UE 283 General Rate Case Filing For Prices Effective January 1, 2015

Transcription

1 BEFORE THE PUBLIC UTILITY COMMISSION OF THE STATE OF OREGON UE General Rate Case Filing For Prices Effective January, 0 PORTLAND GENERAL ELECTRIC COMPANY DIRECT TESTIMONY AND EXHIBITS February, 0

2 BEFORE THE PUBLIC UTILITY COMMISSION OF THE STATE OF OREGON UE / PGE / 00 Piro Lobdell UE Policy PORTLAND GENERAL ELECTRIC COMPANY Direct Testimony of Jim Piro Jim Lobdell February, 0

3 Piro Lobdell / i Table of Contents I. Introduction... II. Context... III. Continuous Improvement Cycle... A. Overview... B. Process Improvement Program... 0 C. Update on Efficiencies... IV. Mitigation and Price Increase... V. Potential New Resource Acquisition... A. Boardman Co-ownership... B. Pelton-Round Butte Co-Ownership... VI. Other Key Proposals... VII. Structure of PGE s Filing... 0 VIII. Qualifications... UE 0 General Rate Case Direct Testimony

4 Piro Lobdell / I. Introduction Q. Please state your name and position with Portland General Electric. A. My name is James J. Piro. I am the President and Chief Executive Officer for PGE. My name is Jim Lobdell. I am the Senior Vice President, Finance, Chief Financial Officer, and Treasurer at PGE. Our qualifications appear at the end of this testimony. Q. What is the purpose of your testimony? A. The purpose of our testimony is to: 0 Describe the context for this filing and the addition of two generating plants coming on line in the first part of 0 with a resulting price increase of.%; Describe how these plants meet our Integrated Resource Plan (IRP) identified resource needs for flexible capacity and renewable resources required by Oregon s Renewable Portfolio Standard (RPS); Discuss PGE s continuous improvement efforts and summarize the efficiency savings we have achieved through 0; Discuss our mitigation of the price increase; Highlight the potential for new resource acquisition; and Identify our other key proposals. My testimony is organized according to these objectives. UE 0 General Rate Case Direct Testimony DRAFT

5 Piro Lobdell / II. Context 0 0 Q. What is the business context for this rate case filing? A. The business context is our responsibility to provide safe, reliable electricity at a reasonable price for our customers. This context is influenced by the economy, customer choices and preferences, and compliance with regulations including our mandate to plan and implement long term strategies to meet our customers energy needs with both demand and supply-side resources that provide the best balance of cost and risk over time. Q. How is PGE s business context influenced by the economy? A. The economy influences our business context because economic growth drives load growth, and load growth enables us to absorb normal inflationary cost increases. While industrial loads are a cautious bright spot in the forecast, we expect flat to decreasing loads for commercial and residential customers when compared with 0 actual deliveries. The economy is seeing a slow recovery and our customers are still feeling the effects of the recent recession. Recognizing this, we continue to focus on a culture of efficiency and keeping our operations and maintenance (O&M) costs contained at a relatively flat level overall when compared with the costs reflected in our last general rate case order. Q. With regard to containing costs to a relatively flat level, what do you mean by flat? A. Flat means flat compared to the approved levels and prices in our last general rate case. To be more specific, we concluded our general rate case with a Commission order in December 0 based on a 0 test year. During that rate case process (UE ), we justified the increases to the 0 test year by making comparisons to the 0 actual expenses. With our current filing, rather than base our 0 test year budget assumptions on 0 actual UE 0 General Rate Case Direct Testimony

6 Piro Lobdell / 0 0 expenses, we used the final approved 0 test year costs and resulting prices. PGE Exhibit 00 provides more detail. Q. How is PGE s business context influenced by customer choices and preferences? A. We are in business to serve our customers, and our customers have alternatives: nonresidential customers may choose an alternate energy supplier and residential customers have fuel choices and distributed technologies. In addition, support for energy efficiency as the resource of choice among public policy makers, regulators, customer advocates, and within PGE itself reduces load growth that would otherwise be expected to accompany population and economic expansion. This prioritization of energy efficiency mirrors our customers preferences as well, and is reflected by a % reduction in average monthly residential energy use since 000. We support, and will continue to support, energy efficiency because it is the right thing to do and benefits our customers and our service area in many ways. To give more perspective on our support for energy efficiency, in 0, we collected about $ million for the Energy Trust of Oregon (ETO) and other agencies to fund programs for our customers to be more energy efficient. In the PGE 0 Draft IRP released in November 0, the ETO s projection for cost-effective energy efficiency acquired is. MWa for 0,.0 MWa for 0 and. MWa for 0. The projected. MWa energy efficiency is approximately.% of PGE s cost of service test year load forecast. Q. Are there other consequences to PGE s commitment to pursue cost-effective energy efficiency? A. Yes. In the long-run, our commitment to energy efficiency helps PGE displace the need for long-term, supply-side resources and we are steadfast in our commitment to cost-effective UE 0 General Rate Case Direct Testimony

7 Piro Lobdell / 0 energy efficiency as a first choice resource. However, in the short-term, energy efficiency leads to reduced contributions to our existing fixed costs, which raises customer prices. For example, absent the 0 target of.0 MWa of energy efficiency, the additional revenues to PGE in 0 would have allowed us to forgo the requested base revenue requirement increase in this case before consideration of Port Westward (PW) and the Tucannon River Wind Farm (Tucannon). Q. What else do customers expect of us? A. In addition, to support energy efficiency, customers expect us to deliver electricity safely and effectively to them, while also fulfilling broader mandates for a changing resource mix, with a smaller environmental footprint and compliance with all applicable standards and regulations. PW, consisting of twelve natural gas reciprocating engines and located 0 adjacent to the Port Westward plant, provides the flexible capacity PGE needs. Tucannon is coming into service to provide wind power to customers and help us meet the RPS. Q. How is PGE s business context influenced by compliance with regulations? A. Electricity generation and delivery is essential to our economy, society and all our lives. Just about every activity PGE is engaged in is regulated by one or more government entities. This is just a fact of being in the utility business. We recognize our responsibility as an essential service provider. Safe, ethical and compliant business practices are among our core principles that underpin everything we do. Extensive and complex regulatory requirements also raise the costs of doing business. Regulation is increasing, growing in complexity, and ever changing. We must hire experienced people to keep abreast of regulations and compliance while planning for the continued reliability of our operations and systems. The other core principles are continuous improvement, diversity and inclusion, community investment and environmental stewardship. UE 0 General Rate Case Direct Testimony

8 Piro Lobdell / 0 0 Q. What are your goals for PGE? A. First and foremost: deliver safe, reliable and reasonably priced electricity to customers with excellent customer service while complying with all applicable laws and regulations. We have strong core values that reflect our commitment to our customers, employees, community and shareholders. If we are successful, we will also ) be a preferred employer, attracting and retaining the best people; ) maintain a reputation as a caring and invested community partner, and ) attract investors by offering a competitive return on capital invested. Q. Does this rate case further the goals you just articulated? A. Yes. The current case is necessary due primarily to the addition of two new generating plants, PW and Tucannon. Both plants are expected to come online in the first part of 0 and we are filing this rate case to add them to customer prices when they do. PW is the resource chosen to meet the need for flexible capacity for peak customer demand and system balancing. We identified the need and the Commission acknowledged it in our 00 IRP. PW will be highly efficient and responsive to load variation, ramping up to full load in less than ten minutes (as compared with about four hours for traditional natural gas fired plants). Tucannon is the resource which will meet the IRP demonstrated need for 0 MWa of renewables to achieve Oregon s RPS that % of all large utilities retail electric sales be met with qualifying renewable energy resources by 0. Each plant was chosen after a rigorous process involving issuance of a Request for Proposals, review and scoring of bids, These plants are a result of the action plan implementation from PGE s 00 IRP (updated in 00, 0 and 0); while the specific projects were selected following a competitive RFP process in 0, the need to bring these resources into our prices has been anticipated for some time. UE 0 General Rate Case Direct Testimony

9 and validation by an Independent Evaluator. discussed in PGE Exhibit 00. UE / PGE / 00 Piro Lobdell / The process and plants are more fully 0 In summary, we are diligently working to bring these facilities online, on time, and on budget as they are essential to our providing safe, reliable electricity at a reasonable price and helping us meet Oregon s RPS. Q. How does this rate case reflect your commitment to managing your costs? A. This case reflects the savings achieved through our continuous improvement and efficiency efforts which are ongoing. As discussed in the next section, our adoption of continuous improvement cycles demonstrates our efforts to manage costs, streamline processes, learn from others, and create a continuous improvement culture at PGE. UE 0 General Rate Case Direct Testimony

10 Piro Lobdell / III. Continuous Improvement Cycle A. Overview Q. In the previous section you stated your goals for PGE. Please elaborate on these goals as they relate to your strategic direction. A. We are striving to deliver on our core business strategy by focusing on: 0 Creating a positive safety culture; Keeping customer energy priorities our business focus; Ensuring PGE culture supports our objectives; Improving our operating efficiency in all aspects of our business; Maintaining plant and system availability while successfully executing on system investments; Improving our financial result; and Maintaining excellent stakeholder relationships. 0 Q. How does PGE hold business units accountable to these goals? A. Accountability starts at the corporate level. Each year we develop corporate scorecard metric goals related to operational excellence that are focused on four key areas: high customer value, reliability and reasonably priced power, financial performance, and an engaged and valued workforce. These metrics measure PGE s operational excellence progress toward a stated goal. Our progress towards each goal is monitored quarterly. Each of these focused areas of accountability cascade down to functional areas and to individual business units. This alignment allows officers to monitor their areas of responsibility from their direct reports, to each manager and each employee as part of our continuous improvement cycle. UE 0 General Rate Case Direct Testimony

11 Piro Lobdell / Q. Please explain PGE s continuous improvement cycle. A. PGE s continuous improvement cycle is a constant and ongoing effort toward increasing our efficiency and effectiveness. Thus, after PGE functional units have identified and implemented improvements, the cycle begins again and we rotate through the organization searching for new efficiencies. PGE remains committed to its continuous improvement cycle and to becoming more efficient and effective in our day-to-day activities. The 0 0 continuous improvement cycle aids PGE by helping each functional area understand how we compare to functional areas in similar companies, determine areas to strategically focus on and improve our operational efficiency and effectiveness. Q. Is there a PGE department responsible for leading this effort? A. Yes. The Corporate Performance Management group leads many of our efforts towards improvement, although not all. The expectation to drive for efficiency lies within all business units throughout PGE. Some of these business units have conducted their own benchmarking study because of less available common measureable data. Whether led by Corporate Performance Management or undertaken by the business unit, the common goal for all departments is to continuously improve operational efficiency. Benchmarking is used as a tool to analyze, plan and improve overall performance. Q. Please explain the steps within the continuous improvement cycle. A. The cycle consists of seven steps:. Perform data Collection;. Perform benchmarking and best practice assessment;. Analyze and communicate results; This is not limited to just benchmarking. It could include other efforts such as Lean process improvement. UE 0 General Rate Case Direct Testimony

12 Piro Lobdell / 0 0. Build understanding and commitment for action;. Evaluate cost benefit and establish improvement goals;. Implement improvements; and. Monitor and revise as needed. After the first cycle completes, another cycle is planned. Some departments are now beginning the second cycle of corporate benchmarking, such as Fleet, while others are still in the first cycle. Q. Do all business units go through this standard cycle? A. No. While some utility functions such as Information Systems and Customer Service have well established vendors that offer benchmarking services with reliable data and valid comparisons, other areas such as Corporate Communications and Public Policy are more difficult to benchmark due to less available common measureable data. Q. How does PGE benchmark areas with less available data? A. Certain functional areas independently conduct peer utilities surveys to determine how similar functions operate and then identify improvements in their areas of responsibility. Q. How long will this benchmarking effort go on? A. PGE s continuous improvement process is an ongoing effort with results expected over multiple years. As we stated previously, there are several business units in varying stages of the benchmarking process at any given time. Although we do not expect large savings each and every year, we are striving for overall cumulative savings and will continue our effort for continuous improvement as part of PGE s Corporate Strategic Direction and Core Principles. Q. What is PGE doing to manage the change occurring throughout the organization? UE 0 General Rate Case Direct Testimony

13 Piro Lobdell / 0 A. We have employed a Change Management Group to assist employees with the change process and to serve as the central resource to provide change management consulting services to facilitate change capability and readiness. Change Management is a structured approach to shifting and transitioning individuals, teams, and organizations from their current state to a desired future state. This in-house structure reduces third-party consultant fees. PGE s Change Management Group will create change competency and empower individuals, teams and organizations to embrace change in the current business environment. B. Process Improvement Program 0 Q. Is benchmarking the only tool PGE is using to improve the efficiency and effectiveness of its operations? A. No. There is no one size fits all solution for efficiency and improvement work; benchmarking is just one tool PGE employs. Some of PGE s other approaches include Lean reviews and business process analysis. Q. What else is PGE doing to improve the efficiency and effectiveness of its operations? A. PGE is currently planning to pilot a Process Improvement initiative during 0. The program will pair education of process improvement methodologies with practical application through training and the implementation of improvement initiatives. The expected value added by the proposed program would: 0 Provide common tools that minimize inconsistency across improvement and efficiency work; Build internal capability and capacity, making PGE less dependent on external consultants; UE 0 General Rate Case Direct Testimony

14 Piro Lobdell / Train leaders to help facilitate culture and environment; Provide a central governance process to improve awareness and tracking of results in alignment with strategic priorities; and Reinforce a culture of improvement and best practice in employees daily work and continuously monitoring and measuring results. The program will be conducted using existing PGE resources including mentoring and leadership. C. Update on Efficiencies 0 Q. Please describe the cost savings you have achieved. A. In our previous general rate case, UE, PGE estimated that we would achieve approximately $. million in cumulative efficiency savings through 0. Since then, we have revised this estimate by $. million and we now expect $. million in efficiency savings through 0. Table below, summarizes expected efficiencies by functional area. Business Unit Table Total O&M Savings ($ millions) UE 0 Test Year Revised Cumulative through 0 Additions in 0 Test Year Cumulative through 0 Forecast* A&G $. $. $0.0 $. Finance Human Resources IT T&D Gov t Affairs/Public Policy Customer Service Total* $. $. $. $. * May not sum due to rounding. Q. What do these savings represent? A. Table represents gross cumulative savings over a number of years, which reflect the facts that: ) efficiency improvements can take time to realize; and ) the functional areas are at UE 0 General Rate Case Direct Testimony

15 Piro Lobdell / 0 different stages of the continuous improvement cycle, with some beginning the process earlier than others. In addition, the amounts above represent both hard savings and avoided costs. Q. Please explain what you mean by avoided costs. A. Avoided costs are the costs that PGE would have incurred had we not found better solutions. Therefore, costs would have been higher had we not avoided them and found a more effective and less costly alternative. Q. What are the total cumulative benefits projected by PGE through 0? A. PGE is projecting total cumulative savings and avoided costs of $. million through 0. Of this total $. million ( percent) is considered avoided cost savings. PGE Exhibit 0 (with the Corporate Support testimony), provides more detail regarding the components of the $. million savings. UE 0 General Rate Case Direct Testimony

16 Piro Lobdell / IV. Mitigation and Price Increase 0 0 Q. In the previous section you discussed your commitment to efficiency and continuous improvement and identified $. million in cumulative savings. Is this a one-time amount or is it an annual amount? A. The $. million cumulative savings through 0 represents an annual level of savings. Q. As noted above, a portion of the $. million savings consists of $. million additional savings in 0. How was your 0 budget flat (as noted in Section II) given these additional savings? A. The 0 budget is within $. million of the costs that are currently in PGE s retail rates, as approved by Commission Order No. -. Other budgeted 0 costs were known to increase, such as depreciation, which largely offset the additional $. million savings. For additional details, see PGE Exhibit 00, Section I, B. Q. What else have you done to reduce the price increase in this rate case? A. As our business grows, we have worked hard to keep costs down to offset impacts of inflation. We took a number of specific actions including: ) reducing our request related to incentive compensation costs, ) asking to smooth effects of environmental remediation by spreading project costs over a longer period of time, and ) updating our depreciation and line-loss studies. We also propose to refund excess funds in the Trojan Decommissioning Trust, due to the outcome of PGE s claim against the US Department of Energy, and Oregon Independent Spent Fuel Storage Installation (ISFSI) tax credits to further mitigate the price increase. The refunds are discussed in PGE Exhibit 00. Q. What is the overall price increase that PGE is requesting in this proceeding? UE 0 General Rate Case Direct Testimony

17 Piro Lobdell / A. With Commission approval of all elements of this filing, PGE cost of service and direct access customers would see an overall.% increase in customer prices. The.% includes PW, Tucannon, and the refunds planned with regard to the Trojan Decommissioning Trust and ISFSI credits (PGE Schedule ). Beginning in January 0, cost of service and direct access customers will experience a price decrease of 0.% with the increases going into effect as each of the two new plants enter service to total the overall increase of.%. UE 0 General Rate Case Direct Testimony

18 Piro Lobdell / V. Potential New Resource Acquisition A. Boardman Co-ownership 0 Q. Is PGE negotiating with a Boardman Coal Plant co-owner to acquire its Boardman share? A. Yes. Power Resources Cooperative (PRC), a 0 percent owner of the Boardman coal plant, is interested in selling its share to PGE. PRC is a cooperative corporation whose members are Northwest retail electric distribution cooperatives, and none of its members take power from Boardman to load. At the time PRC negotiated a share of Boardman in, the plant was under construction and PRC believed it had to secure generation to meet projected loads. PRC has no use for its share of the output and it no longer desires to be in the wholesale power generation supply business. PGE is interested in acquiring the 0% share, as long as the acquisition has a net zero or a beneficial impact to customers. More information is provided in PGE Exhibit 00. Q. Has PGE and PRC reached agreement? A. Not yet. Negotiations are pending. If agreement is reached, we will update this filing April, 0. B. Pelton-Round Butte Co-Ownership 0 Q. Is PGE negotiating a long-term contract with Confederated Tribes of the Warm Springs Reservation (Tribes) for the output of the Tribes share of the Pelton/Round Butte and Re-Regulation Projects (Projects)? A. Yes. PGE is negotiating with the Tribes for the Tribes to forego their right to sell the output of their one-third share of the projects on the market, and sell the energy and capacity output to PGE for ten years, starting January, 0. UE 0 General Rate Case Direct Testimony

19 Piro Lobdell / 0 Q. What is your current agreement? A. Historically, PGE has purchased the energy output from the Warm Spring Power and Water Enterprises (WSPWE the Tribes administering agency) on a year to year contractual basis with PGE s risk that WSPWE will exercise its right to sell its one-third share output on the market annually. Q. Why is the current agreement changing? A. WSPWE gave PGE notice of its intent to go to market and develop an auction process to sell the one-third share output to the highest bidder, as is their right under the operating agreement. As an alternative to WSPWE exercising this option, PGE and WSPWE have negotiated key terms for a multi-year agreement. Upon executing an agreement, PGE will update this filing. PGE Exhibit 00 provides more detail on negotiations and terms. UE 0 General Rate Case Direct Testimony

20 Piro Lobdell / VI. Other Key Proposals Q. Besides the addition of PW and Tucannon, what other key proposals are in this rate case? A. Our case includes the following key proposals: Pricing changes: o Increase the residential customer charge by $.00 per month and increase the small commercial (Schedule ) customer charge by $.00 per month for single phase and $.00 per month for phase service. The increase in the customer charge, albeit small, is to enable PGE to recover more of our fixed costs in the customer charges and reduce the recovery in the volumetric charges. Our 0 0 approach is incremental. The small increase balances the need for greater fixed cost recovery, with the principle that the volumetric energy prices provide a signal for customers to use energy efficiently. o Approve new Schedule, Spent Fuel Adjustment, that passes along to customers, refunds from: ) the US Department of Energy to the Trojan Nuclear Decommissioning Trust Fund related to the settlement of Trojan nuclear plant decommissioning expenses; and ) Oregon Department of Energy payments related to state pollution tax credits for the Trojan Independent Spent Fuel Storage Installation (ISFSI). Schedule will provide the approximately $0 million trust fund refund during a three year period, and the approximately $. million ISFSI refund in one year. o Integrating the Schedule 0 load-following credit into the energy charge which would apply the credit to a Schedule 0 customer s entire load. The credit was UE 0 General Rate Case Direct Testimony

21 Piro Lobdell / 0 0 approved when the Commission accepted the stipulations in UE. Pricing changes are discussed in PGE Exhibit 00. Inclusion of $. million of capitalized costs associated with PGE s implementation and eventual participation in an Energy Imbalance Market (EIM), either a Northwest Power Pool market development initiative or the PacifiCorp and California Independent System Operator EIM. PGE is taking a leadership position in regional EIM efforts. The goal is greater reliability at lower cost. We expect to make our decision which, if either, to join by year end 0. PGE Exhibit 00 discusses this further. An accounting order that allows PGE to mitigate and smooth the impact of the environmental remediation costs of the Downtown Reach, and later, Portland Harbor. This allows PGE to spread the incremental cost of the projects over twenty years to reduce the volatility of customer prices. PGE Exhibit 00 further describes the proposal. A major maintenance accrual for PW similar to the accrual for Port Westward and Coyote Springs plants which is further discussed in PGE Exhibit 00. A forecasted capital structure of 0% equity and 0% debt to allow PGE to maintain our stable, investment grade credit rating, which will provide the financial strength necessary to make ongoing investment in our system, optimize the cost and access to capital markets, and provide access to wholesale fuel and power markets. An authorized return on equity of 0%, which is at the low end of the range recommended by our expert witness, Dr. Zepp, in PGE Exhibit 00. Dr. Zepp s range is based on his sample using several methodologies. His recommended point estimate is 0.%, which is above the sample average because PGE has more risk than the average utility in the sample. Our recommended 0% rate reflects PGE s request for accounting UE 0 General Rate Case Direct Testimony

22 Piro Lobdell / 0 orders and our desire to help mitigate the impact of increased costs given the slow recovery from the Great Recession in our service territory. The 0% rate, while below the recommended average estimated by Dr. Zepp, would still provide a fair investment opportunity for our shareholders, assuming the accounting orders are approved. Recovery of all costs and provision of all benefits related to renewable resources through the RAC consistent with ORS A.0. Doing so will provide PGE the opportunity to recover all prudently incurred costs and customers to receive all the benefits associated with PGE s RPS compliance. The current method of including renewables in the PCAM does not allow recovery of all such prudently incurred costs due to the workings of the PCAM. Our proposed change is discussed in more depth in PGE Exhibit 00. Q. Will the results of this rate case affect PGE s access to and cost of capital to fund investments in the near future? A. Yes. The results of this case, as filed, will provide PGE with the opportunity to generate sufficient earnings and funds with which to meet its financial obligations as well as provide a fair opportunity for our shareholders. UE 0 General Rate Case Direct Testimony

23 Piro Lobdell / 0 VII. Structure of PGE s Filing 0 0 Q. How is PGE presenting this case? A. PGE is presenting the following direct testimony: In Exhibit 00, Ham Nguyen, Senior Economist and Sarah Dammen, Economist, explain the process and method in forecasting the 0 test year load forecast. In Exhibit 00, our project managers, Alex Tooman and Robert Macfarlane, summarize the overall 0 test year revenue requirement, comparing the request with the 0 approved prices in UE and UE. This testimony also presents and uses, for test year purposes, PGE s request for new depreciation rates, based on the depreciation study before the Commission in UM. It discusses the amortization of refunds related to Trojan decommissioning, PGE s rate base, the costs associated with PW and Tucannon, and how PGE proposes to include them in rates. In Exhibit 00 Maria Pope, Senior Vice President of Power Supply and Operations and Resource Strategy and Jim Lobdell, Senior Vice President, Finance, Chief Financial Officer and Treasurer, describe the new generation resources, Tucannon and PW. In addition, the witnesses review the extensive planning and processes that led to the selection of the projects. Finally the joint testimony discusses the costs of the resources and PGE s progress to date to bring the projects on line, on time and on budget. In Exhibit 00, Managers Mike Niman, Terri Peschka, and Patrick Hager provide the initial forecast of PGE s Net Variable Power Costs (NVPC); discuss updates to parameters and modeling changes, comparing the forecast with the final 0 NVPC forecast; and present PGE s proposal to carve out renewable resources from the PCAM, UE 0 General Rate Case Direct Testimony

24 Piro Lobdell / 0 0 passing those benefits and costs through PGE s Renewable Resource Automatic Adjustment Clause. In Exhibit 00, Arleen Barnett, Vice President of Administration and Jardon Jaramillo, Director of Compensation and Benefits, present PGE s compensation costs for the 0 test year, efficiency gains, changes to compensation policies and plans, and proposed pension cost recovery. In Exhibit 00, Jim Lobdell, Senior Vice President, Finance, Chief Financial Officer and Treasurer, Cam Henderson, Vice President of Information Technology (IT), and Alex Tooman, Project Manager, explain PGE s costs and cost drivers related to corporate support operations including insurance, environmental services, business continuity and emergency management and Information Technology. In Exhibit 00, Stephen Quennoz, Vice President of Power Supply and David Weitzel, Analyst, Financial Analysis Group support PGE s O&M costs associated with PGE s long term power supply resources including plants and contracts. The joint testimony also discusses potential participation in an EIM, the PRC negotiations for sale of its Boardman share, recent plant performance and ongoing efforts to improve plant performance, reliability and safety. In Exhibit 00, Bill Nicholson, Senior Vice President of Customer Service, Transmission and Distribution and Bruce Carpenter, Vice President of Distribution, explain PGE s 0 test year transmission and distribution O&M expenses and efficiencies. In Exhibit 000, Kristin Stathis, Vice President of Customer Service Operations and Carol Dillin, Vice President of Customer Strategies and Business Development explain customer service O&M costs for the 0 test year; provide an update on the Customer UE 0 General Rate Case Direct Testimony

25 Piro Lobdell / 0 Engagement Transformation project and fee free bankcard program; and discuss improvement initiatives. In Exhibit 00, Patrick Hager, Manager of Regulatory Affairs, William Valach, Director of Investor Relations, and Brett Greene, Assistant Treasurer and Director of Treasury and Tax recommend PGE s cost of capital and capital structure for the 0 test year. In Exhibit 00 Thomas Zepp, economist, principal of Zepp Consulting LLC, and vice president of Utility Resources, Inc. estimates PGE s required return on equity and describes the analysis undertaken. In Exhibit 00, Bruce Werner and Bonnie Gariety, both Pricing and Tariff analysts, describe marginal cost studies for distribution and customer service, respectively. In Exhibit 00, Marc Cody, Senior Pricing Analyst, describes the marginal cost study for generation and demonstrates how the proposed tariff changes recover PGE s 0 revenue requirement to achieve fair, just and reasonable prices for our customers. The testimony also discusses changes to various supplemental schedules and the new Schedule, Spent Fuel Adjustment. UE 0 General Rate Case Direct Testimony

26 Piro Lobdell / VIII. Qualifications Q. Mr. Piro, please describe your educational background and experience. A. I received a Bachelor of Science degree from Oregon State University in Civil Engineering in with an emphasis in Structural Engineering. In addition, I have taken postgraduate courses in engineering, accounting, economics, and ratemaking. I am a registered 0 Professional Engineer in Civil Engineering in the State of California (Registration No. ). I joined Portland General Electric in 0 and have held various positions in Generation Engineering, Economic Regulation, Financial Analysis and Forecasting, Power Contracts, Economic Analysis, Planning Support, Analysis and Forecasting, and Business Development. I was elected Vice President of Business Development in and then became Chief Financial Officer and Treasurer on November, 000. I was then named Senior Vice President, Finance, Chief Financial Officer and Treasurer on May, 00, and then became Executive Vice President, Finance, Chief Financial Officer and Treasurer effective July, 00. I entered my current position as President and Chief Executive Officer effective January, 00. I also serve on several community and business boards including 0 LifeWorks Northwest, Greater Portland Inc., Oregon State University Foundation, the PGE Foundation, the Oregon Business Council, and the Edison Electric Institute. Q. Mr. Lobdell, please describe your qualifications. A. I received a Bachelor of Science degree from the University of Oregon in. Since joining PGE in I have held a variety of positions at PGE and its affiliates including Vice President of Power Operations; Vice President, Risk Management, Reporting, and Control; Vice President of Portland General Distribution Company; Vice President of UE 0 General Rate Case Direct Testimony

27 Piro Lobdell / Portland General Holdings II; Vice President of FirstPoint Utility Solutions; Manager of Financial Risk Management and Pricing at PGE; Treasurer of Tule Hub Services Company; Manger of Commercial Group Accounting for Portland General Holding; Project Manager for Columbia Willamette Development Company; and Supervisor of Accounting Operations for Portland General Corporation. I entered my current position as PGE Senior Vice President, Finance, Chief Financial Officer, and Treasurer in March 0. Q. Does this conclude your testimony? A. Yes. UE 0 General Rate Case Direct Testimony