1 l - dms.psc.sc.gov
TRANSCRIPT
STATE OF SOUTH CAROLINA
Application of
Duke Energy Carolinas, LLCfor Approval of Energy Efficiency Plan Includingan Energy Efficiency Rider and Portfolio of EnergyEfficiency Programs.
)) BEFORE THE) PUBLIC SERVICE COMMISSION) OF SOUTH CAROLINA)) COVER SHEET))) DOCKET) NUMBER: 2007-358-E)))
(Please type or print)
Submitted by: Bonnie D. Sheal
Address: Robinson, McFadden & Moore, P.C.PO Box 944Columbia, SC 29202
SC Bar Number: 11125Telephone: 803) 779-8900
Fax:Other:
803 252-0724
Email:bsheal robinsonlaw.
corn
NOTE: The cover sheet and information contained herein neither replaces nor supplements the filing and service of pleadings or other papers
as required by law, This form is required for use by the Public Service Commission of South Carolina for the purpose of docketing and must
be filled out completely.
DOCKETING INFOMIATION (Check all that apply)
Emergency Relief demanded in petition Request for item to be placed on Commission's Agenda expeditiously
H Other:
INDUSTRY {Check one) NATURE OF ACTION {Check all that apply)
H Electric
Electric/Gas
Electric/Telecommunications
Q Electric/Water
Electric/Water/Telecom.
Q Electric/Water/Sewer
Q Gas
Q Railroad
Q Sewer
Telecommunications
Q Transportation
Q Water
Q Water/Sewer
Q Administrative Matter
Other:
Affidavit
Q Agreement
Q Answer
Q Appellate Review
g Application
Q Brief
Q Certificate
g Comments
Q Complaint
Q Consent Order
g Discovery
Q Exhibit
Expedited Consideration
Q Interconnection Agreement
Q Interconnection Amendment
Late-Filed Exhibit
Letter
Memorandum
H Motion
Q Objection
Q Petition
Q Request
g Request for Certificatio
Request for Investigatior
Q Resale Agreement
Resale Amendment
Q Petition for Rulemaking
Q Petition for Rule to Show Cause
Petition to Intervene
Petition to Intervene Out of Time
Q Prefiled Testimony
Promotion
Proposed Order
Q Protest
Publisher's Affidavit
Report
Response
Q Response to Discovery
Return to Petition
Stipulation
Subpoena
Q Tariff
H Other; Testimony of
Janice D. Hager
Q Petition for Reconsideration Reservation Letter
STATE OF SOUTH CAROLINA )) BEFORE THE) PUBLIC SERVICE COMMISSION) OF SOUTH CAROLINA
Application of )) COVER SHEET
Duke Energy Carolinas, LLCfor Approval ofEnergy Efficiency Plan Including )an Energy Efficiency Rider and Portfolio of Energy ~ DOCKETEfficiency Programs. ) NUMBER: 2007-358-E
)))
(Ileasetype or print)
Submitted by: Bonnie D. Shealy SC Bar Number: 11125Address: Robinson,McFadden & Moore, P.C. Telephone: j~3)779-8900
P0Box 944Columbia, SC 29202 Fax: (803)252-0724_____________________________________Other: ___________________________________
Email: [email protected]: Thecoversheetandinformationcontainedhereinneitherreplacesnor supplementsthefiling andserviceof pleadingsor otherpapers
asrequiredby law. This form isrequiredfor useby thePublicServiceCommissionof SouthCarolinafor thepurposeof docketingandmust
befilled out completely.
DOCKETINGINFORMATION (Checkall that apply)
~ EmergencyRelief demandedin petition L1J Requestfor item to be placedon Commission’sAgendaexpeditiously
~ Other:
INDUSTRY (Checkone) 1 L NATURE OF ACTION (Checkall that apply)
~ Electric fl Affidavit ~ Letter []Request
LI Electric/Gas ~ Agreement LI Memorandum ~ Requestfor Certificatie
LI Electric/Telecommunications ~ Answer ~ Motion LI Requestfor Investigatior
LI Electric/Water [I] AppellateReview fl Objection LI ResaleAgreement
[I] Electric/Water/Telecom. LI Application [] Petition LI ResaleAmendment
L] Electric/Water/Sewer (~Brief LI Petitionfor Reconsideration [J ReservationLetter
[I] Gas fl Certificate ~ Petitionfor Rulemaking []Response
LI Railroad ~ Comments LI Petitionfor Ruleto ShowCause LI Responseto Discovery
~ Sewer LI Complaint LI Petitionto Intervene [~Returnto Petition
O Telecommunications ~ ConsentOrder ~ PetitiontoInterveneOut ofTime ~ Stipulation
~ Transportation ~ Discovery D PrefiledTestimony ~JSubpoena
~ Water ~ Exhibit ~ Promotion LI Tariff
fl ExpeditedConsideration ~ ProposedOrder ~ Other: TestimonyofLI Water/Sewer
JaniceD, Hager
LI Adn~umstrativeMatter fl InterconnectionAgreement [J Protest
~ Other: [J~ Amendment O Publisher’sAffidavit
fl Late-FiledExhibit []Report
BEFORE
THE PUBLIC SERVICE COMMISSION OF
SOUTH CAROLINA
DOCKET NO. 2007-358-E
In re:Application of Duke Energy Carolinas, LLCFor Approval of Energy Efficiency Plan
Including an Energy Efficiency Rider and
Portfolio of Energy Efficiency Programs
)) TESTIMONY OF) JANICE D. HAGER FOR) DUKE ENERGY CAROLINAS
))
This document is an exact duplicate, with theexception of the form of the signature, of thee-filed copy submitted to the Commission in
accordance with its electronic filing instructions.
BEFORE
THE PUBLIC SERVICE COMMISSIONOF
SOUTH CAROLINA
DOCKETNO. 2007-358-E
Inre: )Applicationof DukeEnergyCarolinas,LLC ) TESTIMONY OFForApprovalofEnergyEfficiencyPlan ) JANICE D. HAGERFORIncludingan EnergyEfficiencyRiderand ) DUKE ENERGYCAROLINASPortfolio ofEnergyEfficiencyPrograms )
)
This documentis anexactduplicate,with theexceptionof the form of the signature,of thee-filed copysubmittedto the Commissioninaccordancewith its electronicfiling instructions.
I. INTRODUCTION AND PURPOSE
2 Q. PLEASE STATE YOUR NAME, ADDRESS AND POSITION WITH DUKE
ENERGY CORPORATION.
4 A. My name is Janice D. Hager. My business address is 526 South Church Street,
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Charlotte, North Carolina. I am Managing Director, Integrated Resource
Planning and Environmental Strategy for Duke Energy Corporation's ("Duke
Energy" ) operating utilities, including Duke Energy Carolinas, LI.C ("Duke
Energy Carolinas" or the "Company" ). I have held a number of different
responsibilities in my 26 years at Duke Energy, including Vice President, Rates
and Regulatory Affairs for Duke Energy Carolinas.
11 Q. WHAT ARE YOUR JOB RESPONSIBILITIES?
12 A, I have responsibility for integrated resource planning and envirorunental
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compliance planning for Duke Energy Corporation's regulated electric utilities.
In that role, I have responsibility for the long-term resource planning for Duke
Energy's Carolinas and Midwest operations, as well as planning for
environmental compliance. Duke Energy's long-range resource planning process
is conducted separately for each of the operating utilities.
18 Q. PLEASE SUMMARIZE YOUR EDUCATIONAL BACKGROUND AND
19 PROFESSIONAL EXPERIENCE.
20 A. I am a civil engineer, having received a Bachelor of Science in Engineering from
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the University of North Carolina at Charlotte. I began my career at Duke Power
Company in 1981 and have had a variety of responsibilities across the Company
in areas of piping analyses, nuclear station modifications, new generation
Direct Testimony: JAIvtcE D. HAGER
Duke Energy Carolinas, LLCPSCSC Docket No. 2007-358-E
1 I. INTRODUCTION AND PURPOSE
2 Q. PLEASE STATE YOUR NAME, ADDRESS AND POSITION WITH DUKE
3 ENERGY CORPORATION.
4 A. My nameis JaniceD. Hager. My businessaddressis 526 SouthChurch Street,
5 Charlotte, North Carolina. I am Managing Director, Integrated Resource
6 Planning and EnvironmentalStrategyfor Duke Energy Corporation’s (“Duke
7 Energy”) operatingutilities, including Duke Energy Carolinas, LLC (“Duke
8 Energy Carolinas” or the “Company”). I have held a number of different
9 responsibilitiesin my 26 years at Duke Energy, including Vice President,Rates
10 andRegulatoryAffairs for DukeEnergyCarolinas.
11 Q. WHAT ARE YOUR JOB RESPONSIBILITIES?
12 A. I have responsibility for integrated resource planning and environmental
13 complianceplanning for Duke EnergyCorporation’sregulatedelectric utilities.
14 In that role, I haveresponsibilityfor the long-termresourceplanning for Duke
15 Energy’s Carolinas and Midwest operations, as well as planning for
16 environmentalcompliance. DukeEnergy’s long-rangeresourceplanningprocess
17 is conductedseparatelyfor eachoftheoperatingutilities.
18 Q. PLEASE SUMMARIZE YOUR EDUCATIONAL BACKGROUND AND
19 PROFESSIONAL EXPERIENCE.
20 A. I ama civil engineer,having receivedaBachelorof Sciencein Engineeringfrom
21 theUniversity of NorthCarolinaat Charlotte. I beganmy careerat DukePower
22 Companyin 1981 andhavehad a varietyofresponsibilitiesacrossthe Company
23 in areas of piping analyses,nuclear station modifications, new generation
Direct Testimony: JANICE D. HAGER 2DukeEnergy Carolinas, LLC -
PSCSCDocketNo. 2007-358-E
licensing, rates, and regulatory affairs, I am a registered Professional Engineer in
North Carolina and South Carolina.
3 Q. HAVE YOU PREVIOUSLY TESTIFIED BEFORE THIS COMMISSION?
4 A. Yes. I have testified before the Public Service Commission of South Carolina
(the "Commission" ) on several prior occasions, including past annual fuel cost
proceedings and a proceeding on the utility process for consideration of capacity
alternatives.
8 Q. WHAT IS THE PURPOSE OF YOURTESTIMONY?
9 A, The purpose of my testimony is to discuss the need for new capacity outlined in
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the Company's 2007 Integrated Resource Plan filed on November 15, 2007 in
Docket No. 87 —223 —E ("IRF' or the "Annual Plan" ) and how energy
efficiency' is reflected in the integrated planning resource models.
13 II. CAPACITY NEEDS IDENTIFIED IN THE COMPANY'S ANNUAL PLAN
14 Q. PLEASE DESCRIBE THE PURPOSE OF COMPANY'S ANNUAL PLAN?
15 A. Duke Energy Carolinas' Annual Plan is developed with the objective of meeting
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customers' needs for a highly reliable energy supply at the lowest reasonable cost,
Annually, Duke Energy Carolinas develops a resource plan for meeting
customers' energy needs, which considers a combination of: (i) existing purchase
power contracts, (ii) existing and new generation, and (iii) customer energy
efficiency options. The Annual Plan is filed with the Commission and the North
Carolina Utilities Commission on an annual basis.
' The term "energy efficiency, "as used in this testimony, includes both energy efficiency/conservation and
demand response measures.
Direct Testimony; JANKK D. HAGKR 3Duke Energy Caroiinas, LLCPSCSC Docket No. 2007-358-E
I licensing,rates,andregulatoryaffairs. I amaregisteredProfessionalEngineerin
2 NorthCarolinaandSouthCarolina.
3 Q. HAVE YOU PREVIOUSLY TESTIFIED BEFORETHIS COMMISSION?
4 A. Yes. I havetestifiedbefore the Public ServiceCommissionof South Carolina
5 (the “Commission”) on severalprior occasions,including past annualfuel cost
6 proceedingsand a proceedingon the utility processfor considerationof capacity
7 alternatives.
8 Q. WHAT IS THE PURPOSEOF YOUR TESTIMONY?
9 A. Thepurposeof my testimonyis to discusstheneedfor new capacityoutlined in
10 the Company’s2007 IntegratedResourcePlan filed on November15, 2007 in
11 Docket No. 87 — 223 — E (“IIRP” or the “Annual Plan”) and how energy
12 efficiency1 is reflectedin the integratedplanningresourcemodels.
13 II. CAPACITY NEEDSIDENTIFIED IN THE COMPANY’S ANNUAL PLAN
14 Q. PLEASE DESCRIBE THE PURPOSE OF COMPANY’S ANNUAL PLAN?
15 A. DukeEnergyCarolinas’Annual Planis developedwith the objectiveof meeting
16 customers’needsfor ahighly reliableenergysupplyat the lowestreasonablecost.
17 Annually, Duke Energy Carolinas develops a resource plan for meeting
18 customers’energyneeds,whichconsidersa combinationof: (i) existingpurchase
19 power contracts,(ii) existing and new generation,and (iii) customerenergy
20 efficiencyoptions. The AnnualPlan is filed with the Commissionand theNorth
21 CarolinaUtilities Commissionon an annualbasis.
The term“energyefficiency.” asusedin this testimony,includesbothenergyefficiency/conservationand
demandresponsemeasures.Direct Testimony: JANICE D. HAGER 3Duke Energy Carolinas, LLCPSCSCDocketNo. 2007-358-E
1 Q. WHAT PROCESS DOES THE COMPANY USE TO FORECAST
CAPACITY NEEDS IN ITS IRP?
3 A. The planning process considers a wide range of assumptions and uncertainties and
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develops an action plan that preserves the options necessary to meet customers'
needs. Duke Energy Carolinas' resource planning process seeks to identify what
actions the Company must take to ensure there is a safe, reliable, reasonably-
priced supply of electricity regardless of how these uncertainties unfold,
The process begins with a forecast of customer needs. The 20-year
forecast used for the 2007 IRP reflects a 1.6 percent average annual growth in
summer peak demand, while winter peaks are forecasted to grow at an average
annual rate of 1.4 percent. The forecasted growth for average annual territorial
energy is 1.4 percent.
The next step is to gather information on Duke Energy Carolinas' existing
resources. Duke Energy Carolinas' generation portfolio is composed of over
21,000 MWs of generation capacity, with about one-third of the capacity in coal-
fired generation resources, one-third of-the capacity in nuclear resources, and the
other third in hydro-electric and gas-fired generation (of about equal proportions).
In addition, as discussed in Company Witness Schultz's testimony, the Company
has approximately 700 MWs of existing demand response programs that are
roughly equivalent to peaking capacity.
Although Duke Energy Carolinas' capacity mix is approximately one-third
coal, one-third nuclear, and one-third hydroelectric and gas-fired, the energy mix
is approximately 50% nuclear and 50% coal-fired generation. Gas-fired
Direct Testimony: JANICK D. HAGER
Duke Energy Carolinas, LLCPSCSC Docket No. 2007-358-E
1 Q. WHAT PROCESS DOES THE COMPANY USE TO FORECAST
2 CAPACITY NEEDSIN ITS IRP?
3 A. Theplanningprocessconsidersawide rangeof assumptionsand uncertaintiesand
4 developsan action planthat preservesthe optionsnecessaryto meetcustomers’
5 needs.Duke EnergyCarolinas’ resourceplanningprocessseeksto identify what
6 actionsthe Companymust taketo ensurethereis a safe, reliable, reasonably-
7 pricedsupplyofelectricityregardlessofhowtheseuncertaintiesunfold.
8 The processbegins with a forecastof customerneeds. The 20-year
9 forecastusedfor the 2007 IRP reflectsa 1.6 percentaverageannualgrowth in
10 summerpeak demand,while winter peaksare forecastedto grow at an average
11 annualrateof 1.4 percent. The forecastedgrowth for averageannualterritorial
12 energyis 1.4 percent.
13 The nextstepis to gatherinformationon Duke EnergyCarolinas’existing
14 resources. Duke Energy Carolinas’ generationportfolio is composedof over
15 21,000MWs of generationcapacity,with aboutone-thirdofthe capacityin coal-
16 fired generationresources,one-thirdof. thecapacityin nuclearresources,andthe
17 otherthird in hydro-electricandgas-firedgeneration(of aboutequalproportions).
18 In addition,as discussedin CompanyWitnessSchultz’stestimony,the Company
19 has approximately700 MWs of existing demandresponseprogramsthat are
20 roughlyequivalentto peakingcapacity.
21 AlthoughDukeEnergyCarolinas’capacitymix is approximatelyone-third
22 coal,one-thirdnuclear, andone-thirdhydroelectricand gas-fired,the energymix
23 is approximately 50% nuclear and 50% coal-fired generation. Gas-fired
DirectTestimony:JAr~iCED. HAGER 4DukeEnergy Carolinas,LLCPSCSCDocketNo. 2007-358-E
generation and hydroelectric generation provide only a small percentage of the
current energy needs of the Duke Energy Carolinas' customers.
3 Q. PLEASE DESCRIBE HOW LOAD FORECASTS AND RESOURCE
NEEDS ARE BALANCED IN THE IRP.
5 A. To meet the future needs of Duke Energy Carolinas' customers, it is necessary to
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understand the load and resource balance. For each year of the planning horizon,
Duke Energy Carolinas develops a load forecast of energy sales and peak
demand. To determine total resources needed, the Company considers the load
obligation plus a target planning reserve margin, which is currently set at 17
percent. The capability of existing resources, including generating units, energy
efficiency programs, and purchased power contracts, is measured against the total
resource need. Any deficit in future years will be met by a mix of additional
resources that reliably and cost-effectively meets the load obligation.
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Hager Exhibit No. 1 shows the existing resources and resource
requirements to meet the load obligation, plus the 17 percent target planning
reserve margin. Beginning in 2007, existing resources, consisting of existing
generation, energy efficiency, and purchased power to meet load requirements,
total 21,330 MW. The load obligation plus the target planning reserve margin is
20,907 MW, indicating sufficient resources to meet Duke Energy Carolinas'
obligation through 2008. The need for additional capacity, shown in the Table
below, grows over time due to load growth„unit capacity adjustments, unit
retirements, existing energy efficiency program reductions, and expirations of
Direct Testimony: JAwcE D. H&GKRDuke Energy Carolinas, LLCPSCSC Docket No. 2007-358-K
1 generationand hydroelectricgenerationprovideonly a small percentageof the
2 currentenergyneedsoftheDukeEnergyCarolinas’customers.
3 Q. PLEASE DESCRIBE HOW LOAD FORECASTS AND RESOURCE
4 NEEDSARE BALANCED IN THE IRP.
5 A. To meetthe future needsof DukeEnergyCarolinas’customers,it is necessaryto
6 understandtheloadandresourcebalance. For eachyearofthe planninghorizon,
7 Duke Energy Carolinasdevelops a load forecast of energy sales and peak
8 demand.To determinetotal resourcesneeded,the Companyconsidersthe load
9 obligation plus a target planning reservemargin, which is currently set at 17
10 percent. The capability of existing resources,including generatingunits, energy
11 efficiencyprograms,andpurchasedpowercontracts,is measuredagainstthetotal
12 resourceneed. Any deficit in future years will be met by a mix of additional
13 resourcesthatreliably andcost-effectivelymeetsthe loadobligation.
14 Hager Exhibit No. 1 shows the existing resources and resource
15 requirementsto meet the load obligation, plus the 17 percenttarget planning
16 reservemargin. Beginning in 2007, existing resources,consistingof existing
17 generation,energyefficiency, and purchasedpower to meet load requirements,
18 total 21,330MW. Theloadobligationplus thetargetplanningreservemarginis
19 20,907 MW, indicating sufficient resourcesto meet Duke Energy Carolinas’
20 obligationthrough2008. The needfor additional capacity,shownin the Table
21 below, grows over time due to load growth, unit capacityadjustments,unit
22 retirements,existing energy efficiency program reductions,and expirationsof
DirectTestimony:JANICE D. HAGER 5DukeEnergyCarolinas,LLCPSCSCDocketNo. 2007-358-E
purchased-power contracts. The need grows to approximately 6,600 MW by
2017 and to 10,700 MW by 2027 as shown in Table 1 below.
Table I
Cumulative Resource Additions to Meet A 17 Percent Planning Reserve
Margin
Year20072008
201020112012201320142015201620172018201920202021202220232024202520262027
CumulativeCapacity Additions
Needed
60430990
2,3403,1904,0304,6305,5406,0906,6207,0207,4307,8808,2708,6709,0709,4709,88010,28010,680
67 Q. DID DUKE ENERGY CAROLINAS PERFORM QUANTITATIVE
ANALYSES IN THE RESOURCE PLANNING PROCESS?
9 A. Yes. Duke Energy Carolinas' resource planning process provides a framework
10 for the Company to assess, analyze and implement a cost-effective approach to
meet customers' growing energy needs reliably. In addition to assessing
Direct Testimony: JANrcs D. HAGER
Duke Energy Carolinas, LLCPSCSC Docket No. 2007-358-K
purchased-power contracts. The need grows to approximately6,600 MW by
2 2017andto 10,700MW by 2027asshownin Table 1 below.
3 Table 1
4 Cumulative ResourceAdditions to Meet A 17 PercentPlanning Reserve
5 Margin
I CumulativeCapacity Additions
Year Needed2007 02008 602009 4302010 9902011 2,3402012 3,1902013 4,0302014 4,6302015 5,5402016 6,0902017 6,6202018 7,0202019 7,4302020 7,8802021 8,2702022 8,6702023 9,0702024 9,4702025 9,8802026 10,2802027 10,680
67 Q. DID DUKE ENERGY CAROLINAS PERFORM QUANTITATIVE
8 ANALYSES IN THE RESOURCE PLANNING PROCESS?
9 A. Yes. Duke Energy Carolinas’resourceplanningprocessprovidesa framework
10 for the Companyto assess,analyzeand implementa cost-effectiveapproachto
11 meet customers’ growing energy needs reliably. In addition to assessing
Direct Testimony: JANICE D. HAGER 6Duke Energy Carolinas, LLCPSCSCDocketNo. 2007-358-E
qualitative factors, a quantitative assessment was conducted using a simulation
model.
A variety of sensibvities and scenarios were tested against a base set of
inputs for various resource mixes, allowing the Company to better understand
how potentially different future operating environments such as fuel commodity
price changes, environmental emission mandates, and structural regulatory
requirements can affect resource choices, and, ultimately, the cost of electricity to
customers,
9 Q. WHAT WERE THE RESULTS OF THE COMPANY'S QUANTITATIVE
10 ANALYSES?
11 A. The quantitative analyses suggest that a combination of additional base load,
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intermediate, and peaking generation, renewable resources, and energy efficiency
programs is required over the next twenty years to meet customer demand reliably
and cost-effectively.
III. ENERGY EFFICIENCY IN THE COMPANY'S 2007 ANNUAL PLAN
16 Q. HOW WERE ENERGY EFFICIENCY PROGRAMS REFLECTED IN
17 THK COMPANY'S 2007 ANNUAL PLAN?
18 A. The 2007 IRP reflects the impacts of the energy efficiency programs proposed in
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the Company's Application for Approval of Energy Efficiency Plan, Including an
Energy Efficiency Rider and Portfolio of Energy Efficiency Programs (the
"Application" ), as well as additional impacts from currently unidentified sources,
See Table 2 below for the projected impacts of the Company's energy efficiency
efforts over the planning horizon.
Direct Testimony: JANtcK D. HAGERDuke Energy Carolinas, LLCPSCSC Docket No. 200 l-358-E
I qualitative factors,a quantitativeassessmentwas conductedusing a simulation
2 model.
3 A variety of sensitivitiesand scenarioswere testedagainsta baseset of
4 inputs for variousresourcemixes, allowing the Companyto better understand
5 how potentiallydifferent future operatingenvironmentssuchas fuel commodity
6 price changes, environmental emission mandates, and structural regulatory
7 requirementscanaffect resourcechoices,and,ultimately,the costof electricityto
8 customers.
9 Q. WHAT WERE THE RESULTS OF THE COMPANY’S QUANTITATIVE
10 ANALYSES?
11 A. The quantitativeanalysessuggest that a combinationof additional baseload,
12 intermediate,and peakinggeneration,renewableresources,andenergyefficiency
13 programsis requiredoverthenext twentyyearsto meetcustomerdemandreliably
14 andcost-effectively.
15 III. ENERGYEFFICIENCY IN THE COMPANY’S 2007ANNUAL PLAN
16 Q. HOW WERE ENERGY EFFICIENCY PROGRAMS REFLECTED IN
17 THE COMPANY’S 2007ANNUAL PLAN?
18 A. The 2007 IRP reflectsthe impactsof the energyefficiencyprogramsproposedin
19 theCompany’sApplicationfor Approvalof EnergyEfficiencyPlan, Including an
20 Energy Efficiency Rider and Portfolio of Energy Efficiency Programs (the
21 “Application”), aswell asadditionalimpactsfrom currentlyunidentifiedsources.
22 SeeTable 2 below for the projectedimpactsof the Company’senergyefficiency
23 effortsovertheplanninghorizon.
Direct Testimony: JANICE D. HAGER 7Duke Energy Carolinas, LLCPSCSCDocketNo. 2007-358-E
Table 2
Projected Energy Efficiency Results in MW
Year20082009201020112012201320142015201620172018201920202021202220232024202520262027
Total Conservation40
110175237302373437499565635700762789789789789789789789789
Total DSM
761898
1,0161,0161,0161,0161,0161,0161,0161,0161,0161,0161,0161,0161,0161,0161,0161,0161,0161,016
Total MW Im acts801
1,0081,1901,2531,3181,3881,4531,5151,5811,6511,7161,7781,8051,8051,8051,8051,8051,8051,8051,805
The impacts for the first four years are those reflected in the Application
as shown on page 3 of the Application, with the exception that the Table in the
Application includes projected accomplishments from the Advanced Power
Manager pilot program. The projected accomplishments for the pilot program are
too preliminary at this point to include them in the projected energy efficiency
accomplishments for planning purposes. The accomplishments for this and other
pilot programs will be incorporated into future plans once there is greater
certainty of their likely impacts. The projected impacts for the remaining years
were developed assuming the Company would continue to achieve energy
efficiency at the same rate as the first four years for an additional eight years.
Direct Testimony: JANlcK D. HAGKRDuke Energy Caroiinas, LLCPSCSC Docket 1Vo. 2007-358-E
Table 2
2 Projected Energy Efficiency Resultsin MW
L Total Conservation Total DSM Total MWImpactsL 2008 40 761 801
2009 110 898 1,0082010 175 1,016 1,1902011 237 1,016 1,2532012 302 1,016 1,3182013 373 1,016 1,3882014 437 1,016 1,4532015 499 1,016 1,5152016 565 1,016 1,5812017 635 1,016 1,6512018 700 1,016 1,7162019 762 1,016 1,7782020 789 1,016 1,8052021 789 1,016 1,8052022 789 1,016 1,8052023 789 1,016 1,8052024 789 1,016 1,8052025 789 1,016 __________________
2026 789 1,016 1,8~JI 2027 789 1 1,016 1,805]
3
4 Theimpactsfor the first four years arethosereflectedin the Application
5 asshownon page3 of the Application, with the exceptionthat the Table in the
6 Application includes projected accomplishmentsfrom the Advanced Power
7 Managerpilot program. The projectedaccomplishmentsfor thepilot programare
S too preliminaryat this point to include them in the projectedenergyefficiency
9 accomplishmentsfor planningpurposes.Theaccomplishmentsfor this andother
10 pilot programswill be incorporated into future plans once there is greater
11 certaintyof their likely impacts. Theprojectedimpactsfor the remainingyears
12 were developed assumingthe Company would continue to achieve energy
13 efficiencyatthesamerateasthefirst four yearsfor an additionaleight years.
Direct Testimony:JANICE D. HAGER 8Duke Energy Carolinas, LLCPSCSCDocketNo. 2007-358-E
1 Q. WHAT COSTS WERE ASSUMED FOR THESE PROGRAMS IN THE
2007 IRP?
For program costs, Duke Energy Carolinas used the revenues that would be
received under the proposed "save-a-watt" model to ensure that the programs
were beneficial to customers (i.e. , that they were cost-effective when priced at the
save-a-watt price).
7 Q. ARE THESE THE SAME COSTS USED IN THE SCREENING OF THK
PROGRAMS AS DISCUSSED BY DR. STEVIE?
9 A. No. Dr, Stevie discusses how the programs are analyzed within the DSMore
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model and how the programs fare under various cost-effectiveness tests, Dr.
Stevie uses the actual cost of the programs, as well as expected load impacts, to
measure their cost-effectiveness. In contrast, for the IRP analysis, the projected
revenues under Rider EE (SC) are used as program costs. This is appropriate
because this is the cost customers will actually incur for the programs if the
Commission approves the Company's Application.
16 Q. HOW DID THK PROPOSED SAVE-A-WATT PLAN FARE IN THE 2007
IRP ANALYSIS?
18 A. In the screening phase of the resource planning process, the model selected the
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energy efficiency options as shown on Table 2 above as part of the preferred
resource portfolio under all proposed scenarios and sensitivities, indicating the
energy efficiency resources are lower cost to customers than equivalent supply-
side alternatives. This indicates that the proposed energy efficiency programs are
part of the "optimum" resource plan. In the detailed analysis phase, portfolios
Direct Testimony: JANICK D. HAGKRDuke Energy Carolinus, LLCPSCSC Docket No. 2007-358-E
1 Q. WHAT COSTS WERE ASSUMED FOR THESE PROGRAMS IN THE
2 2007 IRP?
3 For program costs, Duke Energy Carolinas used the revenuesthat would be
4 receivedunder the proposed“save-a-watt” model to ensurethat the programs
5 werebeneficialto customers(i.e.,that theywerecost-effectivewhenpricedat the
6 save-a-wattprice).
7 Q. ARE THESE THE SAME COSTS USED IN THE SCREENING OF THE
8 PROGRAMSAS DISCUSSEDBY DR. STEVIE?
9 A. No. Dr. Stevie discusseshow the programsare analyzedwithin the DSMore
10 model and how the programsfare under variouscost-effectivenesstests. Dr.
11 Stevie usesthe actualcostof theprograms,aswell asexpectedloadimpacts,to
12 measuretheir cost-effectiveness.In contrast,for the IRP analysis,theprojected
13 revenuesunderRider EE (SC) areusedasprogramcosts. This is appropriate
14 becausethis is the cost customerswill actually incur for the programsif the
15 Commissionapprovesthe Company’sApplication.
16 Q. HOW DID THE PROPOSED SAVE-A-WATT PLAN FARE IN THE 2007
17 IRP ANALYSIS?
18 A. In the screeningphaseof the resourceplanningprocess,the model selectedthe
19 energyefficiency options as shown on Table 2 aboveas part of the preferred
20 resourceportfolio under all proposedscenariosand sensitivities,indicating the
21 energyefficiencyresourcesare lower cost to customersthanequivalentsupply-
22 sidealternatives.This indicatesthat theproposedenergyefficiencyprogramsare
23 part of the “optimum” resourceplan. In the detailedanalysisphase,portfolios
Direct Testimony: JANICE D. HAGER 9Duke Energy Carolinas, LLCPSCSCDocketNo. 2007-358-E
including the energy efficiency resources shown on Table 2 were lower cost to
customers than those that included the Company's existing energy efficiency
programs. As discussed by Company Witness Farmer, the revenue requirements
have been updated since the Company filed its Application, An analysis of the
updated costs continues to show energy efficiency as cost-effective for customers,
In summary, the portfolios including the save-a-watt plan are lower cost to
customers than alternative portfolios that do not include the proposed energy
efficiency programs.
9 Q. HOW DO ENERGY EFFICIENCY PROGRAMS IMPACT THE
10 COMPANY'S IRP?
11 A. Duke Energy Carolinas is projecting that energy efficiency will offset the need for
13
14
15
17
generating resources that would have been required to meet customer needs by
providing approximately 1805 MWs of capacity (replacing an existing 700 MWs)
and over 2,000,000 MWHs of energy. If the implementation of the Company's
save-a-watt plan yields the results projected in the 2007 Annual Plan, Duke
Energy Carolinas will be able to avoid building at least one new 700 MW gas-
fired plant and to defer two others by a year over the next ten years.
18 Q. ARE ENERGY EFFICIENCY PROGRAMS A RELIABLE SOURCE OF
19 ENERGY AND CAPACITY?
20 A. They certainly can be. Duke Energy Carolinas has long relied upon DSM
21
22
23
programs as an integral component of its resource mix. The current DSM
programs provide approximately 700 MWs of capacity at the time of the system
peak. These programs are tested periodically to ensure their availability, and the
Direct Testimony: JANicE D. HAGERDuke Energy Carolinas, LLCPSCSC Docket No. 2007-35$-E
10
1 including the energyefficiency resourcesshownon Table 2 were lower cost to
2 customersthan those that included the Company’s existing energyefficiency
3 programs. As discussedby CompanyWitnessFarmer,the revenuerequirements
4 havebeenupdatedsincethe Companyfiled its Application. An analysisof the
5 updatedcostscontinuesto showenergyefficiencyascost-effectivefor customers.
6 In summary, the portfolios including the save-a-wattplan are lower cost to
7 customersthan alternativeportfolios that do not include the proposedenergy
8 efficiencyprograms.
9 Q. HOW DO ENERGY EFFICIENCY PROGRAMS IMPACT THE
10 COMPANY’S IRP?
11 A. DukeEnergyCarolinasis projectingthat energyefficiencywill offsettheneedfor
12 generatingresourcesthat would havebeenrequired to meetcustomerneedsby
13 providingapproximately1805MWs of capacity(replacinganexisting700MWs)
14 and over 2,000,000MWHs of energy. If the implementationof the Company’s
15 save-a-wattplan yields the resultsprojected in the 2007 Annual Plan, Duke
16 EnergyCarolinaswill be able to avoid building at least onenew 700 MW gas-
17 fired plantandto defertwo othersby ayearover thenextten years.
18 Q. ARE ENERGY EFFICIENCY PROGRAMS A RELIABLE SOURCE OF
19 ENERGY AND CAPACITY?
20 A. They certainly can be. Duke Energy Carolinas has long relied upon DSM
21 programsas an integral componentof its resourcemix. The current DSM
22 programsprovideapproximately700MWs of capacityat the time of the system
23 peak. Theseprogramsaretestedperiodicallyto ensuretheir availability, andthe
DirectTestimony:JANICE D. HAGER 10DukeEnergyCarolinas,LLCPSCSCDocketNo. 2007-358-E
10
12
13
14
15
results of activating the programs are studied following an event to determine if
the expected results were achieved. History has shown that these programs can be
counted upon as a reliable resource.
With regard to conservation programs, once conservation measures are
installed they will likely be reliable resources as well. Conservation measures
(e.g. , weatherization or high efficiency commercial lighting) are not subject to
scheduled or forced outages. These measures, once implemented, will provide
resources with measured reliability, such that prudent inclusion into the Duke
Energy Carolinas' resource mix is possible.
One uncertainty, however, is the extent of customer participation in energy
efficiency programs. In addition to the planned measurement and verification that
will occur after the programs are implemented, the Company will be carefully
monitoring programs during roll out and make adjustments to projected program
results within the IRP process to ensure adequate reliable resources to meet
customer needs.
16 Q. WHAT ASSURANCES DOES DUKE ENERGY CAROLINAS OFFER
17
18
THAT CUSTOMERS ARE NOT PAYING FOR CAPACITY THAT IS NOT
AVOIDED?
19 A. The save-a-watt model is fundamentally based on payment for results. If the
20
21
22
23
Company estimates that we will achieve SOOMW of energy efficiency and only
achieves 300MW of savings, Duke Energy Carolinas will be compensated for the
300MW under Rider EE (SC). If the Company then has to secure 200MW of
supply elsewhere, the Company would do so and reflect the costs of the capacity
Direct Testimony: JANICE D. HAGERDuke Energy Carolinas, LLCPSCSC Docket No. 2007-358-K
1 resultsof activatingthe programsarestudiedfollowing an eventto determineif
2 theexpectedresultswereachieved.Historyhasshownthat theseprogramscanbe
3 counteduponasareliableresource.
4 With regardto conservationprograms,once conservationmeasuresare
5 installedthey will likely be reliableresourcesas well. Conservationmeasures
6 (e.g., weatherizationor high efficiency commerciallighting) arenot subjectto
7 scheduledor forced outages. Thesemeasures,onceimplemented,will provide
8 resourceswith measuredreliability, such that prudentinclusion into the Duke
9 EnergyCarolinas’resourcemix is possible.
10 Oneuncertainty,however,is theextentofcustomerparticipationin energy
11 efficiencyprograms.In additionto theplannedmeasurementand verification that
12 will occur afterthe programsare implemented,the Companywill be carefully
13 monitoringprogramsduring roll out and makeadjustmentsto projectedprogram
14 results within the IRP processto ensureadequatereliable resourcesto meet
15 customerneeds.
16 Q. WHAT ASSURANCES DOES DUKE ENERGY CAROLINAS OFFER
17 THAT CUSTOMERS ARE NOT PAYING FOR CAPACITY THAT IS NOT
18 AVOIDED?
19 A. The save-a-wattmodel is fundamentallybasedon paymentfor results. If the
20 Companyestimatesthat we will achieve500MW of energyefficiency and only
21 achieves300MWofsavings,Duke EnergyCarolinaswill be compensatedfor the
22 300MW underRider EE (SC). If the Companythenhasto secure200MW of
23 supplyelsewhere,theCompanywould do so and reflect thecostsofthe capacity
Direct Testimony: JANICE D. HAGER 11Duke Energy Carolinas, LLCPSCSCDocketNo. 2007-358-E
10
as a cost of serving our customers. Upon approval, this would result in customers
paying for 300MW of energy efficiency and 200MW of supply from another
source. Customers will not have to pay for 500MW of energy efficiency
programs, of which 200MW did not materialize, and then pay for the additional
supply. Therefore, customers are only paying for the resources —be they energy
efficiency or supply side —that the Company actually has acquired.
The Company will update at least annually the expected level of energy
efficiency accomplishments. To the extent energy efficiency results are trending
lower or higher than expected, the IRP process will incorporate these expectations
and identify resources needed to reliably serve load.
IV. RETIREMENT OF OLD COAL PLANTS
12 Q. HO%' DOES DUKE ENERGY CAROLINAS PLAN TO IMPLEMENT
13
14
15
THE NORTH CAROLINA UTILITIES COMMISSION'S RECENT
ORDER IN ITS CLIFFSIDE CPCN PROCEEDING REQUIRING
RETIREMENT OF OLDER COAL PLANTS?
16 A. The North Carolina Utility Commission's order in March 2007 approving the
17
18
19
20
23
Company's request for a Certificate of Public Convenience and Necessity
("CPCN") for a new 800 MW clean coal generating unit requires Duke Energy
Carolinas to retire older coal-fired units (in addition to Cliffside Units 1 through
4) on a megawatt-for-megawatt basis to account for actual load reductions
realized through new energy efficiency programs up to the megawatt level added
upon completion of Cliffside Unit 6. Consequently, the Company will consider
(i) the megawatt ("MW") capacity reflected in the energy efficiency programs, (ii)
DireCt Testimony: JANICE D. HAGERDuke Energy Carolinas, LLCPSCSC Docket No. 2007-358-E
12
1 asa costof servingourCustomers.Uponapproval,this would resultin customers
2 paying for 300MW of energyefficiency and 200MW of supply from another
3 source. Customerswill not have to pay for 500MW of energy efficiency
4 programs,of which 200MW did not materialize,and thenpay for the additional
5 supply. Therefore,customersareonly payingfor theresources— be they energy
6 efficiencyorsupplyside— thattheCompanyactuallyhasacquired.
7 The Companywill updateat leastannuallythe expectedlevel of energy
8 efficiency accomplishments.To the extentenergyefficiencyresultsaretrending
9 lowerorhigherthanexpected,theIRP processwill incorporatetheseexpectations
10 andidentify resourcesneededto reliablyserveload.
11 IV. RETIREMENT OF OLD COAL PLANTS
12 Q. HOW DOES DUKE ENERGY CAROLINAS PLAN TO IMPLEMENT
13 THE NORTH CAROLINA UTILITIES COMMISSION’S RECENT
14 ORDER IN ITS CLIFFSIDE CPCN PROCEEDING REQUIRING
15 RETIREMENT OF OLDER COAL PLANTS?
16 A. The North CarolinaUtility Commission’sorder in March 2007 approvingthe
17 Company’s request for a Certificate of Public Convenienceand Necessity
18 (“CPCN”) for a new800 MW cleancoal generatingunit requiresDuke Energy
19 Carolinasto retire oldercoal-firedunits (in additionto Cliffside Units 1 through
20 4) on a megawatt-for-megawattbasis to account for actual load reductions
21 realizedthroughnewenergyefficiencyprogramsup to themegawattlevel added
22 upon completionof Cliffside Unit 6. Consequently,the Companywill consider
23 (i) themegawatt(“MW”) capacityreflectedin theenergyefficiencyprograms,(ii)
Direct Testimony: JANICE D. HAGER 12Duke Energy Carolinas, LLCPSCSCDocketNo. 2007-358-E
the hours of availability over which the energy efficiency resource applies, (iii)
the blend of supply side resources required going forward, including both capacity
and energy components, (iv) the relative uncertainty of energy efficiency impact
projections and impact evaluation findings, (v) the likely persistence of energy
efficiency impacts over the planning horizon of the IRP, and (vi) the traditional
set of planning criteria and reserve margin drivers, in arriving at the appropriate
projection of MWs of capacity to be built, retired or avoided. As savings are
verified, Duke Energy Carolinas will include projected retirement dates in the IRP
filings which are subject to Commission review.
10 Q. WAS HAGER EXHIBIT NO. 1 PREPARED BY YOU OR UNDER YOUR
SUPERVISION?
12 A. Yes.
13 Q. DOES THIS CONCLUDE YOUR PRE-FILED DIRECT TESTIMONY?
14 A. Yes.
Direct Testimony: JANicE D. HAGERDuke Energy Carolinas, LLCPSCSC Docket No. 2007-358-E
13
1 the hoursof availability over which the energyefficiencyresourceapplies,(iii)
2 theblendofsupplysideresourcesrequiredgoingforward,includingbothcapacity
3 and energycomponents,(iv) therelativeuncertaintyof energyefficiency impact
4 projectionsand impactevaluationfindings, (v) the likely persistenceof energy
5 efficiency impacts over the planninghorizon of the IRP, and (vi) the traditional
6 set of planningcriteria andreservemargindrivers, in arriving at the appropriate
7 projectionof MWs of capacityto be built, retired or avoided. As savingsare
8 verified, DukeEnergyCarolinaswill includeprojectedretirementdatesin theIRP
9 filings which aresubjectto Commissionreview.
10 Q. WAS HAGER EXHIBIT NO. 1 PREPARED BY YOU OR UNDER YOUR
11 SUPERVISION?
12 A. Yes.
13 Q. DOES THIS CONCLUDE YOUR PRE-FILED DIRECT TESTIMONY?
14 A. Yes.
Direct Testimony: JANICE D. HAGER 13Duke Energy Carolinas, LLCFSCSCDocket No. 2007-358-E
Load and Resource Balance
Hager Exhibit No. 1
Resource Requiremertts
28000
26000
24000
22000
. Additional Resources Needed to .: Meet Load Plus 17% Reserves
20000
18000
5 16OOO
ts 14OOO
12000
Purchases
DSM
10000
8000 Existing Generatng Resources
6000
4000
2000
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Year
8t Existing Duke Energy Generation ta Existing Purchases (incl NUGs) Q Total DSM QAdditional Resources Needed I
Direct Testimony: JANICE D. HAGERDuke Energy Caroiinas, LLCPSCSC Docket No. 2007-358-E
14
Hager Exhibit No. 1
Load and ResourceBalance
Rosouree RGquirem~nt~
30000
28000 ::: :
28000 :
24000 Additional Resources Neededto
22000 Meet Load PIus 17% Reserves
20000Purchases - : : : : :- - - : : : : :- :
18000DSM
16000a0)14000
12000
10000
8000 Existing Generatng Resources
6000
4000
2000
02007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 202~ 2024 2025 2026 2027
Year
~Existing Duke Energy Generation lIDExisting Purchases (mci NUG5) ~1otaI DSM 0 Additional Resources Needed
Direct Testimony: JANICE D. HAGER 14Duke Energy Carolinas, LLCPSCSCDocketNo. 2007-358-E
BEFORETHE PUBLIC SERVICE COMMISSION
OF SOUTH CAROLINADOCKET NO. 2007-358-E
In Re ))
Application of Duke Energy )Carolinas, LLC for Approval of )Energy Efficiency Plan Including an )Energy Efficiency Rider and )Portfolio of Energy Efficiency )Programs )
CERTIFICATE OF SERVICE
This is to certify that I, Leslie L. Allen, a legal assistant with the law firm of
Robinson, McFadden & Moore, P.C., have this day caused to be served upon the
person(s) named below the Testimony of Janice D. Wager in the foregoing
matter by placing a copy of same in the United States Mail, postage prepaid, in
an envelope addressed as follows:
Jeremy C. Hodges, EsquireNelson Mullins Riley & Scarborough, LLPP.O. Box 11070Columbia, SC 29211
Scott A. Elliott, EsquireElliott & Elliott, PA721 Olive AvenueColumbia, SC 29205
J. Blanding Holman, IV, EsquireSouthern Environmental Law Center200 W. Franklin Street, Suite 330Chapel Hill, NC 27516
Robert E. Tyson, Jr. , EsquireSowell Gray Stepp & Laffitte, LLCPost Office Box 11449Columbia, SC 29211
BEFORETHE PUBLIC SERVICE COMMISSION
OF SOUTH CAROLINADOCKET NO. 2007-358-E
InRe: ))
Application of Duke Energy )Carolinas, LLC for Approval of ) CERTIFICATE OF SERVICEEnergy Efficiency Plan Including an )Energy Efficiency Rider and )Portfolio of Energy Efficiency )Programs )
This is to certify that I, Leslie L. Allen, a legal assistant with the law firm of
Robinson, McFadden & Moore, P.C., have this day caused to be served upon the
person(s) named below the Testimony of Janice D. Hager in the foregoing
matter by placing a copy of same in the United States Mail, postage prepaid, in
an envelope addressed as follows:
Jeremy C. Hodges, EsquireNelson Mullins Riley & Scarborough, LLPP.O. Box 11070Columbia, SC 29211
Scott A. Elliott, EsquireElliott & Elliott, PA721 Olive AvenueColumbia, SC 29205
J. Blanding Holman, IV, EsquireSouthern Environmental Law Center200 W. Franklin Street, Suite 330Chapel Hill, NC 27516
Robert E. Tyson, Jr., EsquireSowell Gray Stepp & Laffitte, LLCPost Office Box 11449Columbia, SC 29211
Nanette S. Edwards, EsquireOffice of Regulatory StaffPost Office Box 11263Columbia, SC 29211
Dated at Columbia, South Carolina this 10th day of December, 2007.
Leslie L. Allen
Nanette S. Edwards, EsquireOffice of Regulatory StaffPost Office Box 11263Columbia, SC 29211
Dated at Columbia, South Carolina this 10th day of December, 2007.
Leslie L. Allen