ML19308A418

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Testimony in Response to Tx Utils Generating Co & Houston Lighting & Power First Set of Interrogatories
ML19308A418
Person / Time
Site: South Texas, Comanche Peak  Luminant icon.png
Issue date: 08/01/1979
From: Gross R
AFFILIATION NOT ASSIGNED
To:
Shared Package
ML19208C305 List:
References
E-7775, E-9101, NUDOCS 7909260294
Download: ML19308A418 (4)
v • d • e


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APPALACllIAN POWER COMPANY

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FPC DOCKET NOS. E-7775 & E-9101

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1Q PLFASE STATE YOUR NAME AND ADDRESS.

2 3 A My name is Robert M. Gross, Jr. My business address is 1000 4 Crescent Avenue, N.E. , Atlanta, Georgia 30309.

5 6Q UP \T IS YOUR EDUCATIONAL BACRGROLD.D?

7 8 A I graduated f rom Georgia Institute of Technology in 1965, receiving 9 the degree of Bachelor of Industrial Engineering. I also attended 10 Georgia State t'niversity and in 1971 received the degree of raster 11 of Eusiness Administration, majoring in finance.

12 13 Q PLEASE STATE YOUR PROFESSIONAL EXPERIEhCE.

14 15 A I have been employed by Southern Engineering Company of Geor:;ia for 16 approximately cight years. Daring this time I have been involved 1/ in the preparation of cost of service studies of investor-ouned 13 utilities, rural electric cooperatives and municipal systems and 19 have participated in sinolesale rate and retail electric consulting 20 assignments in 23 states. I an a registered professionat engineer 21 in the State of Georgia.

22 23 Q ILW2 YOU EVER TESTIFIED IN OTi!ER COS241SSION PROCEEDIHGS?

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2 ', A Yes, I 1: ave testified as a rate expert and cost of service uitness

( 26 be fore the State Co raission of Kentucky, Indiana, Michigan, Vermont 27 nnd Virginia. I have also testified before the Pederal Pouer Com-2S m. salon in e r ,ceedings involving the Mississippi 'ouct Cccocnv, TPC 29 Dacket ::o . E-/625; Central Vermant Public Service Corcoratio., FPC M Docket No. E-76S5; Annalachinn Power Comnany, FPC Docket No. E-7775; 31 Dr > Pop r Cornanv, FPC Docket No. E-7994; Gulf States Uti'.ities 32 Co.many, FPC Dachet No. E-8121; and Gulf Posmr Cemneny, I?C Docket

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33 No. E-3911.

34 35 Q BY Ullo'4 IS SOUTiiERN ENGINEERING COMPANY RETAINED IN THIS PROCEEDING?

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36 37 A ny Virginia Polytechnic Institute and State University (VPI).

38 39 Q WiiAT UAS YOUR ASSIGRIENT IN TilIS PROCEEDING?

40 41 A My assignnent was to revieu Appalachian Power Company's (APCO) direct 42 testimony, exhibits and other available information concerning its 43 filing of November 8, 1974 and June 23, 1975. I uas to consider the 44 appropriateness of APCO's proposed draft Service Agreement, specifi-45 cally Article 3.

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47 Q WOULD YOU ERIEFLY SUMMARIZE Tile CONCLUSIONS WilICII YOU llAVE REACllED 48 AS A RESULT OF YOUR ANALYSIS?

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1A Article 3 of APCO's proposed Service Agreement, in combintion with 2 the billing demand ratchet (50%) established in propose.d Rate Sche-3 dule "WS", acts to work an unreasonabic hardship on VtI. I have 4 therefore amended Articic 3 in VPI Exhibit (RMG-1) to change 5 the application of the ratchet from onc based on che maximum contract 6 demand commitment to one based on the actual previous peak load of 7 VPI. .

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9Q MR. CROSS, WOULD YOU PLEASE. DISCUSS Tile REASONS WHY YOU HAVE CIIANGED

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10 APCO'S PROPOSED IANGUAGE IN ARTICLE 3 0F THE FILED DRAW SERVICE 11 AGREEMENT.

12 13 A Yes. Articic 3 of APCO's proposed Service Agreement is as follows:

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15 The contract capacity reserved and contracted for by the Customer 16 is fixed at 30,000 kW. The Company shall not be required to supply 17 more than 30,000 kW provided, however, that if the requirements of 18 the Customer should exceed the maximum premissibic reservation of i 19 contract capacity, i.e. , 30,000 kW, or if the customer advises the 20 Company that it believes that its requirements vi11 in the futurc 21 cxceed the maximum permissibic reservation of contract capacity

22 of 30,000 kW, the parties shall meet. in attempt to negotiate the i 23 rate, terms and conditions under which such capacity in excess of 24 30,000 kW shall be supplied. Such negotiations shall not be deemed 25 a waiver by the Company of its right to make such filing uith any g 26 governmental authority or authoritics or regulatory agency having 27 jurisdiction in the premises of a rate schedule applicabic to 28 energy delivered in excess of the maximum permissibic reservation

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29 contract capacity of 30,000 kW or othemise to make any filing 30 permitted by Paragraph "5". In the event that Customer shall notify

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31 Company pursuant to Paragraph "14" hereof that Customer has ciccted 32 to terminate this Agreement in the manner provided in said Pcrc-33 graph "14", then in such event, there shall be no obligation on the 34 part of the Company to enter into the negotiations otherwise con-35 templated by this Paragraph.

36 37 The objectionabic feature of this language concerns the definition of 38 contract capacity. The Company fixes the amount of contract capacity

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39 at 30,000 kW. The Billing Demand Provision conteAned in proposed Rate 40 "WS" establishes the minimum monthly billing demand by multiplying a 41 507. ratchet times the defined contract capacity. In this case the 42 30,000 kW contract capacity established for VPI when multiplied by the 43 507. ratchet produces a minimum monthly billing demand of 15,000' kW.

44 VPI's present load on APCO's system fluctuates in a range of 15 to 20 45 megauatts. There is also some probability that VPI may add additional

( 46 scif-owned generation in the future thus reducing its requirements

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47 from APCO to a Icyc1 below 15 megawatts. It is obvious that the 15 48 ' megawatts minimum billing demand works an undue hardship on VPI by 49 catablishing an arbitrary minimum load requirement which is not related 50 to previous loads placed by VPI on APCO's system. Additionally, APCO t

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I has ut shown that the 15,000 kW minimum billing demand relates 2 to the investment that APCO wishes to protect in case of signi-3 ficant load reduction.

4 5 In recent negotiations uith APCO, in which I participated, APCO 6 has been primarily concerned with the establishment of a maximum 7 amount of capacity above which there would be no obligation to 8 provide additional power except through negotiations. APCO ad-9 vised VPI that the present transformation facilitics installed 10 to serve VPI uould not be of sufficient capacity to meet loads 11 in excess of thirty megawatts. Becuase of APCO's stated position 12 VPI agreed to the thirty megawatt contract capacity limitation in 13 the contract. In doing so, however, it was understood by all 14 parties present that the acceptance of a maximum not to exceed 15 amount of 30,000 kW would not tie VPI to an onerous minimum con-16 tract demand level arising through strict application of the 17 ratchet contained in Schedule "WS".

18 19 Q MR GROSS, DO YOU IIAVE AN EX1b. BIT THAT SliOWS YOUR PROPOSED CHANGES 20 IN THE COMPANY'S FILED CONTRACT CAPACITY PROVISION NO. 3?

21 22 A Yes. VPI Exhibit (RMG-1) contains my revisions to the Company's 23 Article 3 on contract capacity.

24 25 Q PLFASE EXPLAIN THIS EXHIBIT.

26 27 A VPI Exhibit (RMG-1) revises dhe Company's proposed langunge 28 concerning contract capacity by establiohing the contract ccpacity 29 for billing demand purnoses at a Icyc1 equal to the previous maxi-30 mum thirty-minute integrated demand established on VPI's system 31 less the total installed kW capacity (nmne plate rating) of VPI's 32 existing generating units. This provision provides that VEI's 33 uinimum billing demand obligation from APCO will be equal to 50%

34 of its previous maximum thirty-minute demand Icss the present capa-35 bility of VPI's scif-owned generation. The concept of establishing 36 the contract capacity for billing purposes on the basis of peah 37 syster load less scif-owned generation capability was actually 38 initiated by APCO in its Novmaber 8, 1974 filing with the Federal 39 Power Commission. Articic 3 of the proposed Service Agreement in 40 the November 8,1974 APC0 filing contained the follouing language:

41 42 For contract capacity reserved and contracted for by the Customer 43 for the first year of the term of this Agreement is fixed at 44 22,800 kW. For each succeeding year of the term of this Agree- 1 45 ment, the contr.z.ct capacity shall be adjusted automatically to 46 equal the difference, adjusted to the nearest 100 kW, between 47 the maximum thirty-minute kW demand established on the Custo-48 mer's system during the tena of this Agreenent up to the end 49 of the preceding contract year (which the Customer shall report g 50 in writing to the Company at the end of cach contract year) and

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1 1,800 kW; provided, however, that the contract capacity in 2 any year shall in no event be Icss than the highest contract 3 capacity reserve in any preceding year of the term of this 4 Agreemen t , nor shall it in any event be more than 30,000 kW 5 and the Company shall not be required to supply more than 6 30,000 kW. ..."

7 8 The 1,800 kW specified in this provision represents APCO's evalua-9 tion of the then-existing generating capability of VPI. The pro-10 posed language contained in VPI Exhibit (PJiG-1) is a refinement 11 of this same concept. I have climinated the initial contract amount 12 of 22,800 kW, since VPI may exceed it in the near future. Further-13 more to make the formula ficxible for variations, up or doun, in 14 VPI's generating capability, I have provided that VPI's previous 15 maximum system peak thirty-minute demand will be reduced by the 16 name plate generating capability of VPI's cicetric generating units 17 in service at the date of billing, before application of the ratchet.

18 I believe this language provides adequate ficxibility to protect the 19 stated interests of both parties.

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