1 surrebuttal testimony and exhibit

Surrebuttal Testimony of Anthony M. Sandonato Docket No. 2019-227-E Lockhart Power Company December 2, 2020 of 3

THE OFFICE OF REGULATORY STAFF 1401 Main Street, Suite 900

Columbia, SC 29201

SURREBUTTAL TESTIMONY AND EXHIBIT 1

OF 2

ANTHONY M. SANDONATO 3

ON BEHALF OF 4

THE SOUTH CAROLINA OFFICE OF REGULATORY STAFF 5

DOCKET NO. 2019-227-E 6

IN RE: SOUTH CAROLINA ENERGY FREEDOM ACT (HOUSE BILL 3659) 7

PROCEEDING RELATED TO S.C. CODE ANN. SECTION 58-37-40 8

INTEGRATED RESOURCE PLANS FOR LOCKHART POWER COMPANY 9

Q. PLEASE STATE YOUR NAME, BUSINESS ADDRESS AND OCCUPATION. 10

A. My name is Anthony Sandonato. My business address is 1401 Main Street, Suite 11

900, Columbia, South Carolina, 29201. I am employed by the South Carolina Office of 12

Regulatory Staff (“ORS”) in the Energy Operations Division as a Senior Regulatory 13

Manager. 14

Q. DID YOU FILE DIRECT TESTIMONY AND AN EXHIBIT RELATED TO THIS 15

PROCEEDING? 16

A. Yes. I filed Direct Testimony and one (1) exhibit with the Public Service 17

Commission of South Carolina (“Commission”) on October 20, 2020. 18

Q. WHAT IS THE PURPOSE OF YOUR SURREBUTTAL TESTIMONY? 19

A. The purpose of my Surrebuttal Testimony is to set forth and support ORS’s 20

recommendations and evaluation resulting from the examination and review of Lockhart 21

Power Company’s (“LPC” or “Company”) Supplemented Integrated Resource Plan 22

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Columbia, SC 29201

(“IRP”) Attachments 2 and 3 and the additional information filed in the Company’s rebuttal 1

testimony and exhibits. 2

Q. DO THE REQUIREMENTS OF S.C. CODE ANN. §58-37-40(B)(1) APPLY TO THE 3

COMPANY? 4

A. Yes. The Company is obligated to comply with the requirements outlined in S.C. 5

Code Ann. §58-37-40(B)(1) (“Section 40”). LPC is in a unique position due to its size, the 6

full requirements contract with Duke, and the fact the Company does not propose to add 7

generation facilities to its retail operations at this time.1 The South Carolina General 8

Assembly directed the Commission to establish a specific process for the IRP to allow the 9

Commission, LPC’s customers, and other interested parties a transparent process to review 10

the generation planning decisions that may ultimately impact LPC’s customers’ future 11

electric rates. LPC should present possible generation resource choices to the Commission 12

for review prior to acquisition as part of the Company’s IRP. This will ensure transparency 13

and the new generation resource acquired is part of the least cost, least risk plan for its 14

customers. 15

Q. PLEASE EXPLAIN THE MODIFICATIONS ADOPTED BY THE COMMISSION 16

RELATED TO THE IRP FILING REQUIREMENTS FOR LPC. 17

A. As discussed on page 5 of the report titled “Review of Lockhart Power Company’s 18

2020 Integrated Resource Plan,” filed as exhibit AMS-1 with my direct testimony, 19

Commission Order No. 93-950, the Commission established filing requirements 20

specifically for LPC’s IRP. A copy of Commission Order No. 93-950 is attached to my 21

Surrebuttal Testimony as Surrebuttal Exhibit AMS-1. However, the South Carolina Energy 22

1 Rebuttal Testimony of Brian Stone p. 6 and Direct Testimony of Brian Stone p. 5.

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Columbia, SC 29201

Freedom Act (“Act 62”) emphasized the importance of evaluating utility planning in South 1

Carolina and Act 62 did not exempt LPC from the IRP requirements. 2

Q. DID THE COMPANY ADDRESS OR ADOPT ALL OF THE 3

RECOMMENDATIONS IDENTIFIED IN YOUR DIRECT TESTIMONY? 4

A. No. The Company addressed two (2) of the five (5) recommendations outlined in 5

the Report that should be addressed in this IRP. In addition, the Company outlined how it 6

would modify its IRP to try and satisfy the requirements.2 ORS witness Hayet will discuss 7

the recommendations in greater detail in his surrebuttal testimony. 8

Q. PLEASE SUMMARIZE ORS’S RECOMMENDATION RELATED TO THE 9

COMPANY’S PROPOSED ADDITIONS TO ITS IRP. 10

A. ORS recommends the Company file a supplemental IRP with the Commission in 11

this docket to incorporate the changes that were proposed by LPC witness Stone in his 12

rebuttal testimony as well as the updated Attachments 2 and 3. 13

Q. WILL YOU UPDATE YOUR SURREBUTTAL TESTIMONY BASED ON 14

INFORMATION THAT BECOMES AVAILABLE? 15

A. Yes. ORS fully reserves the right to revise its recommendations via supplemental 16

testimony should new information not previously provided by the Company, or other 17

sources, becomes available. 18

Q. DOES THIS CONCLUDE YOUR SURREBUTTAL TESTIMONY? 19

A. Yes, it does. 20

2 Rebuttal Testimony of Brian Stone pp. 12-13 lines 20-7.

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EXHIBIT AMS-1 Page 1 of 8

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BEFORE

THE PUBLIC SERVICE COMMISSION OF

SOUTH CAROLINA

DOCKET NO. 93-430-E — ORDER NO. 93-950&

OCTOBER 14, 1993

IN RE: Proceeding of Lockhart Power Company )ORDER ESTABLISHINGto Address Integrated Resource )INTEGRATED RESOURCEPlanning (IRP) Procedure. )PLANNING PROCEDURE

On June 18, 1987 by Order No. 87-569, the Public Service

Commission of South Carolina on its own motion established a

generic proceeding involving al.l jurisdictional electric utilitiesto address integrated resource planning procedures. Integrat,ed

Resource Planning (IRP) refers to efforts by utilities and

regulators to ensure that the lowest cost options to the rate

payers and utilities are integrated into designing resource plans

for the provision of energy services to customers. By Order No.

91-885 issued October 21, 1991, the Commission adopted integxat.ed

resource planning procedures after a coll.aborative process

involving the Commission's jurisdictional electric utilities, the

South Carolina Department of Consumer Affairs, Nucor Steel, South

Carolina Energy Users Committee, and the Commission Staff. The

procedures were clarified by Order No. 91-1002.

1n 1993, it was brought to the Commission's attention that

Lockhart Power Company presented a unique situation for the

development of an integrated resource plan. Among other things,

Lockhart purchases 80: of its power from Duke Power Company.


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DOCKET NO. 93-430-E — ORDER NO. 93-950OCTOBER 14, 1993PAGE 2

Essentially, Lockhart has unique problems. The Commission agreed

that Lockhart presented a unique situation, and therefore

authorized the opening of this docket to establish a procedure, and

subsequently examine an IRp strictly for Lockhart Power Company.

The Staff has proposed a procedure for establishment of an

IRP for Lockhart Power Company as appears in Appendix A. The

Consumer Advocate reviewed Staff's recommendations and had no

objections to Staff's proposed filing requirements for Lockhart

Power Company.

The Commission has examined this matter and believes that the

procedure outlined in Appendix A to this Order is a reasonable

procedure for the establishment of an IRF for Lockhart Power

Company and therefore adopts same.

IT IS THEREFORE ORDERED THAT:

1. The procedure as appears in Appendix A to this Order for

establishment of an integrated resource plan for Lockhart Power

Company is hereby adopted.

2. That this Order shall remain in full force and effectuntil further Order of the Commission.

BY ORDER OF THE COMMISSION:

ATTEST:

Executive Director

(SEAL)


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APPENDIX A

FILING REQUIREMENTS

INTEGRATED RESOURCE PLANNING PROCESS

COMMISSION STAFF

SOUTH CAROLINA PUBLIC SERVICE COMMISSION

FOR LOCKHART POWER COMPANY

IRP OBJECTIVE:

The objective of the IRP process is the development of aplan that results in the minimization of the long run totalcosts of the utility's overall system and produces the leastcost to the consumer consistent with the availability of anadequate and reliable supply of electricity while maintainingsystem flexibility and considering environmental impacts. Inconjunction with the overall objective, the IRP shouldcontribute toward the outcomes of improved customer service,additional customer options, and improved efficiencies ofenergy utilization.

A. IRP FILING AND REPORTING PROCEDURES

1. Lockhart must file a 15 year IRP every three years. AnIRP is to be filed by November 1, 1993. Each subsequentIRP will be filed by June 30 or the nearest working dayto that date.a. The IRP filing must comply with all procedural and

substantive requirements set forth herein and anyadditional requirements established by the Commissionin future proceedings.

b. Upon receipt of Lockhart's IRP filing, a separatedocket will be established by the Commission. Atthat time, interested parties will be given anopportunity to intervene. Such parties will have 30days to intervene from publication of the notice.


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c. Lockhart will provide a copy of its IRP filing toeach intervenor no later than 5 days after receivingthe notice of intervention.

d. Approximately 10 days after the close of inter-vention, a conference will be held between Lockhartand the parties of record in that docket. Allparticipating parties will identify a list ofpreliminary issues and serve the issues on theutility five (5) days prior to the conference. Thepurpose of the conference will be to discuss theprocedural aspects of the proceeding, includingdiscovery; and in addition to establish a mechanismfor a collaborative process which will be utilized toexamine relevant issues. In the event that anyissues raised through the conference process are notresolved, the parties may request the Commission toset a hearing and/or establish other procedures toresolve specific problems. The hearing will focus onthe specific issues of concern and/or the points ofdisagreement resulting within the conference processpertaining to the utility's compliance with theestablished IRP procedures. In addition, the hearingcan address requests to modify the existing planningprocess. Lockhart will be expected to defend its IRPfiling regarding compliance with the proceduresestablished under the IRP process at the conferenceand within any prescribed hearing that is required.

e. At the conclusion of the IRP review the Commissionwill determine whether the IRP filed is reasonablyconsistent with the approved IRP procedures at thatpoint in time. Such a determination by theCommission does not constitute avoidance of anyprudence review, siting approvals, etc. deemednecessary by law or by Commission decision and/ororder.

f. The IRP process is dynamic and complex requiringvarious assumptions, forecasting techniques, andplanning methodologies. The IRP process mustrecognize the limitations on resources available tothe Commission and its Staff to evaluate the variousIRP's. In addition, the process should recognize thatthe limited resources available to small utilitiessuch as Lockhart impact the composition of the IRP'swhich can be developed and filed by such entities.

The Commission might wish to review alternatives inaddition to those incorporated within the utility'sIRP. The Commission can choose to specify reasonable


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alternatives not included within the IRP for theutility to develop and provide to the Commission.The exploration and evaluation of any suchalternative is not to be a specific part of the IRPfiled by the utility. The information could be usedby the Commission to evaluate the utility's IRP.Parties of record and staff may request theCommission to require the utilities to performanalyses or develop alternatives not included withinthe utilities filed IRP.

g. The separate docket for the utility will be closed atthe end of the three (3) years prior to the filing ofthe next IRP.

h. Lockhart must file with the Commission anysignificant changes to the IRP within 30 days of thedecision to change/amend. The filing will includethe analysis of the modification on which thedecision was based. When feasible, the utilityshould give reasonable advance notice to theCommission and the parties of record of anysignificant change it decides to make in the IRP.

i. Major changes, e.g. in laws, may necessitatemodification of the timetable set forth for thefiling and reporting procedures.

2. Lockhart must file, on an annual basis, a list of its DSM

programs and the projected impacts of such options, alongwith other related information.

B» REQUIREMENTS FOR THE DEVELOPMENT AND COMPOSITION OF THEIRP FILING

1. The IRP filing must contain a statement of both long-termand short-term objectives of the utility and how theseobjectives address the overall objective of the IRPprocess as stated by the Commission.

2. A copy of relevant supporting documentation necessary toexplain and understand the IRP must be filed with it.

3. The IRP filing must indicate how the resource plans seekto ensure that the utility incorporates the lowest costoptions for meeting the electricity needs of consumers,consistent with the availability of an adequate andreliable supply of electricity.

4. The IRP filing must seek to incorporate the customer as a


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part of the planning process through opening direct andindirect lines of communication; providing usefulinformation to consumers for efficient energy choices;providing various energy alternatives; and throughsending proper pricing signals.a. As a part of this endeavor, the utility should

identify existing programs that seek to encourageconsumer participation in DSM options, includingconservation.

b. The planning process should solicit consumer input asan integral part of the planning function.

In evaluating potential options for incorporation withinthe IRP, the utility must employ unbiased analysistechniques.

The IRP filing must evaluate the cost effectiveness ofeach supply-side and demand-side option in a manner thatconsiders relevant costs and benefits. To ensure properevaluation, the screening of DSM resources can be basedon more than one test. No single test is alwaysappropriate for all situations. Each option must beevaluated, using the appropriate test or tests, and theanalysis should include all appropriate costs. If achosen option is not the least cost, according to theappropriate test, the utility must provide a detailedexplanation with supporting evidence for its choice.

A measure of the net benefits resulting from the optionschosen within the IRP must be provided by the utility.The utility shall propose an IRP which minimizes totalresource costs to the extent feasible, giving due regardto other appropriate criteria such as system reliability,customer acceptance and rate impacts.

Environmental costs are to be considered on a monetizedbasis where sufficient data is available. Thoseenvironmental costs that cannot be monetized must beaddressed on a qualitative basis within the planningprocess. Environmental costs are to be considered withinthe IRP to the extent that they impact the utility'sspecific system costs such as meeting existing regulatorystandards and such standards as can be reasonablyanticipated to occur. The term "reasonably anticipatedto occur" refers to standards that are in the process ofbeing developed and are known to be forthcoming but arenot finalized at the time of analysis. This does notmean that the utility is prohibited from incorporatingfactors which go beyond the above definition. Should the


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utility feel that other factors (environmental or other)are important and need to be incorporated within theplanning process, it needs to justify within the IRP thebasis for inclusion.The utility must provide a demand forecast (to includeboth summer and winter peak demand) and an energyforecast. The forecast must incorporate explicittreatment of demand-side resources.

10. The plan must incorporate an evaluation and review ofthe existing demand-side options utilized by theutility. It should identify any changes in objectivesand specifically identify and quantify achievementswithin each specific program. The plan should include adescription of each program; program objectives;implementation schedule; and program achievements todate. An explanation must be provided outlining theapproaches used to measure program achievements andbenefits.

11. The IRP filing must identify and discuss any significantstudies being conducted by the company on futuredemand-side and/or supply-side options.

12. The IRP must be flexible enough to allow for theunknowns and uncertainties that confront the plan. TheIRP must have the ability to quickly adapt to changes ina manner consistent with minimizing costs whilemaintaining reliability.

13. The utilities must incorporate as part of their IRP's amaintenance and refurbishment program of existing unitswhen economically viable and consistent with systemreliability and planning flexibility.

14. Utilities must adequately consider all cost effectivethird-party power purchases including firm, unit, etc.,consistent with the IRP objective statement. Thisinvolves consideration of both interconnected andnon-interconnected third-party purchases. The utilitywill describe any consideration of joint planning withother utilities. The utility will identify all thirdparty power purchase agreements.

15. Lockhart must explain and/or describe any newtechnologies included in the IRP.

16. Each future supply-side option incorporated within theIRP must be identified. The fuel source; anticipatedgenerating capacity; anticipated date of initial


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construction; anticipated date of commercial operation;etc. must be provided for each option. The utilityshall identify the anticipated location of any futuresupply-side option when it is consistent with theutility's proprietary interests.

17. Lockhart's DSN plans should give attention to capturinglost opportunity resources. They include those costeffective energy efficiency savings that can only berealized during a narrow time period, such as in newconstruction, renovation, and in routine replacement ofexisting equipment.

18. The Commission realizes that the IRP process is dynamicand that modifications may be necessary over time. Newissues may arise, existing issues or components of theplan may change in significance, and improved analysistechniques may be developed. As these occur, they willbe evaluated for possible incorporation into the IRPprocess, or for separate consideration.

1 surrebuttal testimony and exhibit

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