Witness CCS – 1
BEFORE THE PUBLIC SERVICE COMMISSION OF UTAH
In the Matter of the Application of
PacifiCorp for Approval of an IRP-based
Avoided Cost Methodology for QF
Projects Larger than Three Megawatts
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Docket No. 03-035-14
SURREBUTTAL TESTIMONY OF
PHILIP HAYET
ON BEHALF OF
THE COMMITTEE OF CONSUMER SERVICES
September 19, 2005
CCS-1D Philip Hayet
1
Q.
03-035-14
Page 2
ARE YOU THE SAME PHILIP HAYET THAT FILED DIRECT AND
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REBUTTAL TESTIMONY IN THIS DOCKET ON BEHALF OF THE
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COMMITTEE OF CONSUMER SERVICES?
4
A.
Yes I am.
5
Q.
WHAT IS THE PURPOSE OF YOUR SURREBUTTAL TESTIMONY?
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A.
I provide support concerning an issue that Division witness Andrea Coon
discussed in her rebuttal testimony.
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8
Q.
93% OF PALO VERDE TO PRICE AVOIDED ENERGY COSTS IN
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CERTAIN PERIODS.
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PLEASE EXPLAIN MS. COON’S CONCERN REGARDING THE USE OF
A.
In Ms. Coon’s rebuttal testimony, she explained, “Several Parties have
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suggested that energy payments during certain periods should remain
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linked at 93% of Palo Verde as allowed in the stipulation. The Division is
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not comfortable with continuing this practice.”1 Ms. Coon explains that
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based on evidence that the Division evaluated, “Palo Verde may still
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overestimate the avoided cost.”2
17
Q.
DOES THE COMMITTEE SHARE THE SAME CONCERN?
18
A.
Yes, it does.
The Committee believes that avoided energy costs
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computed based on the energy costs of a combined cycle combustion
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turbine (“CCCT”) unit for the high load hours, and 93% of Palo Verde for
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the low load hours, fails to accurately reflect PacifiCorp’s avoided energy
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costs. In my direct testimony, I explained that the most accurate way to
1
Ms. Coon Rebuttal Testimony, Page 3.
CCS-1D Philip Hayet
03-035-14
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1
capture the complex interaction of different resources used to serve
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PacifiCorp’s load is to use production cost modeling incorporated within
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the DRR approach.
4
Q.
IS THERE ANY OTHER EVIDENCE TO SUGGEST THAT 93% OF PALO
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VERDE SHOULD NOT BE RELIED ON FOR PACIFICORP’S AVOIDED
6
ENERGY COSTS DURING LOW LOAD HOURS?
7
A.
Yes, besides the evidence that Ms. Coon provides, the Committee relies
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on a Division data response to UAE, DR 2.2, and an exhibit to Mr.
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Townsend’s direct testimony, Exhibit TNT-2, p.1.
10
Q.
DEMONSTRATE?
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12
WHAT DOES THE DIVISION DATA RESPONSE TO UAE DR 2.2
A.
Table 1 below contains historic Palo Verde data for the period May 1997
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to August 2004. I present a portion of that data in Table 1, and for each
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month I have computed the ratio of off-peak to on-peak Palo Verde energy
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prices for both firm and non-firm energy. I have also computed averages
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over the entire period. For the energy with the highest ratio, non-firm
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energy, the table shows that off-peak energy averages only 65.8% of the
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price of on-peak energy. This demonstrates that there is a substantial
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difference between off-peak and on-peak energy pricing.
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2
Ms. Coon Rebuttal Testimony, Page 4.
CCS-1D Philip Hayet
03-035-14
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Table 1
DIVISION RESPONSE TO UAE DR2.2
PALO VERDE HISTORIC PRICES
Date
Firm
On-Peak
Firm
Off-Peak
Non Firm
On-Peak
Non Firm
Off-Peak
May-97
Jun-97
Jul-97
Aug-97
Sep-97
Oct-97
Nov-97
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:
:
Sep-03
Oct-03
Nov-03
Dec-03
Jan-04
Feb-04
Mar-04
Apr-04
May-04
Jun-04
Jul-04
Aug-04
29.36
25.37
35.10
35.52
42.56
27.24
24.19
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45.22
45.99
37.99
45.56
46.95
43.87
42.35
46.93
53.98
52.30
62.71
53.02
9.09
8.61
9.99
15.58
16.74
12.27
14.63
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32.27
29.04
28.58
32.85
33.72
36.79
31.35
33.30
36.62
31.59
37.43
35.11
22.36
18.19
26.16
30.52
33.42
24.37
21.89
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41.48
42.45
36.47
40.38
43.72
40.07
41.37
40.60
47.84
43.05
49.58
45.88
10.54
9.95
11.88
13.63
17.16
14.63
15.13
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26.03
26.64
27.54
36.09
33.48
36.25
36.42
36.30
36.25
29.71
32.55
29.13
Ratio Off-Peak to On-Peak Energy Prices
Average
Firm Energy
Non-Firm Energy
31.0%
33.9%
28.5%
43.9%
39.3%
45.1%
60.5%
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71.4%
63.2%
75.2%
72.1%
71.8%
83.9%
74.0%
70.9%
67.8%
60.4%
59.7%
66.2%
47.1%
54.7%
45.4%
44.7%
51.4%
60.0%
69.1%
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62.7%
62.8%
75.5%
89.4%
76.6%
90.5%
88.0%
89.4%
75.8%
69.0%
65.7%
63.5%
56.9%
65.8%
1
However, UAE’s proxy approach, a portion of which is shown in Table 2
2
below, determines that off-peak energy is approximately equal to 91% of
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on-peak energy. UAE’s proxy method, based on 93% of Palo Verde for
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off-peak prices, clearly does not reflect the difference in prices that exists
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between on-peak and off-peak periods.3
3
See Exhibit TNT-2, p.1 to Mr. Townsend’s direct testimony
CCS-1D Philip Hayet
03-035-14
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TABLE 2
Total Avoided Cost Price Using UAE's Proposed Proxy Model Method
HLH % of Hours
LLH % of Hours
1
Q.
57.00%
43.00%
Year
Year
HLH Energy
Costs
($/MWh)
LLH Energy
Costs
($/MWh)
Total Energy
Costs
($/MWh)
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
$56.99
$52.05
$48.25
$45.48
$42.69
$44.63
$50.19
$52.91
$53.24
$53.96
$55.21
$56.48
$57.92
$59.42
$60.99
$62.57
$64.21
$65.86
$67.50
$69.02
$45.71
$42.74
$39.72
$37.62
$35.76
$39.08
$45.00
$49.29
$50.20
$51.99
$53.73
$56.09
$57.92
$59.42
$60.99
$62.57
$64.21
$65.86
$67.50
$69.02
$52.14
$48.05
$44.58
$42.10
$39.71
$42.24
$47.96
$51.35
$51.93
$53.11
$54.57
$56.31
$57.92
$59.42
$60.99
$62.57
$64.21
$65.86
$67.50
$69.02
20 Year Levelized Price
$53.70
$49.02
$51.69
Low Load Hour Price as a
Percent of High Load Hour
Price
91.29%
BESIDES
DEMONSTRATING
THAT
THE
PROXY
METHOD
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PRODUCES NON-INTUITIVE AVOIDED ENERGY COST RESULTS IN
3
LOW LOAD HOURS, HAS THE COMMITTEE DEMONSTRATED THERE
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ARE ALSO PROBLEMS WITH HIGH LOAD HOUR RESULTS?
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6
A.
Yes we have. The Committee demonstrated in its Rebuttal Testimony that
UAE’s proposal to use a CCCT-based energy price to compute avoided
CCS-1D Philip Hayet
03-035-14
Page 6
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energy costs in high load hours would overstate PacifiCorp’s high load
2
hour avoided energy prices.
3
Q.
THIS
TESTIMONY?
4
5
DOES
A.
Yes, it does.
CONCLUDE
YOUR
PREFILED
SURREBUTTAL