before the public utilities commission of nevada...sierra is a nevada corporation and wholly-owned...

SIERRA PACIFIC POWER COMPANY d/b/a NV Energy

BEFORE THE

PUBLIC UTILITIES COMMISSION OF NEVADA

) IN THE MATTER of the Petition of SIERRA ) PACIFIC POWER COMPANY, filed on behalf ) of its electric and natural gas divisions, pursuant ) to Directive Paragraph 10 from the Order in ) consolidated Docket Nos. 13-06002, 13-06003, ) Docket No. 14-05_____ and 13-06004, seeking adjudication of the support ) for cost recovery for the Advanced Service ) Delivery Project and Nevada Dynamic Pricing ) Trial. ) __________________________________________ )

Volume 1 of 1

Transmittal Letter Table of Contents

Petition Exhibit 1 - H-CERT-DRMS, NDPT

Exhibit 2 - CERT NVE-SPPC E Exhibit 3 - CERT NVE-SPPC G

Exhibit 4 - Draft Notice Prepared Testimony of:

Shawn Elicegui Gary Smith

Shane Hendricks Pat Egan

Certificate of Service

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Transmittal Letter

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May 2, 2014

Ms. Breanne Potter Assistant Commission Secretary Public Utilities Commission of Nevada 1150 East William Street Carson City, Nevada 89701-3109

RE: Sierra Pacific Power Company d/b/a NV Energy’s Petition to Adjudicate Advanced Service Delivery Cost Recovery; Docket No. 14-05___

Dear Ms. Potter:

Enclosed for filing please find the attached USB Flash Drive electronic device, which contains a Petition to Adjudicate Advanced Service Delivery (“ASD”) Cost Recovery made by and on behalf of Sierra Pacific Power Company d/b/a NV Energy (“Sierra”). This filing is being made concurrently with Nevada Power’s general rate filing, pursuant to Directive Paragraph 10 of the Modified Final Order in Docket No. 13-06002.

The entire filing is contained in a single volume that contains:

Petition; Petition Exhibit 1, which sets forth the costs of the demand response and Nevada Dynamic Pricing Trial Petition Exhibit 2, which sets forth the cost of the ASD program allocable to Sierra’s electric division as of May 31, 2014 Petition Exhibit 3, which sets forth the cost of the ASD program allocable to Sierra’s gas division as of May 31, 2014 Petition Exhibit 4, draft notice Prepared Testimony of Shawn Elicegui Prepared Testimony of Gary Smith Prepared Testimony of Shane Hendricks Prepared Testimony of Pat Egan

There is no confidential material included in this filing. Should you have any questions regarding this filing, please contact me at (775) 834-5694 or [email protected].

Respectfully submitted,

/s/Elizabeth Elliot Elizabeth Elliot Associate General Counsel

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Table of Contents

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Sierra Pacific Power Company d/b/a NV Energy

Volume 1 of 1

Table of Contents Page 1 of 1

Page Description No.

Transmittal Letter 2Table of Contents 4Petition 6Exhibit 1 – H-CERT-DRMS, NDPT 12Exhibit 2 – CERT-NVE-SPPC E 14Exhibit 3 – CERT-NVE-SPPC G 16Exhibit 4 – Draft Notice 18Prepared Testimony of: 21

Shawn Elicegui 22Gary Smith 28Shane Hendricks 137Pat Egan 290

Certificate of Service 314

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Petition

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BEFORE THE PUBLIC UTILITIES COMMISSION OF NEVADA

IN THE MATTER of the Petition of SIERRA )PACIFIC POWER COMPANY, filed on behalf )of its electric and natural gas divisions, pursuant )to Directive Paragraph 10 from the Order in )consolidated Docket Nos. 13-06002, 13-06003, )and 13-06004, seeking adjudication of the support )for cost recovery for the Advanced Service )Delivery Project and Nevada Dynamic Pricing )Trial. /

Docket No. 14-05___

Nevada Power Com

pany

and Sierra Pacific Power Com

pany

d/b/a NV Energy

PETITION TO ADJUDICATEADVANCE SERVICE DELIVERY COSTS

Sierra Pacific Power Company, d/b/a NV Energy (“Sierra” or “the Company”),

hereby Petitions the Public Utilities Commission of Nevada seeking the adjudication of

support for costs recovery for the Advanced Service Delivery (“ASD”) project and the

Nevada Dynamic Pricing Trial (“NDPT”). This Petition is filed pursuant to NAC § 703.540

and Directive Paragraph 10 of the Modified Final Order issued by the Commission in its

order in consolidated Docket Nos. 13-06002, 13-06003, and 13-06004. In Directive

Paragraph 10, the Commission ordered Sierra to take the following action:

In a combined general rates application with Nevada Power Companyd/b/a NV Energy or a companion filing with Nevada Power Companyd/b/a NV Energy's next general rates application, whichever comes first, Sierra Pacific Power Company d/b/a NV Energy shall provide thefollowing information in support of cost recovery for the Advanced Service Delivery Project and Nevada Dynamic Pricing Trial:

a) testimony and exhibits demonstrating that it was prudent for the gas division to participate in the Advanced Service Delivery Project;

b) an update to its 20-year life cycle analysis, including the costsand benefits of distribution planning function and outage management functions;

c) evidence regarding the costs and benefits of the distribution planning and outage management and their impacts on ratepayers;

d) an assignment of costs and benefits by company (Sierra PacificPower Company d/b/a NV Energy and Nevada Power Company d/b/aNV Energy) and by Sierra Pacific Power Company d/b/a NV Energy's gas and electric divisions;

e) documentation and evidence, with witness support, of the costsand benefits of the Advanced Service Delivery Project to Sierra PacificPower Company d/b/a NV Energy's gas division and how these costsand benefits relate to any costs and benefits of Sierra Pacific Power Company d/b/a NV Energy's electric division;

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f) the results of the Department of Energy final audit; and g) areport as to how employee transfers are accounted for in the life cycleanalysis.Emphasis added.

Concurrent with this Petition, Nevada Power Company d/b/a NV Energy (“Nevada

Power”) is filing a general rate application that includes cost recovery support for the ASD

program and NDPT. Consistent with Directive Paragraph 10 of the Modified Final Order,

that filing addresses each of the items listed above. Relevant excerpts from the Nevada

Power general rate application setting forth this information have been reproduced and

attached to this Petition. Sierra asks that the Commission consolidate this Petition with

Nevada Power’s general rate case for purposes of adjudicating the cost recovery support for

the ASD program and NDPT. Sierra asks that the Commission’s order regarding ASD

program and NDPT cost recovery be issued on a consolidated basis, and that Sierra be

allowed to implement the revenue requirement impacts of the consolidated order addressing

ASD program and NDPT cost recovery in its next general rate case filing.

I. AUTHORITY

A pleading praying for affirmative relief, other than an application, motion or

complaint, must be styled a “petition.” NAC §703.540(1). Sierra seeks affirmative relief in

the form of the adjudication, along with Nevada Power, of the support for cost recovery of

the ASD and NDPT costs directly charged and allocable to Sierra. This request for

affirmative relief was prescribed by the Commission in Directive Paragraph 10 of the

Modified Final Order (above) in consolidated Docket Nos. 13-06002, 13-06003, and 13-

06004.

II. THE PETITIONER

Sierra is a Nevada corporation and wholly-owned subsidiary of NV Energy, Inc.,

which since the December 19, 2013 close of the transaction approved by the Nevada

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Commission in Docket No. 13-07021, is an indirect subsidiary of MEHC. Sierra is engaged

in providing electric service to the public in Carson City, Nevada and portions of Washoe,

Pershing, Humboldt, Lander, Elko, Mineral, Churchill, Nye, Esmeralda, Douglas, Storey

and Lyon Counties, Nevada pursuant to a certificate of public convenience and necessity

issued by this Commission. Sierra is a “public utility” as that term is defined and used

pursuant to Chapter 704 of the Nevada Revised Statutes.

Sierra’s primary business office is located at 6100 Neil Road in Reno, Nevada. All

correspondence related to this Application should be transmitted to Nevada Power’s counsel

and to Nevada Power’s Manager of Regulatory Services, as set forth below:

Elizabeth Elliot Trevor Dillard Associate General Counsel Manager, Regulatory Services 6100 Neil Road 6100 Neil Road Reno, NV 89511 Reno, NV 89511 775-834-5694 775-834-5823 [email protected] [email protected]

III.

PETITION EXHIBITS

Sierra has included with this petition four exhibits:

Exhibit 1 is Schedule H-CERT-DRMS, NDPT which reflects Sierra’s NDPT related

Demand Side Management costs that were deferred from consideration in Sierra’s last

General Rate Case (Docket Nos. 13-06002, 13-6003, and 13-06004).

Exhibit 2 is Schedule CERT NVE-SPPC E, which reflects plant in service,

depreciation expense and tax effect of the allocated and jurisdictionalized costs as of May

31, 2014 of the ASD project to Sierra’s electric customers.

Exhibit 3 is Schedule CERT NVE-SPPC G, which reflects plant in service,

depreciation expense and tax effect of the allocated and jurisdictionalized costs as of May

31, 2014 of the ASD project to Sierra’s gas customers.

Exhibit 4 is a draft notice that satisfies the requirements of NAC §703.162.

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IV.

PREPARED DIRECT TESTIMONY

Sierra has included with its Petition and incorporates herein by reference the

following prepared direct testimony and exhibits of supporting and sponsoring witnesses.

This testimony provides an appropriate factual basis upon which the Commission may grant

the Petitioner’s request for affirmative relief.

Mr. Shawn M. Elicegui, Vice President of Regulation for NV Energy, sponsors

Sierra’s request to establish a regulatory asset account for the costs contained in Schedule

H-CERT-DRMS, NDPT.

Mr. Gary Smith (Director, Customer Energy Solutions) supports the costs of

investment in the NV Energize project. Mr. Smith also sponsors costs associated with the

Nevada Dynamic Pricing Trial as reflected on Schedule H-CERT-DRMS, NDPT.

Mr. Shane Hendricks (KPMG) supports an independent calculation of the benefits of

the NV Energize project.

Mr. Patrick S. Egan, Nevada Power’s Senior Vice President of Customer Operations

supports the numerous customer service tools and capabilities associated with full

implementation of NV Energize.

V.

REQUEST TO CONSOLIDATE

Sierra asks that this Petition be consolidated with the general rate application to be

filed contemporaneously with this Petition by Nevada Power, which among other requests

for relief, seeks adjudication of the support for cost recovery for the ASD project and

NDPT. Nevada Power’s general rate application and this request for consolidation are

consistent with the Commission’s Modified Final Order in Sierra’s most recent general rate

case, PUCN Docket No. 13-06002 et al.

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VI.

PRAYER

WHEREFORE, Sierra requests that the Commission:

(1) Accept this Petition as complying with Directive Paragraph 10 from the

Modified Final Order in consolidated Docket Nos. 13-06002, 06003, 06004; and

(2) Consolidate this Petition with Nevada Power’s general rate case filing for

purposes of adjudicating the cost recovery support for the ASD program and NDPT; and

(3) Render a consolidated order regarding the cost recovery for the ASD

program and NDPT; and

(4) Allow Sierra to reflect the revenue requirement impacts of the consolidated

order regarding the cost recovery for the ASD program and NDPT in its general rate case

filing for its electric division and natural gas division;

(5) Grant any specific waivers of Commission rules or regulations as are

necessary to grant Sierra’s requests as contained in this Petition;

(6) Grant any other requests as are specifically set forth in the testimony and

exhibits filed herewith, both those that are directly addressed and those that are not directly

addressed in this Petition;

(7) Grant such additional other relief as the Commission may deem appropriate

and necessary.

Dated this 2nd day of May, 2014.

Respectfully submitted,

SIERRA PACIFIC POWER COMPANY

/s/Elizabeth ElliotElizabeth Elliot Associate General Counsel Sierra Pacific Power Company6100 Neil Road Reno, NV 89511 775-834-5694 [email protected]

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Exhibit 1

H-CERT-DRMS, NDPT

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SIERRA PACIFIC POWER COMPANY

d/b/a NV Energy

CERTIFICATION ADJUSTMENT

DRMS AND NDPT COSTS REMOVED FROM

ENERGY EFFICIENCY PROGRAM COSTS BALANCES AND DEFERRED

FOR THE TEST PERIOD ENDED DECEMBER 31, 2013 AND

FOR THE CERTIFICATION PERIOD ENDED MAY 31, 2014

(IN THOUSANDS)

EXHIBIT - 1 SCHEDULE H-CERT-DRMS, NDPT

PAGE 1 OF 1

The Company is requesting that costs associated with the unrecovered costs of Demand Response Management System "DRMS" and Nevada Dynamic Pricing Trial "NDPT" programs be moved to a regulatory asset and a carrying charge be calculated on the balance. The compamy is requesting approval to include the balance with carrying charges in it's next general rate case revenue requirement.

( a ) (b) ( c ) (d) (e) (f) (g) (h)

Ln No 1 2 3 4

Description

DRMS and NDPT Costs

Move to a Regulatory Asset

Account

186332

182300

Recorded Estimated Balance 12/31/2013 5/31/2014 5/31/2014

1,799 $ 195$ 1,994 $

Adjustment

(1,994) $

1,994 $

Nevada Jurisdictional

Percentage Allocation

100.000% 1,994 $

Ln No 1 2 3 4

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Exhibit 2

CERT NVE-SPPC E

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EXHIBIT - 2 SIERRA PACIFIC POWER COMPANY SCHEDULE CERT-NVE-SPPC E

ELECTRIC DEPARTMENT PAGE 1 OF 1 d/b/a NV Energy

CERTIFICATION ADJUSTMENT NVENERGIZE COSTS - PLANT IN SERVICE

FOR THE TEST PERIOD ENDED DECEMBER 31, 2013 AND FOR THE CERTIFICATION PERIOD ENDING MAY 31, 2014

(IN THOUSANDS)

This schedule reflects Plant in Service, Accumulated Depreciation, Annualized Depreciation Expense and tax for NV Energize in rate base.

(a) (b) (c) (d) (e) (f) (g) (h) (i)

% of Common Electric Plant Nevada Ln Recorded Estimated Applicable to after Common Jurisdictional Ln No Description Account 12/31/2013 5/31/2014 Balance Electric Allocation Percentage Adjustment No 1 PLANT IN SERVICE - Account 101 1 2 2 3 NVEnergize - Electric Dist. Plant 370 $ 32,029 $ 33,197 $ 33,197 $ 33,197 100.000% $ 33,197 3 4 Electric General Plant 397 5,094 5,118 5,118 5,118 94.726% 4,848 4 5 Common General Plant 303, 370.1, 391.2 & 397 14,439 16,082 16,082 83.198% 13,380 100.000% 13,380 5 6 $ 51,561 $ 54,397 $ 54,397 $ 51,695 $ 51,425 6 7 7 8 ACCUMULATED PROVISION FOR 8 9 DEPRECIATION - Account 108 9 10 10 11 NVEnergize - Electric Dist. Plant 370 $ (1,535) $ (2,217) $ (2,217) $ (2,217) 100.000% $ (2,217) 11 12 Electric General Plant 397 (344) (472) (472) (472) 94.726% (447) 12 13 Common General Plant 303, 370.1, 391.2 & 397 (2,125) (2,782) (2,782) 83.198% (2,314) 100.000% (2,314) 13 14 $ (4,004) $ (5,471) $ (5,471) $ (5,003) $ (4,978) 14 15 15 16 ANNUALIZED DEPRECIATION EXPENSE 16 17 (CURRENT) - Account 403 17 18 18 19 NVEnergize - Electric Dist. Plant 370 $ 896 $ 1,666 $ 1,666 $ 1,666 100.000% $ 1,666 19 20 Electric General Plant 397 176 341 341 341 94.726% 323 20 21 Common General Plant 303, 370.1, 391.2 & 397 1,329 1,600 1,600 83.198% 1,331 100.000% 1,331 21 22 $ 2,401 $ 3,608 $ 3,608 $ 3,339 $ 3,320 22 23 23 24 24 25 ACCUMULATED DEFERED TAXES 282 $ (8,942) $ (9,143) $ (9,143) $ (9,143) 92.470% $ (8,454) 25 26 26 27 LIBERALIZED TAX DEPRECIATION M-1 $ 8,263 $ 4,627 $ 4,627 $ 4,627 92.463% $ 4,279 27 28 28 29 DEFERRED TAX EXPENSE 29 30 LIBERALIZED DEPRECIATION 410 $ 2,185 $ 476 $ 476 $ 451 92.463% $ 440 30

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Exhibit 3

CERT NVE-SPPC G

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EXHIBIT - 3 SIERRA PACIFIC POWER COMPANY SCHEDULE CERT-NVE-SPPC G

GAS DEPARTMENT PAGE 1 OF 1 d/b/a NV Energy

CERTIFICATION ADJUSTMENT NVENERGIZE COSTS - PLANT IN SERVICE

FOR THE TEST PERIOD ENDED DECEMBER 31, 2013 AND FOR THE CERTIFICATION PERIOD ENDING MAY 31, 2014

(IN THOUSANDS)

This schedule reflects Plant in Service, Accumulated Depreciation, Annualized Depreciation Expense and tax for NV Energize in rate base.

(a) (b) (c) (d) (e) (f) (g) (h) (i)

% of Common Gas Plant Nevada Ln Recorded Estimated Applicable to after Common Jurisdictional Ln No Description Account 12/31/2013 5/31/2014 Balance Gas Allocation Percentage Adjustment No 1 PLANT IN SERVICE - Account 101 1 2 2 3 NVEnergize - Gas Dist. Plant 381 $ 17,280 $ 17,351 $ 17,351 $ 17,351 100.000% $ 17,351 3 4 Common General Plant 303, 370.1, 391.2 & 397 14,439 16,082 16,082 16.802% 2,702 100.000% 2,702 4 5 $ 31,719 $ 33,433 $ 33,433 $ 20,053 $ 20,053 5 6 6 7 ACCUMULATED PROVISION FOR 7 8 DEPRECIATION - Account 108 8 9 9 10 NVEnergize - Gas Dist. Plant 381 $ (1,628) $ (2,047) $ (2,047) $ (2,047) 100.000% $ (2,047) 10 11 Common General Plant 303, 370.1, 391.2 & 397 (2,125) (2,782) (2,782) 16.802% (467) 100.000% (467) 11 12 $ (3,753) $ (4,829) $ (4,829) $ (2,514) $ (2,514) 12 13 13 14 ANNUALIZED DEPRECIATION EXPENSE 14 15 (CURRENT) - Account 403 15 16 16 17 NVEnergize - Gas Dist. Plant 381 $ 883 $ 1,010 $ 1,010 $ 1,010 100.000% $ 1,010 17 18 Common General Plant 303, 370.1, 391.2 & 397 1,329 1,600 1,600 16.802% 269 100.000% 269 18 19 $ 2,212 $ 2,610 $ 2,610 $ 1,279 $ 1,279 19 20 20 21 21 22 ACCUMULATED DEFERED TAXES 282 $ (923) $ (973) $ (973) $ (973) 100.000% $ 973 22 23 23 24 LIBERALIZED TAX DEPRECIATION M-1 $ 2,364 $ 1,608 $ 1,608 $ 1,608 100.0000% $ (1,608) 24 25 25 26 DEFERRED TAX EXPENSE 26 27 LIBERALIZED DEPRECIATION 410 $ 711 $ 239 $ 239 $ 115 100.0000% $ 115 27

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Exhibit 4

Draft Notice

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SIERRA PACIFIC POWER COMPANYD/B/A NV ENERGY

PETITION TO ADJUDICATE ADVANCE SERVICE DELEIVERY COSTS

DRAFT NOTICE Satisfying NAC §703.162

I. Include a title that describes the relief requested, or proceeding scheduled pursuant to Nevada Administrative Code (“NAC”) §703.160 (4)(a.)

IN THE MATTER of the Petition of SIERRA PACIFIC POWER COMPANY, filed on behalf of its electric and natural gas divisions, pursuant to Directive Paragraph 10 from the Order in consolidated DocketNos. 13-06002, 13-06003, and 13-06004, seeking adjudication of the support for cost recovery for the Advanced Service Delivery Project andNevada Dynamic Pricing Trial.

II. Include the name of the applicant, complainant, petitioner, or the name of the agent for same pursuant to NAC §703.160 (4)(b).

Sierra Pacific Power Company, d/b/a NV Energy

III. Include a paragraph with a brief description of the purpose of the filing or proceeding with an introductory statement in plain English understandable to a person of average knowledge and intelligence, that summarizes the relief requested or proceeding scheduled, AND its impact upon consumers, pursuant to NAC §703.160 (4)(c).

Sierra Pacific Power Company, d/b/a NV Energy (“Sierra” or “the Company”) is seeking the adjudication of support for costs recovery for the Advanced Service Delivery (“ASD”) project and the Nevada Dynamic Pricing Trial (“NDPT”). This filing is made in compliance with a Commission order directing Sierra to refile information regarding its ASD NDPT programs that could be viewed in conjunction with Nevada Power Company’s comparable information, before the costs associated with these projects can be recovered in rates. Sierra is asking that this petition be consolidated with Nevada Power Company’s pending general rate case docket and that the revenue requirement impacts be allowed to be implemented in Sierra’s next general rate case filing.

IV. A declaration by the applicant, petitioner, or complainant whether a consumer session is required by Nevada Revised Statute (“NRS”) §704.069 (1). NAC §703.162 (2)

This petition does not require a consumer session.

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http://www.leg.state.nv.us/NRS/NRS-704.html#NRS704Sec069

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V. If the draft notice pertains to a tariff filing, please include the tariff number and the section number(s) or schedule number(s) being revised.

Not applicable.

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Testimony

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Prepared Direct Testimony of

Shawn M. Elicegui

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Sierra Pacific Power Company d/b/a NV Energy ASD Cost Recovery Petition

Docket No. 14-05_____

PREPARED DIRECT TESTIMONY OF

Shawn M. Elicegui

1. Q. PLEASE STATE YOUR NAME, JOB TITLE, EMPLOYER AND

BUSINESS ADDRESS.

A. My name is Shawn M. Elicegui. I am the Vice President of Regulation for Sierra

Pacific Power Company d/b/a NV Energy (“Sierra”) and Nevada Power Company

d/b/a NV Energy (“Nevada Power” or the “Company” and, together with Sierra,

the “Companies”). My business address is 6100 Neil Road in Reno, Nevada. I

am filing testimony on behalf of Sierra.

2. Q. PLEASE DESCRIBE YOUR PROFESSIONAL BACKGROUND AND

EXPERIENCE.

A. I hold a Bachelor of Arts in Political Science and International Affairs from the

University of Nevada Reno. I earned a law degree from the University of

California, Davis. Before joining the Companies in 2009, I was a shareholder in

the law firm of Lionel Sawyer & Collins. Between 2009 and 2013, I served as an

Associate General Counsel for the Companies. I focused on matters related to

rate making and resource planning. More details regarding my professional

background and experience are set forth in my Statement of Qualifications,

included as Exhibit Elicegui-Direct 1.

Elicegui-DIRECT 123 of 315

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3. Q. HAVE YOU PREVIOUSLY TESTIFIED BEFORE THE PUBLIC

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UTILITIES COMMISSION OF NEVADA (“COMMISSION”)?

A. No. I filed prepared direct testimony in support of the Companies’ annual

deferred energy accounting adjustment proceedings, which were designated

Docket Nos. 14-02040, 12-02041 and 14-02042. In Docket No. 14-04024, I filed

testimony in support of the Companies’ amendments to their energy supply plans

to obtain permission to participate in the energy imbalance market operated by the

California Independent System Operator (“ISO”). Most recently, I filed prepared

direct testimony in support of the Company’s emission reduction and capacity

replacement plan filed on May 1, 2014, and support of the Company’s general

rate case filed concurrently with this filing.

4. Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY IN THIS

PROCEEDING?

A. I sponsor Sierra’s request to establish a regulatory asset account for the costs

contained in the Schedule H-CERT-DRMS, NDPT. In his prepared direct

testimony, Gary P. Smith explains that Sierra’s investment in the equipment,

systems and programs reflected in the schedule is reasonable.

5. Q. DO YOU SPONSOR ANY EXHIBITS TO YOUR TESTIMONY?

A. Yes. I sponsor the following exhibits:

Exhibit Elicegui-Direct-1, Statement of Qualifications

6. Q. PLEASE DESCRIBE SCHEDULE H-CERT-DRMS, NDPT.

A. Schedule H-CERT-DRMS, NDPT reflects the Nevada Dynamic Pricing Trial

(“NDPT”) related demand side management costs that were deferred from


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consideration in Sierra’s last General Rate Case (Docket Nos. 13-06002, 13-6003,

and 13-06004).

7. Q. PLEASE DESCRIBE THE REGULATORY TREATMENT FOR THE

OTHER ASD PROJECT COSTS REFLECTED IN SCHEDULE H-CERT-

DRMS, NDPT?.

A. Sierra was previously directed to defer ASD project costs for ratemaking purposes

and accumulate carrying charges monthly on the May 31, 2013, balance.

Currently, the costs reflected in Schedule H-CERT-DRMS, NDPT are recorded in

a subaccount of FERC Account 186. Sierra requests permission to move those

costs to FERC Account 182. Sierra will continue to record carrying charges on

the unamortized balance in the account and will request to include the balance in

rate base in its next general rate case.

8. Q. DOES THIS COMPLETE YOUR TESTIMONY?

A. Yes, it does.


Exhibit Elicegui-Direct-1 Page 1 of 1

QUALIFICATIONS OF WITNESS Shawn M. Elicegui

Vice President, Regulation

NV Energy

6100 Neil Rd.

Reno, NV 89511

EDUCATION University of California-Davis, King Hall School of Law

J.D., Order of the Coif – 1996 University of Nevada-Reno

B.A., Political Science and International Affairs, With Distinction – 1993

PROFESSIONAL EXPERIENCE NV ENERGY, Reno, Nevada Vice President Regulation, 2013 to Present Associate General Counsel, 2009-2013

As Vice President, Regulation, my responsibilities include overseeing the rates and regulatory team and the resource planning team. As an Associate General Counsel, I provided legal and regulatory advice to the Companies. I also represented the Companies in contested cases, investigations and rulemaking proceedings before the Public Utilities Commission of Nevada.

LIONEL, SAWYER & COLLINS, Reno, Nevada Shareholder, January 2005-2009 Associate, August 1997-December 2004

Represented corporate and individual clients in a variety of regulatory matters before local, state and federal governmental agencies, and the Nevada legislature. Practice focused on representation of utilities of customers in the energy, telecommunications, and water and wastewater industries. Experience included prosecuting rate increase applications, obtaining regulatory approval of mergers and acquisitions, and advocating the interests of utilities of customers in proceedings involving changes to tariff provisions. Practice included representing banks, trust companies and financial institutions, professional licensees, and corporations and individuals involved in the gaming industry. Civil litigation experience included representing clients in general commercial litigation, and appellate and judicial review proceedings.

RELEVANT INDUSTRY/PROFESSIONAL INFORMATION Utility Executive Summit, University of Idaho College of Business and Economics 2012 High and Dry in Nevada: When Water Rights Trump Development, ABA Section of Business Law, Business Law Today, Volume 15, No. 4, March/April 2006 (with D. Reaser, W. McKean and D. Cannon) Rio Revs up the Power, Casino Enterprise Management, volume 2, Iss. 6, June 2004 (profiling role in combined heat and power project at Rio All Suites Hotel) Best Lawyers in America 2008 & 2009 (Administrative Law and Energy Law)

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Sierra Pacific Power Company d/b/a NV Energy ASD Cost Recovery Petition

Docket No. 14-05

PREPARED DIRECT TESTIMONY OF

Gary P. Smith

1. Q. PLEASE STATE YOUR NAME, JOB TITLE, EMPLOYER AND

BUSINESS ADDRESS.

A. My name is Gary P. Smith. I am the Director of Customer Energy Solutions for

Nevada Power Company d/b/a NV Energy (“Nevada Power” or the “Company”)

and Sierra Pacific Power Company d/b/a NV Energy (“Sierra” and together with

Nevada Power, the “Companies”). My business address is 6100 Neil Road in

Reno, Nevada. I am filing testimony on behalf of Sierra.

2. Q. PLEASE DESCRIBE YOUR PROFESSIONAL BACKGROUND AND

EXPERIENCE.

A. I have a Bachelor of Science Degree in Business Administration earned from the

University of Nevada, Reno. I began working for Sierra in 1986 and have held

several positions with Sierra and its affiliates. I have more than 14 years

experience as a senior manager in electric and gas distribution operations, new

business and process improvement. More details regarding my professional

background and experience are set forth in Exhibit Smith-Direct-1.

Smith-DIRECT 1 29 of 315

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3. Q. PLEASE DESCRIBE YOUR RESPONSIBILITIES AS DIRECTOR OF

CUSTOMER ENERGY SOLUTIONS.

A. As Director of Customer Energy Solutions, for approximately the last five years, I

have been responsible primarily for the management and implementation of the

Companies’ advanced service delivery (“ASD”) project, or, as we now call it, the

“NVEnergize” project.

Together with the NVEnergize project legal team, I am responsible for

negotiating project contracts. I also provide all necessary project management,

manage the project budget, and manage reporting to the United States Department

of Energy (“DOE”) and other regulatory agencies. In short, I am responsible for

the scope of NVEnergize, ensuring that the costs incurred by the Companies to

implement NVEnergize are reasonable, maintaining the NVEnergize schedule,

and the cost savings and benefits produced by the project.

4. Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY IN THIS

PROCEEDING?

A. First, my testimony demonstrates that NVEnergize is complete and the

Companies use each of the elements or components NVEnergize to provide

electric and natural gas distribution service to customers. Second, my testimony

demonstrates that the costs of that were directly assigned or allocated to Nevada

Power and Sierra’s electric and natural gas operations are just and reasonable. I

show, among other things, that the Companies used sound processes to select

vendors for the project, maintained necessary and sufficient project controls, and

made reasonable decisions regarding implementation of the project. Third,

pursuant to the Public Utilities Commission of Nevada’s (“Commission”)


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directive in 2010,1 together with Shane Hendricks, Managing Director at KPMG,

I explain the verifiable savings caused by the implementation of NVEnergize.

Specifically, I show that the Companies have documented, verified and measured

“cost savings” attributable to NVEnergize, primarily due to workforce reductions.

I also demonstrate that the benefits of NVEnergize have been substantially

realized in light of the circumstances the Companies encountered during

implementation of the ASD project.2

I am sponsoring the following Exhibits to the Petition:

Exhibit 1 is Schedule H-CERT-DRMS, NDPT which reflects Sierra’s

NDPT related Demand Side Management costs that were deferred from

consideration in Sierra’s last General Rate Case (Docket Nos. 13-06002,

13-6003, and 13-06004).

Exhibit 2 is Schedule CERT NVE-SPPC E, which reflects plant in service,

depreciation expense and tax effect of the allocated and jurisdictionalized

costs as of May 31, 2014 of the ASD project to Sierra’s electric customers.

Exhibit 3 is Schedule CERT NVE-SPPC G, which reflects plant in

service, depreciation expense and tax effect of the allocated and

jurisdictionalized costs as of May 31, 2014 of the ASD project to Sierra’s

gas customers.

1 From paragraph 305 of the Commission’s July 30, 2010 Order in Docket Nos. 10-02009, 10-03022, and 10-03023:

[A]t the time the Companies seek cost recovery for the project, the Companies must produce evidence of the progress in achieving the benefits that were used as the basis to support this application including verifiable savings related to meter reading, field services, revenue protection, distribution planning, billing, credit collections, and load research.

2 Id.


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I am sponsoring the following Exhibits to my testimony:

Exhibit Smith-Direct-1 Statement of Qualifications

Exhibit Smith-Direct-2 20-Year Life Cycle Analysis

Exhibit Smith-Direct-3 Project Cost Verification Audit

Exhibit Smith-Direct-4 Reconciliation of Smith Direct Table 6 to

Plant In Service at December 31, 2013

5. Q. HAVE YOU PREVIOUSLY TESTIFIED BEFORE COMMISSION?

A. Yes. I filed prepared written testimony in several proceedings before the

Commission. I provided testimony in Docket Nos. 10-02009, 10-03022 and 10-

03023, which were the integrated resource plan (“IRP”) proceedings in which the

Companies presented, and the Commission accepted, the plan to implement

NVEnergize. In addition, I participated in Docket No. 10-07024. In that

rulemaking proceeding, the Commission amended certain provisions of the

Consumer Bill of Rights to address issues relating to the implementation of the

NVEnergize. I participated in Docket No. 11-10007, which was an investigation

initiated by the Commission to address certain issues related to the

implementation of the ASD project, and provided testimony in the subsequent

proceeding, Docket No. 12-05003, in which the Commission approved the

Companies’ non-standard metering option. Finally, I participated in Docket Nos.

13-06002 and 13-06003, which were the applications of Sierra’s electric and gas

divisions requesting the authority to adjust annual revenue requirement for

general rates.


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6. Q. PLEASE SUMMARIZE NVENERGIZE.

A. NVEnergize is a strategic smart grid project utilizing advanced metering and

communications technologies. Smart grid technology is modernizing the nation’s

electric delivery network. In 2008 the Company began investigating smart grid

technology and by 2009 had developed a business case for its deployment in

Nevada. In August 2009, the Company applied for a Smart Grid Investment

Grant (“SGI Grant” or “SGIG”) associated with the American Recovery and

Reinvestment Act of 2009, and was ultimately received $139 million of matching

funds from the DOE. With an initial estimated total project cost of $303 million,3

the SGI Grant reduced the cost to customers of modernizing the Companies

operations by approximately 46 percent.

NVEnergize allows the Companies to remotely read meters and remotely activate

and terminate electric service, both of which lead to reduce operating costs.

Customers benefit from lower operating costs through lower rates. As of May 31,

2014 the NVEnergize project will have achieved total steady state savings of over

$25 million for the benefit of our customers.4

3 While the initial project budget presented to the Commission was $301 million, the Companies accepted an additional $1 million of federal funding and agreed to complete a consumer confidence plan.

4 The $25 million excludes one-time and short-term savings.


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Smith Direct Table 1

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NVEnergize Steady State Benefits Achievement

TOTAL

Target Gross Benefits (2010 IRP) $33,551,000

Target Net Benefits (2010 IRP) $25,158,000

Benefits Achieved as of 12/31/2013

Gross Amount Achieved $23,604,000

Gross Percent Achieved 70%

Add-Back Costs $6,851,000

Net Amount Achieved $16,753,000

Net Percent Achieved 67%

Benefits Projected as of 5/31/2014

Gross Amount Achieved $25,217,000

Gross Percent Achieved 75%

Add-Back Costs $7,006,000

Net Amount Achieved $18,211,000

Net Percent Achieved 72%

Field workforce reductions drive savings. As can be seen on Smith Direct Table

2, as of May 31, 2014 the NVEnergize project will achieve a total workforce

reduction of 240 full time employees.

Smith Direct Table 2

NVEnergize FTE Savings Achievement

TOTAL

Target FTE Benefits (2010 IRP) 240

Target FTE Add-Backs (2010 IRP) 20


FTE Savings Achieved 222

FTE Savings Percent Achieved 93%

Add-Back FTE’s !chieved 20


FTE Savings Achieved 240

FTE Savings Percent Achieved 100%

Add-Back FTE’s !chieved 20


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NVEnergize also provides customers with information that was simply

unavailable before this technology was implemented. Some of the features now

available to our customers include daily energy usage, real time service outage

and restoration information, improved meter accuracy and increased ability to

manage their bill during peak seasons. Access to information empowers

customers to manage energy usage. As discussed in more detail in the prepared

testimony of Mr. Egan, customers who feel empowered by utility-provided

programs and services are more satisfied with their utility.

NVEnergize has been, and will be, a successful project. In January 2013, the

Companies were awarded POWERGRID International’s Smart Metering Project

of the Year award for the NVEnergize project. The Companies use NVEnergize

to provide safe and reliable electric and gas service to our customers in a more

cost-effective manner. Customers benefit from the project through lower cost of

service. Now, customers have unparalleled access to information regarding their

energy usage, outage notification, and access to advanced demand response

programs.

7. Q. HOW IS THE BALANCE OF YOUR PREPARED DIRECT TESTIMONY

ORGANIZED?

A. In Section I, I discuss the background of the project. In Section II, I address the

directives the Commission ordered in Docket Nos. 13-06002, 13-06003 and 13-

06004. In Section III, I summarize the status of NVEnergize, the total cost of the

project, Nevada Power’s and Sierra’s investments in the project, the benefits that

have been realized as of December 31, 2013, as well as the benefits that will be

realized before May 31, 2014. In Section IV, I describe each of the major


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elements of the NVEnergize system and explain how the Companies use these

systems to provide electric and natural gas service to its customers. In Section V,

I turn to the costs of the project. I explain the project controls and regime that the

Companies established to manage the project, how the Companies selected the

major vendors for the project, managed the project, and controlled costs. In

addition, I explain how the Companies generally, and Nevada Power and Sierra

specifically, responded to adversity during the implementation of the project. I

also explain how the Companies made reasonable and sound decisions in the face

of unplanned and unforeseen changes in circumstance. In short, in Section V, I

demonstrate that the Companies’ investment in NVEnergize is just and

reasonable. In Section VI, I discuss the benefits created by NVEnergize and show

that one-time, short-term and ongoing operational and capital savings have been

reasonably realized. Finally, Section VII of my testimony contains my

conclusion.

Section I: Project Background

8. Q. PLEASE DESCRIBE THE NVENERGIZE PROJECT.

A. NVEnergize consists of advanced metering infrastructure (“AMI”), a meter data

management system (“MDMS”), a communications network using tower gateway

basestations (“TGBs”), a regional network interface (“RNI”), a demand response

management system (“DRMS”), a customer portal, and an energy management

system (“EMS”). The Companies remotely read meters and remotely activate and

terminate electric service. The AMI meters and AMI modules (attached to

Sierra’s gas meters) communicate with TGBs. Data received by TGBs is

delivered to the Companies’ data center and from there into back office systems.


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One component of NVEnergize is the Nevada Dynamic Pricing Trial (“NDPT”).

The NDPT is a voluntary program that tests how customers respond to different

time-of-use rates, a technology package, and educational programs. NVEnergize

also facilitates and enhances the Companies’ energy conservation and efficiency

measures and allows the delivery of a demand response (“DR”) program in a

more cost-effective manner.

In 2013, NVEnergize expanded to include the “Day 2 Customer Initiative.” This

initiative leverages the core project elements to increase customer service and

satisfaction. The Day 2 Customer Initiative includes the implementation of a

Customer Preference Center, the transition of the Usage and Bill Management

Program, and the implementation of an Outage Communications Platform. The

latter project component integrates power fail alarms provided by the AMI with

the Companies’ distribution management systems to increase the effectiveness of

outage identification and efficiency of power restoration.

9. Q. WHEN DID NEVADA POWER AND SIERRA FIRST EVALUATE

NVENERGIZE?

A. The Companies started evaluating smart grid technology in November 2008.

Between November 2008 and March 2009, the Companies developed a

comprehensive business case NVEnergize. The Companies issued formal

requests for proposals (“RFPs”) for assistance in evaluating advanced service

technologies. By August of 2009, the Companies had incurred approximately

$1.8 million in costs associated with these efforts. These expenditures are not

eligible for matching funding from the federal government due to the time frame

in which they were incurred.


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10. Q. PLEASE DESCRIBE THE SGI GRANT AND HOW IT IMPACTED THE

NVENERGIZE PROJECT.

A. In August 2009, the Companies submitted an application to the DOE for an

SGIG. On October 27, 2009, the DOE announced that the Companies’

application had been selected for award negotiations. In October 2009, the

Companies had secured a source of funding that significantly reduced the impact

to customers of modernizing our operations. The Companies committed to the

project and retained the services of Ballard Spahr to assist in the negotiations with

the DOE. On December 24, 2009, the Companies received a preliminary

Assistance Agreement from the DOE.

On March 12, 2010, the Companies entered into a definitive Assistance

Agreement with the DOE. The agreement initially allowed a project

implementation period of no more than 36 months, with an overall “period of

performance” not to exceed five years. Nevada Power and Sierra faced

unanticipated challenges during the project, which were addressed with the DOE.

The DOE extended the “period of performance” to April 30, 2015, for data

collection activities. The project was substantially complete in April 2013, and

Nevada Power and Sierra expect 100 percent installation of AMI meters by

December 31, 2014.

11. Q. HOW DOES THE SGI GRANT AFFECT THE COMPANIES’

INVESTMENT IN NVENERGIZE?

A. The SGI Grant directly offsets the Companies’ investment in the project by $139

million.


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12. Q. DID THE COMMISSION REVIEW THE COMPANIES’ DECISION TO

PURSUE NVENERGIZE BEFORE THE COMPANIES STARTED

IMPLEMENTING THE PROJECT?

A. Yes. The Companies obtained IRP approval of NVEnergize in 2010.

13. Q. THE COMMISSION’S ORDER ACCEPTING NVENERGIZE

CONTAINED SEVERAL CONDITIONS. HAVE THE COMPANIES

SATISFIED THOSE CONDITIONS?

A. Yes. The Commission ordered the Companies to provide a semi-annual report

regarding the progress of the NVEnergize project. The Companies filed Semi-

Annual Status Reports pursuant to the Order on February 11, 2011, August 3,

2011, February 7, 2012, and September 7, 2012.

The Commission directed the Companies to systematically review their existing

customer privacy policies, and to prepare a report addressing the privacy policies

related to NVEnergize. In compliance with the Order, the Companies conducted

an internal review of all policies and procedures. The Companies concluded that

existing corporate policies are sufficient for legal compliance and generally

comport with the standards provided by the Commission. The Companies

submitted this report to the Commission on November 24, 2010. In Docket No.

11-10007, the Commission noted that “NV Energy has taken all reasonable

measures to ensure customer privacy and security, but no system is totally safe.”

The Companies periodically reviewed and continue to review their corporate

policies on an ongoing basis, as presented later in this testimony.


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The Commission required the Companies to demonstrate that customers will

reasonably realize benefits from NVEnergize, which I explain in the next section

of my testimony.

Section II: Directives from the Commission in Docket Nos. 13-06002, 13-06003 and

13-06004

14. Q. HAVE THE COMPANIES UPDATED THE 20-YEAR LIFE CYCLE

ANALYSIS THAT THE COMPANIES PROVIDED TO THE STAFF IN

THE IRP PROCEEDINGS?

A. Yes. The Companies updated the “investment decision template” supplied in

response to Staff 464 in Docket No. 10-02009. The Companies used actual costs

and documented benefits. The analysis demonstrates that all of the Companies

customers (northern electric and gas customers and southern electric customers)

benefit from NVEnergize through lower operating costs driven by workforce

reductions. Figure Smith Direct 1 shows that the present worth of savings for

customers exceed the present worth of the project’s revenue requirement.


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Figure Smith Direct 1

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15. Q. DOES THE UPDATED 20-YEAR LIFE CYCLE ANALYSIS

DEMONSTRATE THAT THE COMPANIES’ DECISION TO PURSUE A

SINGLE, STATEWIDE PROJECT PROVIDED BENEFITS TO NEVADA

POWER’S CUSTOMERS, SIERRA’S ELECTRIC CUSTOMERS, AND

SIERRA’S GAS CUSTOMERS?

A. Yes. All customers will share in the operational savings provided by NVEnergize.

Sierra’s gas customers share in the savings because Sierra has lower payroll costs

and payroll-driven costs such as vehicle, gasoline, pension and benefit, and

insurance costs. Thus, gas customers share because the “basis” – i.e., operating

costs – allocated between Sierra’s electric and gas operations is lower.


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Table Smith Direct 3

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Nevada Power Sierra Electric Sierra Gas NV EnergizeCommunications

Revenue Requirement 7.40$ 7.80 1.60 16.80 Operational Savings 9.70 7.90 0.80 18.40

Costs/(Savings) (2.30) (0.10) 0.80 (1.60) SystemsRevenue Requirement 25.60$ 13.50 5.30 44.40

Operational Savings 22.50 9.80 2.10 34.40 Costs/(Savings) 3.10 3.70 3.20 10.00

Meters/ModulesRevenue Requirement 102.00$ 31.90 18.30 152.20

Operational Savings 117.30 37.70 23.40 178.40 Costs/(Savings) (15.30) (5.80) (5.10) (26.20)

Project TotalRevenue Requirement 135.00$ 53.20 25.20 213.40 Operational Savings 149.50 55.40 26.30 231.20

(Costs)/Savings (14.50) (2.20) (1.10) (17.80)

Table Smith Direct 3 reflects that it made sense for the Companies to pursue a

statewide, fully-integrated project. Without including the gas division in the

project, neither gas nor electric customers would have received the benefits

produced by NVEnergize.

16. Q. THE COMMISSION DIRECTED THAT THE ASSIGNMENT OF COSTS

AND BENEFITS BY COMPANY (SIERRA AND NEVADA POWER) AND

BY GAS AND ELECTRIC DIVISIONS BE INCLUDED IN THIS FILING.

IS THIS PROVIDED?

A. Yes. In the 20-year life cycle analysis, the Companies provided costs and benefits

by company and commodity. The results of this analysis are demonstrated in

Table Smith Direct 3. Exhibit Smith-Direct-2 contains the data that supports

Figure Smith Direct 1 and Table Smith Direct 3. The inputs to the analysis reflect

direct-charges where possible for both vouchers and human resources-the

Companies instructed all staff to charge time and materials to each individual

project component whenever possible. Thus, all components including meters


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and modules were directly charged. Costs common to both Companies and

electric and gas such as communications systems and infrastructure were

allocated based on the number of meters and modules in each location. Project

components common to Sierra’s electric and gas divisions demonstrate the reason

for including the gas division in the project. The common systems are the RNI,

MDMS, customer portal, and communication towers. The shared functions are

meter reading, customer service and billing. The Companies utilized a 60/40 split

between southern and northern costs and a 67/33 split of costs supporting both

Sierra’s electric and gas customers. Common benefits were allocated using the

same methodology.

17. Q. THE COMMISSION DIRECTED THAT THE RESULTS OF THE DOE

FINAL AUDIT BE PROVIDED IN THIS FILING. HAS THE AUDIT

BEEN COMPLETED?

A. Yes. The DOE cost verification audit was conducted by Ahmad Associates Ltd.

The independent auditor’s fieldwork was completed January 25, 2014. One

notice of finding was identified, which did not impact the project costs. The

finding was related to a modification of time reporting that did not occur within

the timesheet system for a specific time period; however, project costs were

appropriately allocated. A final audit report dated January 28, 2014, was

provided to the DOE by the independent auditor. The DOE reviewed the audit

report, and considers the finding fully resolved and the audit closed. The audit

report concluded that NV Energy’s total project costs of $137.1 million incurred

between August 6, 2009, and November 30, 2013, related to the Smart Grid

Investment Grant Award, were accurate, allowable, allocable or reasonable, in


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accordance with Federal Acquisition Regulation Part 31, award terms and

conditions, and other applicable requirements. See Exhibit Smith-Direct-3.

18. Q. THE COMMISSION DIRECTED THAT A REPORT AS TO HOW

EMPLOYEE TRANSFERS ARE ACCOUNTED FOR IN THE LIFE

CYCLE ANALYSIS BE INCLUDED IN THIS FILING. IS THIS

INFORMATION BEING PROVIDED HERE?

A. Yes. This directive is satisfied through the direct testimony and exhibits of Mr.

Shane Hendricks.

19. Q. THE COMMISSION ALSO REQUIRED AN UPDATE TO THE 20-YEAR

PROJECT LIFE CYCLE ANALYSIS, INCLUDING THE COSTS AND

BENEFITS OF DISTRIBUTION PLANNING FUNCTION AND OUTAGE

MANAGEMENT FUNCTIONS. HAS THIS ANALYSIS BEEN

UPDATED?

A. Yes. The 20-year life cycle analysis has been updated from the original 2010

analysis to reflect the addition of the costs associated with the integration of AMI

with the outage management function. See Exhibit Smith-Direct-2. The

analysis includes actual costs through January 31, 2013, projected expenditures

through May 31, 2014, and ongoing estimated costs through 2029, which

encompasses both capital expenditures and operating costs. The benefits verified

by KPMG included in the analysis are based on actuals as of December 31, 2013

and steady state benefits thereafter through 2029. All costs and benefits have

been quantified and segregated between Nevada Power and Sierra, and between

Sierra’s electric and gas divisions. Individual 20-year life cycle analyses were

completed for each component of the project, each company and each service to


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capture the different book and tax life of each type of asset, as well as the rate of

return and weighted average cost of capital.

While the Companies sought recovery of an investment in the distribution

planning, and, therefore, those costs are not included in this analysis. The

distribution planning system will be replaced in 2014, but integration with the

AMI system will not be completed until a cost/benefit analysis is completed. If

ultimately approved, replacement and integration would allow the distribution

planning system to utilize interval data to better understand the utilization of

various distribution system assets.

The 20-year life cycle analysis does not include the energy management system,

DRMS, home area network, and NDPT components, as these costs were not

included in the original 2010 20-year life cycle analysis.

20. Q. THE COMMISSION DIRECTED THAT EVIDENCE REGARDING THE

COSTS AND BENEFITS OF THE DISTRIBUTION PLANNING AND

OUTAGE MANAGEMENT AND THEIR IMPACTS ON RATEPAYERS

BE INCLUDED IN THIS FILING. IS THIS INFORMATION

PRESENTED HERE?

A. As noted above, the 20-year life cycle includes the costs of the integration of AMI

with the outage management system for which the Companies are requesting

recovery. The Companies are not requesting a recovery of investment in this rate

case for the replacement of the distribution planning system as the replacement

has not occurred.


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Section III: Project Status

21. Q. PLEASE SUMMARIZE THE OVERALL STATUS OF THE PROJECT.

A. As of December 31, 2013, Nevada Power’s meter deployment was more than 99

percent complete (896,489 meters) and Sierra’s electric meter deployment was

more than 99 percent complete (326,904). Sierra’s AMI gas modules installation

was 100 percent complete.5 In addition, the Companies have placed into service

100 percent of the TGBs planned within the scope of the project. All 72 TGBs

for Nevada Power were fully commissioned as of February 28, 2013. All 54

TGBs for Sierra were fully commissioned as of September 30, 2013. Nevada

Power and Sierra now use each AMI meter and module to provide electric and

natural gas service to their customers. The Companies also utilize the usage

information recorded by these meters and modules to bill their customers.

Electric meters pending deployment include non-standard metering installations,6

net metering, hard-to-access locations, and certain commercial installations. The

Companies are expecting complete AMI electric meter installations including

growth adjusted counts by December 31, 2014.

22. Q. PLEASE SUMMARIZE THE OVERALL STATUS OF THE PROJECT

BUDGET AND THE PROJECTED COSTS THAT THE COMPANIES

WILL INCUR TO IMPLEMENT THE NVENERGIZE PROJECT

(THROUGH MAY 31, 2014)?

5 Completion percentages were calculated based on the number of AMI electric meters and gas modules installed as a percentage of the targets established at the beginning of the project. Those targets were 898,000 electric meters in southern Nevada; 330,000 electric meters in northern Nevada; and 156,000 gas modules in northern Nevada. The AMI modules are attached to Sierra’s gas meters.

6 As of January 31, 2014, 3,833 non-standard electric meters and gas modules were in-service.


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A. In Docket Nos. 10-02009, 10-03022 and 10-03023, the Companies established a

project budget of $301.3 million. The Companies obtained an additional $1

million of DOE funding to complete a consumer confidence plan, which resulted

in a budget of $303.3 million. As of December 31, 2013, actual costs incurred by

the Companies were $315,949,800, and the Companies estimate the projected

costs as of May 31, 2014 will be $319,188,280.

As of December 31, 2013, the Companies’ investment in the project was

$178,846,000. Nevada Power’s investment in the project was $108,824,000, and

Sierra’s investment was $70,022,000. Sierra’s costs were split between Sierra’s

electric and gas divisions, with Sierra’s investing $50,674,000 in the electric

components of the project and $19,348,000 in the gas components. Nevada

Power’s projected investment through May 31, 2014, is estimated to be

$110,429,900. Sierra’s total projected investment through May 31, 2014, is

estimated to be $71,376,000. Sierra’s electric division projected investment

through May 31, 2014, is estimated to be $51,971,900 and for the gas division

$19,404,100.

23. Q. PLEASE SUMMARIZE THE BENEFITS THAT THE COMPANIES HAVE

ACHIEVED THROUGH NVENERGIZE AS OF DECEMBER 31, 2013.

A. As of December 31, 2013, NVEnergize in total had generated approximately

$26,943,000 in gross benefits,7 including one-time and short-term savings, and

gross benefits excluding one-time and short-term savings of approximately

7 The NV Energy ASD business case included gross and net benefits targets. Gross benefits refer to total costs removed from the Companies’ operations as identified in the business case. Net benefits are recurring savings resulting from the project, after consideration of add-backs, one-time or short-term expenditures, and incremental O&M.


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$23,603,000. As of December 31, 2013, the recurring steady state net benefits,

which include one-time and short-term benefits, were approximately $20,492,000.

Finally recurring steady state net benefits excluding onetime and short-term

benefits was approximately $16,753,000.

As of December 31, 2013, NVEnergize had generated approximately $17,701,000

in gross benefits, including one-time and short-term savings for Nevada Power

and gross benefits excluding onetime and short-term savings of approximately






in gross benefits, including one-time and short-term savings for Sierra Electric

and gross benefits excluding onetime and short-term savings of approximately






in gross benefits, including one-time and short-term savings for Sierra Gas and

gross benefits excluding onetime and short-term savings of approximately




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Smith Direct Table 4 NVEnergize Steady State Benefits Achievement

Nevada Power

Sierra Electric Sierra Gas TOTAL

Target Gross Benefits (2010 IRP)

$24,378,000 $7,821,000 $3,352,000 $33,551,000

Target Net Benefits (2010 IRP)

$16,912,000 $5,772,000 $2,474,000 $25,158,000


Gross Amount Achieved $ 15,754,000 $5,478,000 $2,372,000 $23,604,000

Gross Percent Achieved 65% 70% 71% 70%

Add-Back Costs $4,937,000 $1,340,000 $574,000 $6,851,000

Net Amount Achieved $10,817,000 $4,138,000 $1,798,000 $16,753,000

Net Percent Achieved 64% 72% 73% 67%


Gross Amount Achieved $16,777,000 $5,891,000 $2,549,000 $25,217,000

Gross Percent Achieved 69% 75% 76% 75%

Add-Back Costs $5,030,000 $1,383,000 $593,000 $7,006,000

Net Amount Achieved $11,747,000 $4,508,000 $1,956,000 $18,211,000

Net Percent Achieved 69% 78% 79% 72%

24. Q. PLEASE DESCRIBE THE USE OF “NET” AND “GROSS” COSTS IN

NVENERGIZE PROJECT BUDGETS.

A. The availability of matching funds for reimbursable costs under the SGIG reduced

the cost of NVEnergize for customers. For this reason, the cost schedules that

have been utilized in the management of the program distinguish between the

“gross” and “net” costs of project implementation. Gross costs reflect total costs,

and do not distinguish costs that are reimbursable by the DOE. Net costs reflect

the Companies’ contribution.


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25. Q. PLEASE DESCRIBE THE INCREMENTAL BENEFITS THAT THE

COMPANIES EXPECT TO REALIZE BY MAY 31, 2014.

A. As of May 31, 2014, NVEnergize expects to generate approximately $28,556,000

in total gross benefits including one-time and short-term savings, and gross

benefits excluding one-time and short-term savings of approximately

$25,217,000. As of May 31, 2014, total (that is, one-time, short-term and

recurring) net benefits are expected to be approximately $21,951,000. Finally,

recurring steady state net benefits excluding one-time and short-term benefits are

expected to be approximately $18,212,000.

As of May 31, 2014 for Nevada Power, NVEnergize expects to generate

approximately $18,724,000 in gross benefits including one-time and short-term

savings, and gross benefits excluding one-time and short-term savings of

approximately $16,777,000. As of May 31, 2014, total (that is, one-time, short-

term and recurring) net benefits are expected to be approximately $13,934,000.

Finally, recurring steady state net benefits excluding one-time and short-term

benefits are expected to be approximately $11,747,000.

As of May 31, 2014 for Sierra Electric, NVEnergize expects to generate






benefits are expected to be approximately $4,508,000.


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As of May 31, 2014 for Sierra Gas, NVEnergize expects to generate

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benefits are expected to be approximately $1,956,000. See Smith Direct Table 4

above.

26. Q. ARE THE SAVINGS DISCUSSED IN Q&A 24 THROUGH 26

UNDERSTATED?

A. Yes. In Sierra’s 2013 general rate case (Docket No. 13-06002) the Commission

found that the benefits start date should be August 1, 2010. Order p. 286.

However, by that date the Company had achieved steady state benefits in the

amount of $1.19 million through the reduction of eight FTEs. These savings were

included in Target Gross Benefits (2010 IRP), are included in the above

calculation the gross benefits achieved would increase to 79%. The FTE

reductions that the Companies realized before August of 2010 were FTE

reductions that the Companies planned to obtain through the program. But for

implementation of the ASD project, all of the FTE reductions in the metering

services department that occurred in 2009 and 2010 would have been replaced.


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Section IV: Description of the Major System Components and their Functions

27. Q. DO NEVADA POWER AND SIERRA USE ALL OF THE MAJOR

COMPONENTS OF THE NVENERGIZE SYSTEM TO PROVIDE

ELECTRIC AND NATURAL GAS SERVICE TO ITS CUSTOMERS?

A. Yes, the major components of the smart grid system (AMI meters and modules,

TGBs, the RNI, the MDMS, the DRMS, and the EMS) are used and useful and

provide customers electric and gas service. In the following section, I describe

each major component of the system in more detail, and explain how the

Companies use the system elements in the day-to-day operations of their electric

transmission, distribution and natural gas delivery systems.

28. Q. PLEASE DESCRIBE THE AMI COMPONENT OF THE SYSTEM AND

EXPLAIN HOW NEVADA POWER AND SIERRA USE THE AMI

COMPONENT IN CONNECTION WITH THE PROVISIONING OF

ELECTRIC AND NATURAL GAS SERVICE TO CUSTOMERS?

A. The AMI portion of the program involves the replacement of 1.23 million electric

meters with new, solid-state electric meters. AMI captures interval, register, and

alarm data from every meter and enables billing and remote disconnect and

connect services. The new meters feature integrated AMI communications and

are capable of communicating with devices within a customer’s premises. As I

noted above, as of December 31, 2013, Nevada Power has installed nearly

896,500 AMI meters (or 99.8 percent of the targeted 898,000) in its service

territory and Sierra has installed 326,900 (or 99.1 percent of the targeted 330,000)

AMI meters in its service territory. Sierra has installed 100 percent of the

targeted 156,000 AMI gas modules in its service territory. The Companies use

the meters and modules to deliver electric and gas service to customers and use


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the usage data recorded by the meters and modules to bill customers. Customers

now also have the ability to view load profile information and manage their

energy usage via monthly alerts and analysis tools through the customer portal via

a web browser. Finally, as of December 31, 2013, the Companies had remotely

initiated turn on-turn off service to approximately 1.9 million customers statewide

via the AMI system. In summary, the Companies’ investment in AMI meters and

modules is fully used and useful in providing the regulated electric and gas

services it offers to customers within its certificated service territories. Moreover,

the NVEnergize foundation has enabled the Companies to provide addition

programs as evidenced in the Day 2 Customer Initiative.

29. Q. PLEASE DESCRIBE MDMS AND EXPLAIN HOW NEVADA POWER

AND SIERRA USE THAT SYSTEM IN THE DAY-TO-DAY OPERATION

OF THEIR ELECTRIC AND GAS DELIVERY SYSTEMS.

A. Usage data recorded by AMI meters and modules is transmitted to the TGBs,

which in turn is transmitted to and received by the MDMS. The MDMS consists

of an application and a meter data warehouse, which manage metrology data,

alerts and alarms, and other data as delivered by the AMI systems. The MDMS

converts the data into information, and then delivers the resulting information to

the proper back-office system. The MDMS applies business logic to perform

validation, editing and estimating to ensure accurate billing. In addition, the

MDMS ensures that billing information is available to customers and supports

voluntary dynamic pricing programs, including the dynamic pricing trial. The

MDMS is the system of record for metering data.


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In addition to core meter data management functions, the MDMS serves as the

information broker between the AMI technology system and other utility

applications to facilitate demand response, in-home display information and other

key functions. Statewide system reads have increased from 1.4 million monthly

meter reads before AMI to four billion monthly meter reads upon final

deployment. The MDMS receives these system reads and ensures accurate

customer billing.

The Revenue Protection Suite (“RPS”) module of the MDMS utilizes tamper and

theft alarms and interval usage data provided by the AMI solution to identify

likely tamper and theft candidates. Correlating interval data usage patterns with

tamper and theft alarms provides a more reliable indicator of actual theft than

relying on alarms alone. Improving the reliability of theft detection improves the

effectiveness of tamper detection and reduces tamper-related lost revenues.

30. Q. PLEASE DESCRIBE THE HOME AREA NETWORK, THE

PROGRAMMABLE CONTROLLABLE THERMOSTATS, AND THE

DEMAND RESPONSE MANAGEMENT SYSTEM (“DRMS”) THAT

MAKE UP PART OF NVENERGIZE.

A. NVEnergize enables the Home Area Network (“HAN”) to support the NDPT and

existing demand response program mPowered. The HAN is comprised of a

programmable controllable thermostat (“PCT”), a gateway, and the AMI meter.

This network enables customers to receive information regarding their energy

demand and to participate in voluntary demand response programs.


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The DRMS enables the execution of demand response programs, including the

NDPT, by facilitating participant recruitment, managing demand response events,

and enabling settlement – the process of determining the amount of load reduction

provided by each participating customer and compensating that customer per the

terms of the program. The DRMS provides messaging to internet portals that

display customer-specific information and to PCTs. This infrastructure suite is

designed to enable customers to take control of their energy usage by providing

transparent and timely consumption and pricing information, and energy control

capabilities to customers with HAN technology.

Nevada Power and Sierra use the DRMS for the enrollment, management and

service of customers participating in the Nevada Dynamic Pricing Trial, including

demand response programs.

31. Q. PLEASE DESCRIBE THE ENERGY MANAGEMENT SYSTEM (“EMS”)

AND BRIEFLY EXPLAIN HOW NEVADA POWER AND SIERRA USE

THE EMS IN THEIR DAY-TO-DAY OPERATIONS.

A. The EMS provides situational awareness of grid conditions and greater control in

balancing resources. The EMS is used to control electric transmission,

distribution, and generation facilities within the Balancing Area Authority

(“BAA”) and the two retail jurisdictions. EMS implementation of consolidated

transmission and BAA operations state-wide resulted in a unified EMS that

promotes the optimization of resource balancing across all generation and grid

interface points.


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The EMS project is an allowable cost under the SGIG and is supported with

matching funds from the DOE.

Section V: Costs

Project Governance and Oversight

32. Q. DID THE COMPANIES ESTABLISH A PROJECT MANAGEMENT

OFFICE TO OVERSEE THE NVENERGIZE PROJECT?

A. Yes. NVEnergize has employed a standard proven multi-layered approach to

project governance. A Project Management Office (“PMO”) was established to

maintain project controls necessary to ensure the successful delivery and

completion of the NVEnergize project. The PMO consisted of 15 to 20

individuals representing the project team leadership, key functional organizations

(e.g. Information Technology and Accounting), and key business units (e.g.,

Meter Operations and Telecommunications) and provided guidance and direction

for the project.

Key components of the project were presented at weekly PMO meetings where

general project status was communicated to the PMO members and key business

unit representatives, and issues were discussed and resolved. The weekly

meetings ensured that the project status was tracked cl

before the public utilities commission of nevada...sierra is a nevada corporation and wholly-owned...

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