Rev For Return: (2,336,803) 2,372,312 35,509 (1,935,688) 1,958,831 23,143 Rate Base: Electric Plant In Service 510, ,785 Total Electric Plant: 510, , , ,785 Rate Base Deductions: Accum Prov For Deprec (7,549) (3,764) Accum Prov For Amort - - Accum Def Income Tax - Distribution (39,871) (39,871) Accum Def Income Tax - Transmission (38,761) (681) Unamortized ITC - - Customer Adv For Const - - Customer Service Deposits - - Misc Rate Base Deductions - - Total Rate Base Deductions (86,181) (86,181) (44,316) (44,316) Total Rate Base: 424, , , ,470 Return on Rate Base 8.37% 8.37% Return on Equity 10.60% 10.60% TAX CALCULATION: Operating Revenue (3,773,380) 3,823,288 49,908 (3,124,381) 3,156,910 32,529 Other Deductions Interest (AFUDC) Interest 11,969 11,969 7,801 7,801 Schedule "M" Additions 12,290 12,290 9,000 9,000 Schedule "M" Deductions 113, ,792 94,471 94,471 Income Before Tax (3,886,851) 3,823,288 (63,563) (3,217,652) 3,156,910 (60,743) State Income Taxes (176,463) 173,577 (2,886) (146,081) 143,324 (2,758) Oregon/Utah State Tax Credits Total State Income Taxes (176,463) 173,577 (2,886) (146,081) 143,324 (2,758) Taxable Income (3,710,388) 3,649,711 (60,677) (3,071,571) 3,013,586 (57,985) Federal Taxes Before Credits (1,298,636) 1,277,399 (21,237) (1,075,050) 1,054,755 (20,295) Renewable Energy Tax Credit Federal Income Taxes (1,298,636) 1,277,399 (21,237) (1,075,050) 1,054,755 (20,295) Operating Revenue 100% Operating Deductions Uncollectable Accounts 0.51% Taxes Other - Franchise Tax 1.30% Taxes Other - Revenue Tax 0.00% Taxes Other - Resource Supplier 0.00% Taxes Other - Gross Receipts 0.00% Sub-Total % State Income 4.54% 4.458% Sub-Total % Federal Income 35.00% % Net Operating Income %

41 Exhibit PAC/201 Page 3 of 6 Witness: Shelley E. McCoy PacifiCorp California Catastrophic Event Memorandum Account (CEMA) Application Capital Additions Distribution Total Capital Expense 654,572 Composite Depreciation Rate 2.893% Beginning Balance Additions Ending Balance Accumulated Depreciation Depreciation Expense Apr-15-1,289 1,289 (2) 2 May-15 1,289 1,943 3,232 (5) 5 Jun-15 3, ,131 (9) 9 Jul-15 4,131 12,550 16,681 (25) 25 Aug-15 16,681 2,396 19,077 (43) 43 Sep-15 19,077 96, ,210 (162) 162 Oct ,210 40, ,732 (327) 327 Nov ,732 2, ,205 (378) 378 Dec , ,760 (382) 382 Jan ,760 20, ,274 (407) 407 Feb , ,496 (432) 432 Mar , ,833 (433) 433 Apr , ,063 (435) 434 May ,063 1, ,350 (871) 436 Jun , ,816 (1,309) 438 Jul , ,920 (1,747) 438 Aug , ,159 (2,186) 439 Sep , ,191 (2,625) 439 Oct , ,297 (3,065) 439 Nov , ,436 (3,504) 440 Dec , ,626 (3,944) 440 Jan , , ,620 (4,856) 912 Feb ,620 56, ,540 (6,307) 1,452 Mar , ,572 (7,828) 1,520 Apr ,572 24, ,572 (9,377) 1, ME April , , ,572 (9,377) 8, Month Average Balance 317,397 (3,697) Transmission Total Capital Expense 237,186 Composite Depreciation Rate 1.748% Beginning Balance Additions Ending Balance Accumulated Depreciation Depreciation Expense Mar-15-8,438 8,438 (6) 6 Apr-15 8, ,625 (19) 12 May-15 8, ,331 (32) 13 Jun-15 9,331 2,451 11,783 (47) 15 Jul-15 11,783 18,109 29,891 (77) 30 Aug-15 29,891 70, ,606 (172) 95 Sep ,606 74, ,498 (374) 201 Oct ,498 4, ,551 (632) 259 Nov , ,551 (894) 262 Dec , ,873 (1,155) 262 Jan ,873 2, ,649 (1,419) 264 Feb , ,649 (1,686) 266 Mar , ,649 (1,952) 266 Apr , ,649 (2,218) 266 May , ,649 (2,484) 266 Jun , ,649 (2,750) 266 Jul , ,649 (3,016) 266 Aug , ,649 (3,282) 266 Sep ,649 1, ,204 (3,549) 267 Oct ,204 10, ,529 (3,825) 276 Nov , ,529 (4,108) 283 Dec , ,529 (4,392) 283 Jan ,529 1, ,111 (4,676) 285 Feb ,111 1, ,186 (4,963) 286 Mar , ,186 (5,250) 287 Apr ,186 40, ,186 (5,566) ME April , , ,186 (5,566) 3, Month Average Balance 192,977 (3,852)