Colorado PUC E-Filings System

Transcription

1 BEFORE THE PUBLIC UTILITIES COMMISSION OF THE STATE OF COLORADO DOCKET NO. 1A E IN THE MATTER OF THE APPLICATION OF BLACK HILLS/COLORADO ELECTRIC UTILITY COMPANY, LP, FOR A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY TO CONSTRUCT A POWER PLANT CONSISTING OF A 0 MW SIMPLE CYCLE COMBUSTION TURBINE AND ASSOCIATED BALANCE OF PLANT PURSUANT TO COMMISSION DECISION NO. C1-1. Colorado PUC E-Filings System DIRECT TESTIMONY OF CHRISTOPHER BURKE ON BEHALF OF BLACK HILLS/COLORADO ELECTRIC UTILITY COMPANY, LP April 0, 01

2 DIRECT TESTIMONY OF CHRISTOPHER BURKE I. INTRODUCTION AND QUALIFICATIONS Q. PLEASE STATE YOUR NAME AND BUSINESS ADDRESS. A. My name is Christopher Burke. My business address is S. Victoria Ave, Pueblo, Colorado 0. Q. BY WHOM ARE YOU EMPLOYED AND IN WHAT CAPACITY? A. I am employed by Black Hills/Colorado Electric Utility Company, LP (the Company or Black Hills) as the Vice President Colorado Utility Operations. Q. ON WHOSE BEHALF ARE YOU TESTIFYING? A. I am testifying on behalf of Black Hills. Q. WHAT ARE YOUR DUTIES AND RESPONSIBILITIES AS VICE PRESIDENT COLORADO UTILITY OPERATIONS? A. I am responsible for the financial and overall operational performance of the Company s electric and gas operations in the state of Colorado. My employment history and expertise is provided in Appendix A. Q. HAVE YOU PREVIOUSLY TESTIFIED BEFORE THIS COMMISSION? A. Yes. 1 II. PURPOSE OF TESTIMONY 1 Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY? 1

3 A. The purpose of my testimony is to describe Black Hills service territory, its current generating resources, its load growth, and the local impact of an LM000 1 turbine addition at the existing Pueblo Airport Generating Station (PAGS). Q. WHAT IS YOUR RECOMMENDATION? A. Based on load growth, energy usage and local economic impact, I recommend that the Commission approve the proposed build of the LM000 as proposed in this docket. I believe that the addition of this resource is consistent with the Black Hills Clean Air-Clean Jobs Act (CACJA) Plan and will result in a reasonable rate impact for our customers. III. BLACK HILLS OVERVIEW Q. PLEASE DESCRIBE BLACK HILLS AND ITS SERVICE TERRITORY. A. The Company provides electric utility service to 1 communities in Colorado with approximately,00 customers. This service territory encompasses all or part of Crowley, Custer, El Paso, Fremont, Otero, Pueblo, and Teller counties. Our electric generating resources are located in each of the three largest communities served within this service territory: Pueblo, Cañon City, and Rocky Ford. 1 IV. CURRENT GENERATING RESOURCES 1 0 Q. PLEASE DESCRIBE THE COMPANY S CURRENT GENERATING RESOURCES. 1 All references herein to LM000 or General Electric LM000 or GE LM000 do not represent a commitment to purchase; but instead, represent a proposal for a 0 MW simple-cycle, aeroderivative gas-fired turbine that will be defined by the Company s vendor selection process.

4 A. Black Hills owns seven generating facilities located within its certificated service territory. Of these facilities, only one is coal-fired, the Clark Station in Cañon City. That facility is scheduled to retire by the end of 01. The Clark Station is a dual-unit, coal-fired plant with MW of nameplate capacity, and is scheduled to retire by December 1, 01. This complies with the Commission s Decision issued pursuant to the CACJA (see Decision No. C-, in Docket No. M-E). Decision No. R1- granted a CPCN to decommission Clark Station by 01. The remaining six plants owned by Black Hills are: (1) PAGS, with two GE LMS0 gas turbines built in 0 and operational in January 01; () the gas-fired Pueblo #, a steam turbine built in ; () the gas-fired Pueblo #, a steam turbine built in 1; () the oil-fired Pueblo Airport Industrial Park (AIP) Diesel units built in 001; () the Pueblo Diesels #1- built in 1; and, () the Rocky Ford Diesels #1- built in 1. A summary of the seven plants and nameplate capacity is provided below, in Table 1: 1

5 Table 1 Generating Plant Fuel Location 1 Pueblo Airport Generating Station (PAGS), Units #1- Natural Gas Nameplate Capacity MW Year Installed Pueblo 0 W.N. Clark (Clark Station), Units #1- (retires Dec. 1, 01) Coal Cañon City 0 1, 1 Pueblo # (steam turbine) Natural Gas Pueblo, 001 Pueblo # (steam turbine) Natural Gas Pueblo 0 1 AIP Diesel Oil Pueblo 001 Diesel #1- Oil Pueblo 1 Diesel #1- Oil Rocky Ford 1 Total V. LOAD GROWTH AND DSM PROGRAMS The replacement capacity of Clark Station is MW as referenced in Black Hills Clean Air- Clean Jobs Act Plan (Docket No. M-E). The actual capacity is now 0 MW because one set of cables was removed from each phase of Clark Station Unit 1 in 0, reducing the unit s capability from 1 MW to 1 MW.

6 1 1 Q. WHAT IS YOUR CHARACTERIZATION OF LOAD GROWTH WITHIN THE BLACK HILLS SERVICE TERRITORY? A. As actual load growth projections are described in detail in the Black Hills 01 ERP filing, I would like to describe our load growth from a very important, qualitative perspective. At my direction, our Director of Energy Services works regularly and closely with our industrial customers to ensure that each customer s load accretions are well-understood. Based on this process, we are confident that our projections for growth within our service territory are as accurate as they can possibly be. Our annual (summer) peak has increased in four of the past five years, and in June of 01, Black Hills customer loads set a new summer peak of 00 MW. These annual peaks are outlined in Table below. Table Year Date New System Peak Demand MW Annual Increase 01 Tuesday, June 00 % 0 Monday, July 1 % 0 Monday, July 1 % 00 Friday, August We expect future peak demand growth to continue based on our understanding of customer load accretions. As a consequence, this consistently increasing peak

7 load growth underscores the need for firm, cost-effective generating resources to meet future peak demand. The LMS0 turbines at PAGS are utility-owned peaking resources designed for this purpose, and the LM000 turbine addition, proposed in this CPCN proceeding and identified contemporaneously as a resource option in our 01 ERP, will also serve as a utility-owned peaking resource for new loads beginning in 01. Over the short-term, and depending upon market conditions, wholesale power markets can present economically viable supplies of capacity for customers. Q. WHAT PROGRAMS IMPACT THE USE OF RESOURCES? A. It is important to note the role played by demand-side management (DSM) in our resource planning efforts. Conceptually, effective DSM means that a kilowatt of capacity saved by our customers translates to a kilowatt of capacity that does not need to be produced or acquired by the Black Hills on behalf of our customers. With this backdrop in mind, the Black Hills DSM Program has achieved positive results since its inception. In 00, the Commission mandated that Black Hills implement a DSM program that would document savings of % of the 00 total kwh usage by 01. That goal amounts to savings of 1,00 MWh. The program has exceeded relevant benchmarks for the past two years, and at the current trajectory, the total savings is projected to be,00 MWh by the end of the 01 program year. More detailed information concerning our DSM program can be found in the Company s multi-year Demand Side Management Plan filed with the Commission in Docket 1A-0E.

8 VI. LOCAL IMPACT OF LM000 TURBINE ADDITION Q. WHAT IS THE IMPACT TO THE LOCAL ECONOMY OF THE LM000 TURBINE ADDITION AT PAGS? A. Development of an LM000 turbine addition at PAGS would benefit the local economy in our service territory. As discussed in detail in the testimony of Dr. Mary Jo Kealy, the project would create construction jobs on average for a 1- month duration. Of that total, about 0-0% will be local workers. It would also create a permanent, full-time career opportunity for a technician. All things being equal, Black Hills would prefer to develop projects within rather than outside its service territory, because of the favorable impact such projects have on the local economy. Additionally, this project would raise property tax revenues for Pueblo County. As an example, the increased property tax revenue from PAGS was substantial enough to eliminate the need for a local Pueblo school district to issue new debt to fund a significant school expansion and upgrade project as reported in The Pueblo Chieftain on September, 01 in an article titled Bond issue gets Black Hills boost. Such a local economic benefit would have been lost had this capacity been sourced via a power purchase agreement rather than as a locallydeveloped project. I would anticipate that local development of the LM000 resource recommended in our accompanying ERP would produce commensurate benefits for the local Pueblo economy. Constructing the project will involve local and non-local expenditures for materials, equipment and labor and will generate additional sales and use tax

9 revenues for the state, county, and city. In addition, the local expenditures will be a direct benefit to the local economy. More detailed discussion of the local economic impact can be found within the testimony and exhibit of Dr. Mary Jo Kealy. VII. CONCLUSION 1 1 Q. WHAT IS YOUR RECOMMENDATION? A. I recommend that the Commission issue a CPCN for the construction of an LM000 at PAGS to replace the utility s capacity that will be retired this year pursuant to the CACJA. The development of this LM000 project will provide positive benefits to the local economy and generate additional property, sales and use tax revenues. Q. DOES THIS CONCLUDE YOUR TESTIMONY? A. Yes.

10 Appendix A Statement of Qualifications Christopher Burke Mr. Burke graduated from the United States Naval Academy in May, 1, with a Bachelor of Science degree in General Engineering. He subsequently completed Naval Nuclear Propulsion Training and served as a Nuclear Engineer and Surface Warfare Officer aboard nuclear powered warships. He left active duty military service in September of 1 to commence graduate studies. In May, 1, Mr. Burke completed graduate studies at the Colgate Darden Graduate School of Business and the University of Virginia School of Law, and received joint Masters of Business Administration and Juris Doctorate degrees. Mr. Burke has 1 years work experience. Upon graduation in 1, he began work as a management consultant for A.T. Kearney in Alexandria, VA, where he provided consulting services to Fortune 00 clients in manufacturing and supply chain operations. Subsequently, he worked in similar roles for an e-procurement start-up company, Campbell Soup Company, and America Online. Mr. Burke joined the utility industry in September, 00, as the plant manager of Alliant Energy s 0 MW coal-fired generation station in Ottumwa, IA. From 00 to 00, he worked as the Director of Business and Financial Performance for the Generation Business Unit in Cedar Rapids, IA, where he provided leadership over O&M and capital budgeting; strategic planning; monthly closing processes; rate case support; regulatory reporting; performance management including EBIT; competitive benchmarking efforts; cost accountability, financial performance improvement initiatives; and business decision support. From 00 to 0, Mr. Burke worked as Director of Energy Market Operations in Madison, WI, where he oversaw the corporation s operational performance within the Midwest Independent System Operator (MISO) and Pennsylvania-Jersey-Maryland (PJM) electric power markets, including asset 1

11 optimization strategies, fuel clause cost performance and decision support systems integration. Mr. Burke left Alliant Energy in April 0 to join Black Hills Corporation and he assumed his current role, Vice President Colorado Utility Operations, in May 0.