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1 BEFORE THE PUBLIC UTILITIES COMMISSION

2 STATE OF COLORADO

3 -------------------------------------------------------

4 DOCKET NO. 09A-324E VOLUME 10

5 -------------------------------------------------------

6 IN THE MATTER OF THE APPLICATION OF TRI-STATE


GENERATION AND TRANSMISSION ASSOCIATION, INC., (A) FOR
7 A CERTIFICATE OF PUBLIC CONVENIENCE AND NECESSITY FOR
THE SAN LUIS VALLEY-CALUMET-COMANCHE TRANSMISSION
8 PROJECT, (B) FOR SPECIFIC FINDINGS WITH RESPECT TO EMF
AND NOISE, AND (C) FOR APPROVAL OF OWNERSHIP INTEREST
9 TRANSFER AS NEEDED WHEN PROJECT IS COMPLETED.
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10 DOCKET NO. 09A-325E

11 -------------------------------------------------------

12 IN THE MATTER OF THE APPLICATION OF PUBLIC SERVICE


COMPANY OF COLORADO (A) FOR A CERTIFICATE OF PUBLIC
13 CONVENIENCE AND NECESSITY FOR THE SAN LUIS VALLEY TO
CALUMET TO COMANCHE TRANSMISSION PROJECT, (B) FOR
14 SPECIFIC FINDINGS WITH RESPECT TO EMF AND NOISE, AND
(C) FOR APPROVAL OF OWNERSHIP INTEREST TRANSFER AS
15 NEEDED WHEN PROJECT IS COMPLETED.
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16

17 PURSUANT TO NOTICE to all parties in

18 interest, the above-entitled matter came on for hearing

19 before MANA L. JENNINGS-FADER, Administrative Law Judge

20 of the Public Utilities Commission, on July 30, 2010;

21 said proceedings having been reported in shorthand by

22 James L. Midyett and Harriet S. Weisenthal, Certified

23 Shorthand Reporters.

24 WHEREUPON, the following proceedings were

25 had:
2
1 APPEARANCES

2 (AS NOTED OF RECORD.)

3 EXHIBITS

4 NUMBER MARKED ADMITTED

5 Exhibit No. 144 33 40


Exhibit No. 145 77
6 Exhibit No. 146 153
Exhibit No. 147 182
7 Exhibit No. 148 206

8 INDEX

9 WITNESS PAGE

10 ANJALI SHEFFRIN, Ph.D. 38


Direct Examination by Mr. Douglas 38
11 Voir Dire Examination by Mr. McGann 78
Direct Examination Con't by Mr. Douglas 130
12 Voir Dire Examination by Mr. Sopkin 157
Direct Examination Con't by Mr. Douglas 169
13 Voir Dire Examination by Mr. Sopkin 176
Direct Examination Con't by Mr. Douglas 182
14 Voir Dire Examination by Mr. Sopkin 184
Cross Examination by Mr. Sopkin 195
15 Redirect Examination by Mr. Douglas 232

16

17

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20

21

22

23

24

25
3
1 PROCEEDINGS

2 A.L.J. JENNINGS-FADER: Call this

3 proceeding to order.

4 This is a continuation of the hearing in

5 dockets numbered 09A-324E and number 09A-325E, the

6 applications to construct a transmission line and for

7 other findings filed by Public Service Company of

8 Colorado and Tri-State Generation & Transmission

9 Association.

10 My name is Mana Jennings-Fader. I'm the

11 Administrative Law Judge assigned by the Commission to

12 hear this case.

13 I would like to begin this morning by

14 taking appearances, beginning with the applicant.

15 MR. DOUGHERTY: Good morning, Your Honor,

16 Tom Dougherty, of the law firm of Rothgerber, Johnson &

17 Lyons, on behalf of Tri-State Generation & Transmission

18 Association.

19 A.L.J. JENNINGS-FADER: Good morning.

20 MR. McGANN: Good morning.

21 David McGann on behalf of Public Service

22 Company of Colorado.

23 A.L.J. JENNINGS-FADER: Good morning.

24 MR. SOPKIN: Good morning.

25 Greg Sopkin on behalf of Public Service


4
1 Company of Colorado.

2 A.L.J. JENNINGS-FADER: Good morning.

3 MR. SANTISI: Good morning, Your Honor.

4 Michael Santisi, Assistant Attorney

5 General, appearing on behalf of staff of the PUC.

6 A.L.J. JENNINGS-FADER: Thank you and

7 morning.

8 MR. SCHLESINGER: Good morning, Your

9 Honor.

10 Jake Schlesinger, Assistant Attorney

11 General, on behalf of the Office of Consumer Counsel.

12 A.L.J. JENNINGS-FADER: Good morning.

13 MR. DAVIDSON: Good morning, Your Honor.

14 Mark Davidson of the law firm of Holland

15 & Hart appearing on behalf of Pole Canyon.

16 A.L.J. JENNINGS-FADER: Good morning,

17 Mr. Davidson -- sorry to get you up so early.

18 MR. DAVIDSON: I heard about that.

19 MR. FLANAGAN: He thought he came to shut

20 us down, last hearing, so that's why Holland & Hart has

21 sent him back.

22 A.L.J. JENNINGS-FADER: Mr. Flanagan, top

23 of the morning to you.

24 MR. FLANAGAN: Top of the morning to you,

25 Your Honor.
5
1 Tim Flanagan on behalf of Trinichera

2 Ranch. With me today is Matt Douglas and Tim McDonald.

3 A.L.J. JENNINGS-FADER: And

4 Mr. Macdonald, I wish to apologize. On Monday I forgot

5 to mention congratulations on the birth of your baby.

6 MR. Mcdonald: Thank you, Your Honor.

7 A.L.J. JENNINGS-FADER: Other counsel?

8 MS. MANDELL: Yes, Your Honor.

9 Vicky Mandell on behalf of Western

10 Resource Advocates.

11 Good morning.

12 A.L.J. JENNINGS-FADER: Good morning.

13 MR. HICKEY: Good morning, Your Honor.

14 Lisa Tormoen Hickey of the law firm

15 Alpern Meyer Stuart for Interwest Energy Alliance.

16 A.L.J. JENNINGS-FADER: Good morning.

17 Other counsel?

18 MS. JENSEN: Mary Jensen, Peterson &

19 Fonda, representing Bar Nothing.

20 A.L.J. JENNINGS-FADER: Good morning.

21 MS. JENSEN: Good morning.

22 A.L.J. JENNINGS-FADER: If counsel has

23 not entered an appearance this morning, I'm going to

24 assume counsel is not present and the associated client

25 is not represented at the hearing this morning.


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1 I have many preliminary matters I would

2 like to discuss today. I'm going to start by noting

3 for the record that pursuant to the Commission's

4 practice and procedure, this proceeding is being

5 webcast. I ask whether any party present has an

6 objection?

7 (No response.)

8 A.L.J. JENNINGS-FADER: I see none.

9 My first preliminary matter is to put on

10 the record that on Wednesday, the 28th of July, the

11 Commission decided -- although it has not yet issued a

12 written decision to this effect, that the application

13 of Public Service Company in Docket No. 10A-377E, which

14 is the application of Public Service to amend its 2007

15 Colorado Resource Plan would be dismissed with

16 prejudice -- without prejudice, excuse me.

17 As all the parties are aware, one of the

18 two issues about which we're holding this reopened

19 hearing is the effect of that amendment on the need for

20 this transmission line. Notwithstanding the fact that

21 the Commission has dismissed the application, I will

22 continue with the hearing today and will hear the

23 remainder of the evidence with respect to both issues

24 that were identified for consideration in the reopened

25 proceeding, so that in the event the Commission decides


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1 that it will go forward with the other application,

2 then we won't have lost the opportunity to hear

3 evidence on that -- on that matter. So we will proceed

4 today. We'll hear all testified -- excuse me, all the

5 testimony on both issues.

6 The next matter I wish to discuss has

7 nothing to do with any party in this proceeding but has

8 everything to do with filings that were made by members

9 of the public in response to my allowing the public to

10 file written comments in this matter through close of

11 business last Wednesday the 28th.

12 Based on filings that were made and which

13 have been posted in the Commission's E-Filing website

14 in this proceeding, there appears to be significant

15 misunderstanding on the part of members of the public

16 about the past procedures that have been followed in

17 this case and about the purpose for reopening -- for

18 allowing additional written public comment.

19 I wish to address that now. I don't wish

20 to have any party chime in or say anything, this is

21 purely my statement for the record with respect to this

22 question.

23 I need to set a little background. The

24 applications in both -- both applications were filed on

25 the same day, the 14th of May, 2009. Both applications


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1 were given public notice by a notice issued on the 15th

2 of May, 2009.

3 In response to the notice of applications

4 filed, 18 parties intervened and six of those

5 intervenors have participated, presented witnesses in

6 this evidentiary proceeding.

7 Through the close of the evidentiary

8 hearing in February of 2010, the Commission received 48

9 written comments concerning the applications. Of those

10 written comments, 27 opposed the project, nine

11 supported the project, ten addressed issues that are

12 not related to the proceeding, and two requested a

13 moratorium on consideration of this application pending

14 the conclusion of certain proceedings that were then

15 going forward in Huerfano County and also before the

16 Rural Utility Service of the U.S. Department of

17 Agriculture.

18 When -- following the opening of the

19 proceeding, the Commission held -- I personally held

20 two hearings to take public comments. The first of

21 those public comment hearings was held in Walsenburg,

22 Colorado, on November 9, 2009. At the hearing I heard

23 the testimony of 20 individuals, a number of whom

24 represented or spoke on behalf of a group of

25 individuals. The Walsenburg hearing lasted three


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1 hours.

2 The second public hearing was held in

3 Alamosa, Colorado, on November 10th, 2009. At that

4 hearing, I heard the testimony of 36 individuals, a

5 number of whom represented and spoke on behalf of the

6 group. That Alamosa hearing lasted three and one half

7 hours.

8 Twelve exhibits were offered at the -- at

9 the two public hearings and were admitted into

10 evidence.

11 The statements made at the two public

12 hearings and the twelve exhibits are part of the

13 evidentiary record in this proceeding.

14 The written comments to which I made

15 earlier reference are comments of which the Commission

16 will not take administrative notice but which the

17 Commission will read and consider in issuing its

18 decision in this case. Those written comments, the 48

19 written comments, are not part of the evidentiary

20 record in this proceeding.

21 I make these statements as preliminary

22 statements to address a request that was received 31

23 times in the public comment period that I allowed to

24 reopen for the purpose of taking comments through close

25 of business on Wednesday, the 28th. It is a concern to


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1 me that it appears the folks who wrote those comments

2 did not appreciate or fully understand the extent to

3 which this Commission has extended itself to take

4 public comment in this proceeding.

5 For the reasons I've already stated and

6 the factual bases of the procedures that have been

7 followed to date, I find it disconcerting to be told

8 that, quote, The judicial process has been less than

9 exemplary, unquote; and that the public has received

10 short shift and has received little ability to present

11 input into this case.

12 Aside from the representation of the

13 parties in the evidentiary hearing, we have had, as I

14 said, extensive public comment under oath that was part

15 of the evidentiary record. And for those reasons, I

16 will not do what the requesters have suggested of

17 extending the time for public comment for an additional

18 two weeks. There has been public comment available

19 for -- since May of 2009, through February of 2010, two

20 public hearings, and an additional ability to write

21 further comments.

22 That ends that preliminary matter.

23 I would like to remind the parties of the

24 procedures that we will follow this morning or in this

25 proceeding as necessary, a ten-minute break in the


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1 morning, a 45-minute break for lunch; and if we're

2 still going this afternoon, a ten-minute break in the

3 afternoon.

4 I understand from Public Service and from

5 Tri-State that they -- that neither intends to offer

6 rebuttal testimony to Mr. Dauphinais's testimony; is

7 that correct?

8 MR. SOPKIN: That's correct.

9 MR. DOUGHERTY: Yes, Your Honor.

10 A.L.J. JENNINGS-FADER: My last -- thank

11 you.

12 My last preliminary matter is we have

13 pending a motion for administrative notice filed by

14 Trinichera Ranch. I'll take oral argument -- yes, Ms.

15 Mandell?

16 MS. MANDELL: I'm prepared to take oral

17 argument in whichever order you would like.

18 A.L.J. JENNINGS-FADER: I would like

19 you -- could you come up so I just remember?

20 Thanks.

21 I have read the pleadings and so I would

22 prefer to take the pleadings as submitted and allow

23 oral response first from the applicants and then from

24 any other party that wishes to make a presentation and

25 then take response from the Trinichera Ranch.


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1 Applicants?

2 MR. SOPKIN: Yes, Your Honor.

3 Would you rather I head to the podium

4 or --

5 A.L.J. JENNINGS-FADER: Whichever is more

6 comfortable.

7 MR. SOPKIN: Thank you.

8 Your Honor, as I understand it, the

9 Trinichera Ranch's motion for administrative notice

10 seeks -- asks the Commission to take administrative

11 notice via Commission Rule 723-1-1501(c) of a number of

12 pleadings that have been filed in dockets other than

13 this docket.

14 And to state up front, we believe that

15 the documents for which administrative notice have been

16 requested are not relevant to the reopened evidentiary

17 record in this matter and I don't think there is any

18 argument contained herein that they are relevant to the

19 reopened evidentiary record. And, in fact, since no

20 shortened notice was requested, I assume they concede

21 that point.

22 The remaining evidentiary record is

23 closed, as I understand it; and so the purpose for this

24 administrative notice would be, I guess, to reopen the

25 docket to consider these additional pleadings that have


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1 been filed in other cases that are in all cases

2 advocacy pleadings.

3 Rule 1501(c) says, The Commission may --

4 may take administrative notice of general or undisputed

5 technical or scientific facts -- and I'm skipping a few

6 words here -- documents in its files -- skipping a few

7 more words -- and facts capable of accurate and ready

8 determination by a resort to sources whose accuracy

9 cannot reasonably be questioned.

10 And at the end of that rule it states:

11 Every party shall be afforded an opportunity to

12 controvert the fact to be so noticed.

13 We believe that the -- that it's improper

14 to attempt to admit as part of the administrative

15 notice rule advocacy pleadings of parties -- and that

16 would include, by the way, us, Public Service Company

17 of Colorado. It's one thing to request administrative

18 notice of a Commission decision or a Colorado statute

19 or some type of scientific fact that cannot reasonably

20 be questioned; it's quite another to simply ask the

21 Commission to sort of take at face value comments that

22 were made by parties in disputed proceedings.

23 So there is a request for administrative

24 notice set forth on page 2 of Trinichera Ranch's

25 pleading -- pages 2 and 3 that set forth subparagraphs


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1 2-A, B, and C.

2 2-A concerns staff comments, PSCo's

3 comments, and Public Service's addendum in the matter

4 of integrated planning for the construction of electric

5 transmission facilities pursuant to Section 40-4-117

6 C.R.S., that's Docket No. 09M-616E. As I understand

7 it, part of staff's argument and the part for which

8 Trinichera Ranch wants administrative notice is that

9 Public Service should plan its transmission planning

10 further out and design larger transmission facilities

11 as a result.

12 It's essentially the same argument as in

13 this case. I don't see how it's relevant or adds

14 anything to this proceeding to go into that allegation.

15 It's the same request that's in this case by staff that

16 the line should be built at 345 kv, at least the San

17 Luis Valley-Calumet portion of the line; and Public

18 Service has responses to that. And so it's a matter in

19 dispute. I don't see why we should be disputing the

20 matters in that case in this case. So we don't want to

21 try a case within a case.

22 The second matter that Trinchera Ranch

23 wants to take administrative notice of concerns the

24 Clean Air-Clean Jobs docket, which I believe is Docket

25 No. 10M-245E, and specifically a report by Public


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1 Service Company of Colorado detailing proposed modeling

2 scenarios. And in that case, as you are probably

3 aware, Your Honor, that case addresses House Bill

4 10-1365 relating to the possible retirement of 900

5 megawatts or more of coal plants to be replaced with

6 other resources. And as a result of that docket,

7 Public Service is providing modeling on a number of

8 issues, one of which is transmission reliability

9 modeling. And in the pleading at page 4 -- and here

10 I'm referring to Exhibit D to Trinichera Ranch's

11 motion. It states, Public Service will look at

12 retiring some combination of coal-fired generating

13 units at Arapahoe, Cherokee, and Valmont by January 1,

14 2018. Retirement of these units can have significant

15 impact on the operation and reliability of Public

16 Service's transmission system. These preliminary

17 transmission studies indicate that a significant amount

18 of generation and dynamic voltage support equipment

19 will need to remain in operation or be added in

20 response to unit requirements within the transmission

21 footprints of the Cherokee and Arapahoe Stations. More

22 work is needed before these preliminary studies are

23 completed and can be reviewed by the Commission and the

24 parties.

25 And then towards the end of this page, it


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1 states, We fully expect that the need to maintain an

2 acceptable level of transmission system reliability and

3 operational flexibility will significantly limit the

4 number of generation alternatives and locations that

5 can provide viable replacement for any retired

6 coal-fired capacity.

7 So that's the issue in that case. As the

8 pleading states, the preliminary studies have not been

9 completed yet.

10 I don't understand how at all there is a

11 connection between this -- the retirement of these

12 Colorado plants and the very limited and specific issue

13 for which Your Honor asked Mr. Green questions during

14 the last hearing.

15 This is a separate issue of, how do you

16 deal with the transmission issues as a result of

17 possibly retiring units at Arapahoe, Cherokee and

18 Valmont?

19 The parties, no doubt, in that case will

20 be disputing that issue. It is certainly premature to

21 discuss it in this docket. But in addition to that, it

22 simply has no relevance to this docket.

23 And then the last matter for which

24 Trinichera Ranch wants to take notice is our -- the

25 Colorado Independent Energy Association's comments in


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1 another -- I'm sorry, in that same docket, Docket No.

2 10M-245E, the Clean Air-Clean Jobs docket; and this

3 concerns an allegation by the Colorado Independent

4 Energy Association which represents independent power

5 producers. It's an allegation that Public Service

6 Company supposedly reduced its load forecast in order

7 to help PSCo's own cause on some sort of gaming

8 allegation. It's an allegation that is without merit,

9 unfounded, and disputed. Certainly we don't wish to

10 try that matter in this case.

11 And as an aside, we don't see Trinichera

12 Ranch complaining about our reduced demand forecast in

13 this case -- in fact, it's being trumpeted. So I don't

14 see the relevance of this issue either.

15 We think that the request for

16 administrative notice should be denied because it's not

17 consistent with the administrative notice rule.

18 And we don't want to delay this docket in

19 any way by having to respond to all of these irrelevant

20 matters in this case.

21 A.L.J. JENNINGS-FADER: Thank you.

22 MR. DOUGHERTY: Your Honor, Tri-State and

23 Public Service conferred in advance, and Mr. Sopkin's

24 arguments are on behalf of both applicants.

25 A.L.J. JENNINGS-FADER: Thank you very


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1 much.

2 Ms. Mandell?

3 MS. MANDELL: Your Honor, Western

4 Resource Advocates agrees with the arguments that were

5 made by Public Service, and so I'm going to make this

6 relatively short.

7 We believe that the motion for

8 administrative notice should not be granted for three

9 primary reasons: One, it's an inappropriate

10 application of the Commission's Rule 1501(c); the

11 documents that were selected provide a biased picture;

12 and third, some of the documents proposed to be put

13 into this record have to do with a docket that's

14 ongoing and the matter is before the Public Utilities

15 Commission for decision -- and again, it's not showing

16 an accurate record of what's going on in that docket.

17 So first with regard to the application

18 of the Commission's rule, the Commission's rule does

19 provide that the Commission can take administrative

20 notice of documents in its files. However, it's our

21 position that taking administrative notice of pleadings

22 in dockets is not -- is an improper application.

23 And that the rules of evidence, Rule 201,

24 on taking adjudicatory notice of scientific and

25 technical facts should also guide the Commission and


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1 you when considering whether or not to grant this

2 motion.

3 It makes more sense to allow for

4 Commission orders, final orders and sort of factual

5 matters or factual evidentiary documents in previous

6 dockets for that to be permitted to come in under the

7 Commission's rules.

8 With regard to bias, the pleadings that

9 were selected are advocacy pieces, they do not

10 accurately reflect some of the positions of all of the

11 parties in the dockets. For example, in the

12 transmission planning docket, WRA filed comments and we

13 object to those comments not being included, you know,

14 if there is going to be some kind of a taking of

15 administrative notice of the pleadings in that docket.

16 And then last -- and I referred to this

17 earlier with regard to the HB 1365 docket and

18 specifically the report on modeling scenarios, that is

19 something that the Commission is going to be taking a

20 very close look at. The parties are advocating very

21 hard to have additional material or, you know, having

22 their positions incorporated into the modeling

23 scenarios.

24 And I think it would be unfair and unjust

25 to take one particular pleading -- a Public Service


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1 Company pleading in that docket and have it sort of put

2 into this case, when, as I said, the Commission is

3 going to be determining what those modeling scenarios

4 are; and a lot of people -- a lot of parties are

5 working hard to have influence with regard to the

6 modeling scenarios.

7 Thank you very much, Your Honor.

8 A.L.J. JENNINGS-FADER: Thank you, Ms.

9 Mandell.

10 Any other party before Trinchera Ranch

11 responds?

12 Mr. Santisi.

13 MR. SANTISI: Yes, Your Honor.

14 My comments relate to the staff's

15 comments that were filed in that transmission planning

16 docket. I think that the arguments presented thus far

17 are true and accurate and I just think that the record

18 in this docket would benefit from the additional fact

19 that the way this Commission conducts its business,

20 especially in a transmission planning docket is -- it

21 essentially, in a roundabout way, takes some sort of

22 testimony; but it's filed in the nature of a pleading

23 that's signed by an attorney -- and that would be me as

24 it relates to staff's comments.

25 I did not attend any of those workshops


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1 and I certainly got my information from the person --

2 the staff that had attended them. And so I just want

3 to add one more argument that there is no opportunity

4 for cross-examination. And as the parties had alluded

5 to, it's just inappropriate to take administrative

6 notice of pleadings that are at issue.

7 A.L.J. JENNINGS-FADER: Mr. Santisi, do

8 you agree with the characterization of staff's filing

9 in Docket No. 09M-616E that it is an advocacy filing?

10 MR. SANTISI: Yes I do.

11 A.L.J. JENNINGS-FADER: Thank you.

12 Any other party before Trinichera Ranch?

13 (No response.)

14 A.L.J. JENNINGS-FADER: Counsel?

15 MR. FLANAGAN: Well, thank you, Your

16 Honor.

17 We believe that certainly the rules

18 authorize the -- this Hearing Officer and the

19 Commission taking judicial -- taking administrative

20 notice of these matters.

21 They essentially fall into -- and we

22 certainly don't concede, as Public Service has argued,

23 that these somehow aren't relevant to the reopened

24 proceeding.

25 The documents that we point out -- and,


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1 you know, constantly when we go into certain areas up

2 here, Public Service's argument is, Well, that's in a

3 different docket or that's in another proceeding and

4 you are not in that proceeding.

5 The point of taking -- we have this old-

6 fashioned view that somehow a person under oath ought

7 to be giving consistent testimony on the same topic, no

8 matter which proceeding they are in. And these --

9 besides, the cross-examination that we've offered

10 indicate that both the areas of adequacy of

11 transmission planning, modeling assumptions and load

12 forecasts are changed by Public Service, depending on

13 what is at issue.

14 And we think that is an important point

15 that goes to the credibility of the witnesses that the

16 applicant has put forth in this case.

17 I'll be the first one to indicate that

18 none of this evidence relates to Tri-State, it only

19 relates to Public Service.

20 We have tried to not cherry-pick these

21 points. We have taken Public Service's pleadings and

22 the contrary pleadings -- for example, with staff in

23 the 616 case, all of those do go to this area as has

24 been hotly contested here about adequacy of

25 transmission planning.
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1 When we raise that issue here, Public

2 Service tells us, You have got to go into these other

3 dockets that are either closed or where we can't get

4 into, the other -- the other pleadings and that's -- so

5 the first three go to the adequacy of planning.

6 Pleadings 4 and 5 in the pending 245 case

7 go to modeling assumption and load forecast which are

8 very relevant to this pleading. And depending on where

9 you pick your assumptions, of course, you can change

10 tremendously the dollar impact.

11 One example is simply the carbon tax --

12 the carbon tax and whether or not you impose that at

13 2010 or 2014; it can have hundreds of millions of

14 dollars. And they are taking inconsistent positions in

15 different dockets, and I think that's important. It

16 goes to the credibility of the assumptions that they

17 are laying before this Commission. And that is why we

18 think this is relevant evidence.

19 To a large extent, Public Service's

20 claimed need for this project has been a moving target.

21 Tri-State has always said it's a reliability issue in

22 the valley. Public Service has essentially said, we

23 need to export solar. And the exporting of solar has

24 changed while this docket has been open to the point,

25 as you just noticed, the basis for which this


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1 proceeding was extended; and the basis for which we've

2 heard now a couple of days of testimony has been

3 dismissed by the Commission.

4 And until Public Service figures out what

5 in fact its plans are for the valley, we think it's

6 clearly the cart before the horse.

7 We don't believe that the legislature has

8 yet authorized Public Service's field of dreams notion

9 that they can build a transmission line, charge the

10 ratepayers and wait for solar to develop -- which is

11 essentially the theory here.

12 And whether you do it at 60, 90, 185, or

13 355 megawatts -- pick a number -- they haven't

14 justified any of them. And they keep changing. It's

15 like the game where you beat the mole down and they pop

16 up somewhere else. And that's what we have seen in

17 this proceeding.

18 And I think we're entitled to try to

19 demonstrate that to this Commission and demonstrate

20 that for the record. So we urge administrative notice

21 of those five documents that are in our motion.

22 A.L.J. JENNINGS-FADER: Mr. Flanagan --

23 Mr. --

24 MR. FLANAGAN: Yes, ma'am?

25 A.L.J. JENNINGS-FADER: Let's -- as to


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1 the question of holding a party or a person to give the

2 same testimony under oath in two different proceedings,

3 when asked about the same issue, you raise that as one

4 of the first points in support of your motion for

5 administrative notice.

6 I first wish to ask you whether one needs

7 to take administrative notice in order to use prior

8 inconsistent sworn statements as part of one's

9 cross-examination?

10 MR. FLANAGAN: I don't believe so, Your

11 Honor. I mean, I think we have -- we -- we have

12 covered many of these same topics on cross-examination

13 with Public Service's witnesses. But, of course, when

14 we ask about, Is that what you did in this docket, we

15 get the objection that that's not relevant in this

16 proceeding; and you are not in that docket, so it's out

17 of bounds.

18 So the way we try and counter that

19 argument is to say, well, then here's the pleadings

20 from that case.

21 The same argument between staff and the

22 utility about the adequacy of transmission planning has

23 played out in other dockets -- dockets which we were

24 not parties to -- that we think is important to

25 complete the record in this case, for example.


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1 That's our response.

2 A.L.J. JENNINGS-FADER: The next point

3 is, I would like you to go through each of the four

4 documents and point out to me which of the documents

5 are under oath by a witness in this case.

6 MR. FLANAGAN: They are all pleadings

7 signed by a lawyer.

8 A.L.J. JENNINGS-FADER: So the answer is

9 no?

10 MR. FLANAGAN: No.

11 A.L.J. JENNINGS-FADER: No, none -- is

12 any document of which you asked this Commission to take

13 administrative notice attested to -- let's start with

14 that, attested to by a witness or a person other than

15 an attorney? They are all filings by attorneys. Is

16 there an attestation by anyone else to corroborate any

17 information found in the filings?

18 MR. FLANAGAN: No, they are merely the

19 arguments of lawyers on behalf of clients on the same

20 issues in other proceedings --

21 A.L.J. JENNINGS-FADER: All right.

22 MR. FLANAGAN: -- that appear to us to be

23 inconsistent with the positions taken here.

24 A.L.J. JENNINGS-FADER: I appreciate

25 that; but to your point about prior inconsistent


27
1 statements under oath, there are none in any of these

2 documents, correct?

3 MR. FLANAGAN: Well, there are factual

4 matters like modeling assumptions and load forecasts --

5 A.L.J. JENNINGS-FADER: Are there --

6 MR. FLANAGAN: -- that change.

7 A.L.J. JENNINGS-FADER: Are there sworn

8 statements under oath, either by attestation or

9 otherwise, in any of the filings?

10 MR. FLANAGAN: No, they are statements by

11 the lawyers.

12 A.L.J. JENNINGS-FADER: Okay. With

13 respect to the comments -- let me start with this: In

14 Docket No. 10M-245E, which is the miscellaneous docket

15 in which the Commission is conducting sort of a

16 prefiling investigation of the filing -- of the filing

17 that Public Service will make pursuant to House Bill

18 10-1365 -- is that your understanding of that docket?

19 THE WITNESS: 1365, yes.

20 A.L.J. JENNINGS-FADER: I'm sorry if I

21 said 10.1365, I meant 10-1365.

22 In that proceeding -- correct me if I'm

23 wrong, but this is what the Commission ordered Public

24 Service to do and then ordered -- allowed parties to

25 do: It ordered Public Service to make a filing with


28
1 respect to how Public Service proposed to do its

2 modeling, both the scenarios and the assumptions as

3 part of its -- that would be used to underpin the

4 filing it's going to make in response to House Bill

5 1365. Is that correct, the Commission ordered Public

6 Service to do that.

7 MR. FLANAGAN: Yes. I think I'm with

8 you.

9 A.L.J. JENNINGS-FADER: And the response

10 filing by Public Service is the report which you have

11 asked -- of which you have asked the Commission to take

12 administrative notice in this case.

13 MR. FLANAGAN: Right. They haven't done

14 it yet, but they are going to run these different

15 scenarios and make these sort of assumptions.

16 A.L.J. JENNINGS-FADER: Correct. And

17 then am I not correct that the Commission gave the

18 other participants in that docket the opportunity to

19 file written comments on Public Service's proposal?

20 MR. FLANAGAN: That's -- that's true.

21 A.L.J. JENNINGS-FADER: And one of those

22 comments is the comment filed by the Colorado

23 Independent Energy Association of which you ask me to

24 take administrative notice in this proceeding; is that

25 true?
29
1 MR. FLANAGAN: Yes. Yes, Your Honor.

2 A.L.J. JENNINGS-FADER: Am I correct that

3 that comment is one of 11 comments filed by parties in

4 response to the Public Service Company report?

5 MR. FLANAGAN: I'm certain there were

6 more than this one comment, yes; but there hasn't been

7 any discovery yet.

8 A.L.J. JENNINGS-FADER: Would you --

9 well, we'll put that to the side.

10 Would you agree with me that if I take

11 administrative notice of the report, I ought also to

12 take administrative notice of all 11 comments as

13 opposed to simply one of 11 comments in response to the

14 report?

15 MR. FLANAGAN: We wouldn't object to

16 that. We tried to pick out the one that made -- that

17 synthesized our point; but if -- we wouldn't object to

18 the others being part of the record.

19 A.L.J. JENNINGS-FADER: In Rule 4 Code of

20 Colorado Regulations 723-1-1501(c), which is the

21 administrative notice provision, it requires the

22 Commission to identify the facts of which it is taking

23 administrative notice; is that not correct?

24 MR. FLANAGAN: Those words are all in

25 there, yes.
30
1 A.L.J. JENNINGS-FADER: What facts do you

2 ask me to take administrative notice of in this

3 filing -- in these documents?

4 MR. FLANAGAN: The different modeling

5 assumptions that are made in those proceedings versus

6 the ones they want here for the same sort of planning,

7 the different load forecasts -- that's the reason for

8 which it was offered. Our point is that they vary the

9 inputs into the modeling depending on the results they

10 want. And if -- we would -- that's what we're trying

11 to get at is those facts, the modeling inputs.

12 A.L.J. JENNINGS-FADER: Would you call --

13 would you explain to me how the modeling assumptions

14 are facts that are of sufficient -- that are not

15 disputed and are similar to, you know, locations of

16 towns in geographic areas of which one normally takes

17 administrative notice?

18 I'm confused, because I understood, based

19 on the filings that I have read -- not just the

20 proposals -- the proposed documents, no other

21 documents, that these are disputed issues, they are not

22 undisputed facts.

23 MR. FLANAGAN: The point is that the

24 modeling result is based upon the modeling inputs. The

25 modeling inputs are varied by the modeler, depending --


31
1 we are suggesting, depending on the result they want.

2 And the modeling that Public Service has presented here

3 to justify this transmission line is different than the

4 modeling and the Power Flow studies it's doing for

5 support of 1365; the assumptions about solar in the

6 valley are different than what they have testified to

7 here. That's our point. And we think those are facts,

8 the inputs --

9 A.L.J. JENNINGS-FADER: Thank you.

10 I will deny the motion for administrative

11 notice on these grounds: First, the facts are not of

12 the type that would -- of which one would normally

13 take -- or ever take either judicial or administrative

14 notice under cases that -- in Colorado that have

15 addressed this issue. The -- I'm not going to address

16 whether or not it's outside the scope of this reopened

17 proceeding because I believe that some of the

18 information may be relevant by way of cross-

19 examination, but -- so I'm not going to go as far as to

20 say it's not relevant.

21 But I will not take administrative notice

22 of these documents. I will deny the motion because, in

23 my opinion, Trinichera Ranch has failed to meet its

24 burden.

25 Any preliminary matter from any party


32
1 before we proceed with the testimony?

2 MR. McGANN: Your Honor, we have one

3 preliminary matter.

4 A.L.J. JENNINGS-FADER: Sure.

5 MR. McGANN: I'm not sure whether or not

6 you would like to address this at this time or perhaps

7 during Dr. Sheffrin's testimony; but on Tuesday, we

8 received a new hearing exhibit that Trinichera Ranch

9 proposes to introduce into the record in this

10 proceeding. We object to the introduction of that

11 exhibit. So I'm not sure whether you want to hear

12 argument concerning that exhibit now or during Dr.

13 Sheffrin's testimony.

14 A.L.J. JENNINGS-FADER: Well, I thank you

15 for the heads-up. I was unaware of that -- probably

16 appropriately so, since I shouldn't know about anything

17 until it's offered in any event.

18 I believe it's most appropriate to object

19 at the time the exhibit is offered.

20 MR. McGANN: If I may make just one

21 additional comment, Your Honor.

22 A.L.J. JENNINGS-FADER: Sure.

23 MR. McGANN: Mr. Sopkin is going to be

24 conducting the cross-examination of Dr. Sheffrin.

25 Begging your indulgence, I would be addressing our


33
1 motion relating to the introduction of the exhibit once

2 the time comes, if that's acceptable to you, Your

3 Honor.

4 A.L.J. JENNINGS-FADER: Well, I'm going

5 to say customarily I prefer to have one lawyer do the

6 whole ball of wax; but I'll allow it. I don't see that

7 that will be horrible.

8 MR. SOPKIN: Thank you.

9 MR. McGANN: Thank you.

10 A.L.J. JENNINGS-FADER: We're going to be

11 off the record for just one moment.

12 (Discussion off the record.)

13 A.L.J. JENNINGS-FADER: We're going to be

14 in recess for about five minutes.

15 (Whereupon, Exhibit No. 144 marked for

16 identification.)

17 (Recess.)

18 A.L.J. JENNINGS-FADER: Any other --

19 we'll be back on the record.

20 Any other preliminary matters before we

21 proceed with the testimony?

22 (Discussion off the record.)

23 A.L.J. JENNINGS-FADER: Mr. Flanagan.

24 MR. FLANAGAN: Based on the events in

25 between Monday and today, Trinichera Ranch would be


34
1 moving for a stay, based upon the decision you alluded

2 to in the 447E case.

3 A substantial part of the record to date

4 of Public Service for need has been premised upon what

5 they -- what are their intentions with respect to solar

6 in the valley. We think that is inexplicably tied to

7 their -- I mean, they have made it very clear that they

8 don't intend to file the existing plan, and that's why

9 they filed an amendment. And now that amendment on

10 Wednesday was dismissed. And we, of course, don't know

11 how that is going to play out; but I guess I'll call

12 this the whack-a-mole motion. Until we know which head

13 is going to pop up out of which hole and what Public

14 Service actually intends to do with solar energy in the

15 valley, we think we are at a bit of a disadvantage to

16 at least closing the record in this case, and that we

17 would like an opportunity -- we would like an

18 opportunity to put on evidence after we in fact know

19 what Public Service's plans for solar that justify

20 their claim for this transmission line, what in fact

21 those actually are.

22 This is not anything that's a problem we

23 created, it's as a result of Public Service's actions.

24 I won't go back in detail, but the reason these things

25 have -- this proceeding has been delayed, to a large


35
1 extent, is because of their decision to go in and file

2 an amendment because they couldn't file the existing

3 plan. And we think we're entitled to at least respond

4 in some fashion when we fully know what the plan is for

5 solar in the valley.

6 So we would ask that the record at least

7 be held open -- and technically we're asking for a stay

8 of the proceeding as of this morning.

9 A.L.J. JENNINGS-FADER: Before I ask

10 applicants to respond, any other party?

11 (No response.)

12 A.L.J. JENNINGS-FADER: Thank you.

13 Applicants?

14 MR. McGANN: Your Honor, we don't believe

15 that Trinichera Ranch's motion is well taken.

16 Essentially the events of this week really don't change

17 either the posture of this case or the evidentiary

18 record. Essentially the record was reopened to

19 consider a range of alternatives. The upper range

20 being the 2001 Resource Plan for the acquisition of

21 solar, and the lower range being what was asked for in

22 the application to amend the Resource Plan.

23 And that has not changed. And so we

24 believe we can proceed to hearing and to take evidence

25 on that range. And there are -- there is, quite


36
1 frankly, simply no grounds to seek a stay of this

2 proceeding as a result of that.

3 And Mr. Flanagan hasn't, quite frankly,

4 stated ground for doing so.

5 The fact that the Commission may reach a

6 decision later on -- it was actually -- that the

7 Commission will reach a decision in that other docket

8 was contemplated by Your Honor, which is why Your Honor

9 said in her order that we don't need to know the

10 results of that docket, we need to know the upper and

11 lower limits and we need to know how those impact the

12 need for the line. That is what we're addressing here

13 and there is simply no need for a stay.

14 And Mr. Sopkin -- if I may continue just

15 a little further, Mr. Sopkin reminded me -- and Your

16 Honor started with this at the very beginning of the

17 hearing -- that for administrative efficiency sake,

18 everyone is here, we're all prepared to go forward,

19 there is no reason to delay this hearing, fly everyone

20 out, fly everyone back for a reconvened hearing. We're

21 here, the issues are joined, and we should go ahead and

22 proceed.

23 MR. DOUGHERTY: Your Honor, if I may?

24 A.L.J. JENNINGS-FADER: Yes.

25 MR. DOUGHERTY: Tri-State would strongly


37
1 oppose any further delay in the conclusion of the

2 evidentiary proceedings and anything that would further

3 delay the Commission's decision in this matter for the

4 reasons that Mr. McGann has just stated.

5 Your Honor anticipated this very issue

6 when you set the bounds for how the 377 docket would be

7 considered here. We do not need to know the actual

8 outcome of that docket in order for this matter to be

9 concluded.

10 Tri-State's reliability needs continue

11 and are pressing and continue to be delayed by the

12 outcome of this docket. So Tri-State would strongly

13 oppose anything that would further delay the conclusion

14 of these proceedings.

15 A.L.J. JENNINGS-FADER: The request -- in

16 this case, the oral motion for a stay is denied.

17 Trinichera Ranch -- I don't know, who is

18 up.

19 MR. FLANAGAN: We can do a whack-a-mole,

20 too.

21 A.L.J. JENNINGS-FADER: Counsel, is the

22 witness prepared to go forward?

23 MR. DOUGLAS: Yes, Your Honor.

24 A.L.J. JENNINGS-FADER: Go.

25 MR. DOUGLAS: Trinichera Ranch would call


38
1 Anjali Sheffrin to the stand.

2 ANJALI SHEFFRIN Ph.D.,

3 having been called as a witness, being first duly

4 sworn, testified as follows:

5 A.L.J. JENNINGS-FADER: Thank you, ma'am.

6 Please have a seat.

7 I would like you to be sure the

8 microphone is on, if you will -- in the middle -- turn

9 the green light -- did it come on?

10 THE WITNESS: Yes, it did.

11 A.L.J. JENNINGS-FADER: Doctor, I would

12 like you to state your name for the record and spell

13 your last name.

14 THE WITNESS: My name is Anjali Sheffrin,

15 last name is spelled S-h-e-f-f-r-i-n.

16 A.L.J. JENNINGS-FADER: Thank you, very

17 much, Doctor.

18 Mr. Douglas, you may proceed.

19 MR. DOUGLAS: Thank you, Your Honor.

20 DIRECT EXAMINATION

21 BY MR. DOUGLAS:

22 Q Good morning, Dr. Sheffrin.

23 A Good morning.

24 Q Dr. Sheffrin, given that you have not

25 testified in this case prior to today, I do need to ask


39
1 you some questions about your background and

2 qualifications. And as a starting point, we've marked

3 an exhibit which I'll hand you at this time.

4 MR. DOUGLAS: Your Honor, if I may

5 approach?

6 A.L.J. JENNINGS-FADER: You may.

7 (Pause.)

8 A.L.J. JENNINGS-FADER: Is this Exhibit

9 44 -- 144, excuse me, for identification.

10 MR. DOUGLAS: Yes, Your Honor.

11 A.L.J. JENNINGS-FADER: Thank you.

12 BY MR. DOUGLAS:

13 Q Dr. Sheffrin, do you have Exhibit 144 in

14 front of you?

15 A I do.

16 Q Is that a true and accurate copy of your

17 current CV?

18 A It is.

19 Q Is that a document that you prepared?

20 A I did.

21 MR. DOUGLAS: Your Honor, at this time I

22 would move for the admission of Exhibit 144.

23 MR. SOPKIN: No objection.

24 A.L.J. JENNINGS-FADER: Exhibit 144 for

25 identification has been offered.


40
1 Voir dire or objection?

2 (No response.)

3 A.L.J. JENNINGS-FADER: Exhibit 144 is

4 admitted.

5 MR. DOUGLAS: Thank you, Your Honor.

6 BY MR. DOUGLAS:

7 Q Dr. Sheffrin, is it correct to describe

8 you as an economist?

9 A Yes, it is.

10 Q All right. And can you just give me a

11 brief description -- let me preface this, we're not

12 going to go through every detail of your CV because

13 it's in evidence, but I want to hit some of the

14 highlights we're going to discuss here. So with that,

15 would you please give me a brief description of your

16 educational background?

17 A Yes, I have received a bachelor's,

18 master's and Ph.D. in economics. My Ph.D. in economics

19 was from the University of California at Davis. And I

20 received that in 1990 -- 1981.

21 Q Since receiving that doctorate, Ph.D.

22 this economics, have you worked in the electric utility

23 industry?

24 A Yes, I have.

25 Q And for how long and in what capacity,


41
1 generally?

2 A As soon as I finished my Ph.D., I worked

3 in the electric utility industry. And I have worked in

4 that industry for the past 30 years and just recently

5 moved to academia at Tulane University.

6 Q And that work for Tulane University, is

7 that in the area of electric utility issues?

8 A It is. I have joined the Energy

9 Institute at Tulane University and I have joined

10 colleagues who are experts in oil and gas. And my job

11 is to bring the expertise in electric utilities to that

12 institute.

13 Q What are your current areas of research

14 for Tulane University Energy Institute?

15 A My duties at Tulane really are in three

16 areas: One is to conduct and lead research in energy

17 issues and electric-utility issues for the electric

18 utility industry. I also am responsible for building

19 partnerships between the university and utilities in

20 order to demonstrate and help solve issues that they

21 are currently facing. And also designing a course in

22 energy economics which I will be teaching in the winter

23 semester.

24 Q Okay. And are there any specific areas

25 of research that you are involved with now that involve


42
1 renewable energy?

2 A There are. My current -- some of my

3 current research assignments involve improving

4 forecasting for wind energy and solar energy. I'm

5 working with students on that project.

6 Secondly, I'm looking at the regional

7 impacts of the well drilling moratorium. And thirdly,

8 I'm looking at opportunities to reduce carbon emissions

9 by retiring boilers at some of the large industrial

10 customers' plants and presenting some of those

11 opportunities to those customers as well as the

12 Louisiana Economic Development Corporation.

13 Q Okay. And forgive me if I missed it, but

14 was there anything relating specifically to solar or

15 wind energy that you are researching?

16 A I'm sorry, the first one, which is

17 improving forecasting techniques for solar and wind

18 energy.

19 Q Any other work that you are doing for

20 Tulane University that you haven't already mentioned

21 that relates to the energy industry or renewable energy

22 in particular?

23 A I think that's pretty complete.

24 Q Now, prior to your taking this position

25 at Tulane University, where did you work?


43
1 A I was employed as chief economist at the

2 California Independent System Operator in Folsom,

3 California.

4 Q And can we call that CAL ISO, California

5 ISO, do you --

6 A I refer to it as CAL ISO, California ISO.

7 Q Okay, CAL ISO is what we'll call it.

8 Can you tell me what CAL ISO is?

9 A Yes, CAL ISO is a nonprofit corporation

10 which is responsible for a number of things in

11 California, but it's governed by the rules and

12 regulations of the Federal Energy Regulatory

13 Commission. It has an independent appointed board of

14 directors and its key functions are to maintain

15 reliability of the electric grid in California, which

16 means running the control area. So reliability duties.

17 Second, it operates energy and ancillary

18 service markets in order to facilitate energy

19 transactions in California. And third, it's

20 responsible for planning the transmission grid in

21 California.

22 The CAL ISO owns no assets, no

23 transmission assets or generation assets. It is simply

24 the operator -- independent operator of the grid.

25 Q The independent operator of the electric


44
1 grid in California?

2 A Yes.

3 Q And just briefly, can you explain how

4 that system is different than the system that we

5 operate here in Colorado?

6 A Yes. In Colorado, the utilities remain

7 vertically integrated, which means that they remain

8 responsible for acquiring generation, transmission, and

9 then distributing that power to its customers. Whereas

10 in California, we have restructured the electric

11 utility industry where generation -- wholesale

12 generation can be competitively procured, transmission

13 assets; although they are owned by the electric

14 utilities, they are not operated by them, they are

15 operated by us an as independent agency. And then they

16 do distribute the electricity to their customers.

17 Q Okay. And I apologize if you already

18 said this, but how long were you at CAL ISO?

19 A I was there for twelve years, since its

20 inception.

21 Q And what did you personally do for CAL

22 ISO during your twelve years there?

23 A I had a number of duties at the CAL ISO.

24 I started as their director of market analysis, where

25 my job duties were to monitor the market performance of


45
1 the markets the CAL ISO ran, report on that

2 performance, also recommend any design or rule changes

3 and make those filings at FERC which would enhance the

4 performance of those markets.

5 My job was also to help define what it

6 means to expand transmission for economic reasons.

7 When the CAL ISO was formed under California statute

8 AB1890, it was given authority to plan the grid in

9 California and expand it for reliability and economic

10 reasons.

11 No clear rules were established about

12 what it means to expand the grid for economic reasons,

13 so my job at CAL ISO as chief economist was to lay out

14 those rules and what that process would be to define

15 economic need for a transmission expansion.

16 Q Okay. So during your tenure at CAL ISO,

17 you were personally involved with the evaluation of the

18 economics relating to a need for new transmission

19 additions?

20 A Yes.

21 Q That was part of your job

22 responsibilities there?

23 A Yes.

24 Q Go ahead.

25 A Did you want me to finish my other duties


46
1 that I performed there?

2 Q Oh, I apologize -- yes, I do.

3 A So that was director of market analysis.

4 The second position I held there was

5 director of market and product development. And in

6 that position, my job was to design market rules and

7 products to enhance the performance of the CAL ISO

8 market. And that is where we went from a zonal market

9 design to nodal prices, locational prices. So I was

10 involved in that effort.

11 And lastly, my last position before I

12 left the CAL ISO was director of western regional

13 initiatives. And there my job was to look forward to

14 renewables coming on the grid all over and then -- and

15 help define what rules would be needed to have

16 renewable power across control area boundaries which

17 would help facilitate the integration of renewables.

18 Q When you say renewables all over, what

19 area are you talking about?

20 A In the western region, defined by the

21 WECC, Western Electricity Coordinating Council, those

22 balancing authorities, I worked with them.

23 Q And it's correct that both California and

24 Colorado are in the WECC?

25 A Yes, they are.


47
1 Q Now, when you evaluated the economics of

2 transmission additions that you talked about, what did

3 you -- did you use any programs or models or how did

4 you do that?

5 A Yes. I laid out a methodology and I also

6 applied that methodology to specific options brought

7 forward to expand the grid for economic reasons.

8 In that evaluation, I used capacity

9 expansion models, production cost models, all those

10 types of models in order to conduct my analysis.

11 Q Are you familiar, through your work at

12 CAL ISO or other work that you have done, with the

13 Strategis model that is used by Public Service in some

14 of the forecasting and modeling we've scene in this

15 case?

16 A I, myself, have not used the Strategis

17 model; but I am familiar with many other models which

18 do the same thing.

19 Q Is the Strategis model similar to

20 programs that you have used to do economic modeling

21 during -- during your 30 years in the electric

22 industry?

23 A Yes, very much so.

24 Q Okay. And prior to your work at CAL ISO,

25 where did you work?


48
1 A I worked for the Sacramento Municipality

2 District and I worked there for 15 years.

3 Q Is that commonly referred to by its

4 initials as SMUD, S-M-U-D?

5 A SMUD, S-M-U-D.

6 Q Is it okay if I call it that for short?

7 A Yes.

8 Q So, quickly, what is SMUD?

9 A SMUD is a municipally owned electric

10 utility which operates in Sacramento and Folsom County;

11 and because it is municipally owned, it is run by a

12 publicly elected board of directors.

13 Q And can you briefly describe the work

14 that you did at SMUD during your 15 years there?

15 A My main duties there were manager of

16 power system planning. So my job was to -- I had

17 engineers and economists and financial analysts working

18 under me and we produced the resource plans for SMUD.

19 Q And what kind of team people, as far as

20 numbers, were working for you on those resource plans

21 that you were putting together?

22 A If you hold on just -- I managed a staff

23 of 40 transmission engineers, generation engineers,

24 economists and financial analysts.

25 Q And did any of the resource plans that


49
1 you developed in your work with SMUD involve the

2 acquisition of renewable resources?

3 A Yes, it did.

4 Q Can you tell me a little more about that?

5 A Yes.

6 One of the unique things that occurred

7 during my employment at SMUD was half of its resource

8 base was in the form of the Rancho Seco nuclear plant.

9 That plant was shut done by public vote in June of --

10 oh, I believe 1989. As a result of having lost 903

11 megawatts, as well as dealing with proposed growth, my

12 job was to find replacement power for approximately

13 1100 megawatts, during one of the resource plans I put

14 together. And the direction we had after the public

15 vote was there was great interest among our

16 stakeholders for -- that replacement power be clean

17 power. And so my job was to try to put together a mix

18 of resources to meet that deficiency and need, and to

19 look at renewable technologies as part of that.

20 Q And was there any legal requirement at

21 that time in California for SMUD to include a

22 particular amount of renewable resources into its

23 portfolio?

24 A Not at that time, but SMUD wanted to be a

25 leader in that area so it wanted to add as much green


50
1 energy efficiency and renewables as it could. My

2 mandate was to add as much clean energy as possible to

3 the portfolio, but stay under 30 percent -- stay 30

4 percent under PG&E -- Pacific Gas & Electric Company's

5 rates.

6 The feeling by the board of directors was

7 that we -- while we added these renewables, we also

8 needed to stay 30 percent below PG&E's rates to show

9 the value of SMUD to our customer-owned ratepayers.

10 Q So you couldn't just add whatever

11 renewable resources you wanted, regardless of the cost;

12 there were some limits?

13 A No, that established a limit. And so a

14 lot of trade-offs had to be made in putting a package

15 of replacement resources together.

16 Q All right. So under that framework then

17 how did you go about evaluating what renewable

18 resources and what total resources to add to the SMUD

19 portfolio?

20 A Again, we looked at the current

21 environment. We looked at the options available to us.

22 We conducted competitive bids. And as a result, what

23 we did was add a portfolio of resources that I would

24 describe as about 1100 megawatts in three buckets. And

25 that really was to make sure that we had a diverse


51
1 source, but yet a clean source. So I would say one

2 third, one third, one third.

3 One third of our resources was in the

4 form of purchased power contracts. One third was in

5 the form of renewables and cogeneration. And then the

6 other third was for planned natural gas fired plants.

7 Q And ultimately what types of renewable

8 resources did you decide to add to the SMUD portfolio

9 at that time?

10 A Well, we were very much interested in

11 renewables and energy efficiency. So energy efficiency

12 was our first resource of choice. And, in fact, SMUD

13 was very innovative in a lot of programs such as giving

14 away trees -- shade tree programs -- giving rebates for

15 fluorescents. Also we were very innovative in a solar

16 program we designed that gave rebates for photovoltaic

17 installations. And we were one of the first in the

18 state of California to do so.

19 The type of renewables that we added were

20 50 megawatts of Solano wind. We added some geothermal;

21 biomass, and of course the energy efficiency programs I

22 talked about.

23 We also had what we called advanced

24 renewable technology program, where our job was to

25 follow the progress of some of these other renewables.


52
1 And so, you know, we were constantly researching other

2 renewable options that may become cost-effective in the

3 near future. And in that -- and I forgot to mention

4 the photovoltaics that we added.

5 Q You did have some solar photovoltaic?

6 A Yes, we did.

7 Q Now, aside from the experience you just

8 described, do you have any other experience in your

9 career relating to the relative costs, technology

10 efficiency or capabilities of different renewable

11 energy technologies?

12 A I do follow the improvements in those

13 technologies, all renewable technologies; I follow the

14 cost improvements, look at those trends in general.

15 I'm constantly reading professional published papers,

16 talking to the colleagues in the electric utility

17 industry, as well as developers in the industry. So,

18 you know, as a professional interest, I have followed

19 that for the past 20 years.

20 Q And have you provided testimony before

21 any state or federal agencies relating to the electric

22 utility industry?

23 A Yes, I have.

24 Q All right, can you tell me about that,

25 briefly.
53
1 A Sure. Off the top of my head --

2 Q Well, first, just generally, not just a

3 list exactly, but generally have you testified before

4 state and federal agencies and what have those been?

5 A Yes, I have. I have testified before the

6 California Energy Commission, the California Public

7 Utilities Commission, the California State legislature,

8 the Federal Energy Regulatory Commission, and then one

9 congressional subcommittee looking into the California

10 energy crisis.

11 Q Okay. And was any of the testimony that

12 you have given to any of these state or federal

13 agencies relating to renewable energy, transmission

14 planning or resource-planning issues?

15 A Yes, they were.

16 Q All right, can you just tell me what

17 those were?

18 A Sure. I gave testimony to the California

19 Energy Commission on feed-in tariffs. I have given

20 testimony before the California Public Utilities

21 Commission in a hydro divestiture case where Pacific

22 Gas & Electric wanted to divest hydro assets; and they

23 asked the CAL ISO -- and I was chief witness -- what

24 the impact would be of that divestiture.

25 I testified on reserve margins and how to


54
1 count renewables, different technology of renewables

2 towards the reserve margin.

3 And I -- there was one more testimony

4 that I thought was important -- hold on.

5 Q Did that relate to the determination of

6 need?

7 A Oh, excuse me. And I did also testify

8 before the California Public Utilities Commission on

9 the rebuttable presumption on the determination of need

10 for transmission plant -- transmission projects that

11 were approved by the CAL ISO board and then go to the

12 CPUC for a CPCN.

13 Q All right, thank you.

14 Dr. Sheffrin, do you consider yourself an

15 expert in the field of resource planning?

16 A Yes, I do.

17 Q Do you consider yourself an expert in the

18 analysis of the economic need for transmission

19 addition?

20 A Yes, I do.

21 Q Do you consider yourself an expert in the

22 economics of renewable energy generation technology?

23 A Yes.

24 Q Do you consider yourself an expert in the

25 economic analysis associated with resource plan


55
1 modeling?

2 A Yes.

3 Q In formulating your opinions in this

4 case, generally what information did you review?

5 A I reviewed the 2007 Colorado Resource

6 Plan. I reviewed all the materials there. I reviewed

7 the materials associated with the 2010 Compliance Plan.

8 I reviewed different resource planning statutes and

9 bills. I reviewed the materials in this case, as well

10 as a number of published studies to get a background on

11 resource planning issues in Colorado.

12 Q All right, thank you.

13 Now, Dr. Sheffrin, are you familiar with

14 the testimony of Ms. Hyde in this case that was given

15 on Monday of this week?

16 A Yes, I am.

17 Q Do you recall the testimony from Ms. Hyde

18 where she said that the best place to look for Public

19 Service's long-term acquisitions of solar resources

20 that would potentially be located in the San Luis

21 Valley is the Public Service 2010 Compliance Plan?

22 A Yes, I did hear that.

23 Q Do you also recall Ms. Hyde's testimony

24 that Public Service's future plans, as set out in that

25 2010 Compliance Plan, have not changed?


56
1 A Yes.

2 Q Now, just to get us on the same page, I'm

3 correct that that 2010 RES Compliance Plan that she was

4 discussing describes solar acquisitions through 2020.

5 A Yes, it does.

6 Q Do you have an opinion about the

7 likelihood of potential resources that could

8 potentially be located in the San Luis Valley that are

9 discussed in that 2010 Compliance Plan will actually be

10 acquired in the next ten years?

11 A Yes, I have an opinion on that.

12 Q What is that opinion?

13 A I find in looking at the three

14 250-megawatt solar thermal plants scheduled to come on

15 line in 2016, 2017, 2018, to be highly unlikely in

16 my -- in the analysis that I have conducted, the look

17 at how those plants would be paid for through the RESA

18 balances, the cost of those plants, in my mind, make

19 them highly unlikely and not really a cost-effective

20 investment of renewables.

21 MR. SOPKIN: Your Honor, I'm not sure

22 exactly where to object, but she just referred to her

23 analysis which I believe does relate to the exhibit

24 that we're going to object about. So to the extent her

25 opinion is based on that particular exhibit, we would


57
1 move to strike that portion of her answer.

2 Maybe her answer is based on something

3 else, but what I heard is, Based on my analysis. And I

4 believe the analysis we're speaking of is the exhibit

5 we first received Tuesday of this week.

6 A.L.J. JENNINGS-FADER: Other comments --

7 other statements with respect to the objection before

8 Trinichera Ranch?

9 (No response.)

10 A.L.J. JENNINGS-FADER: Mr. Douglas?

11 MR. DOUGLAS: Thank you, Your Honor.

12 I believe Dr. Sheffrin's analysis in the

13 case goes far beyond what I would describe as the

14 spreadsheet that Mr. Sopkin's objecting to. The

15 question was her opinion of the likelihood of those

16 resources; and we're going to go into that, and to the

17 extent we get into the exhibit Mr. Sopkin is talking

18 about, we can get into it at that time; but her

19 analysis is as set out in her notice of witness

20 testimony and this opinion was right there.

21 MR. SOPKIN: Well, and perhaps that's

22 fine. I heard her talk about RESA dollars and that's

23 exactly what her analysis is concerning is RESA

24 dollars. And that's why I assumed her answer was based

25 on that spreadsheet that she prepared.


58
1 I'm certainly willing to allow some

2 leeway here until we get to the actual exhibit.

3 A.L.J. JENNINGS-FADER: With respect to

4 the objection and to save possibly further objection on

5 this point, the objection will go to -- as I understand

6 it, to an exhibit that my or may not be offered. When

7 that event happens, we'll address the exhibit.

8 She may testify as she will and she may

9 or may not need the exhibit, I don't know. But the

10 fact is she's allowed to testify to anything within the

11 scope of what it is that I've identified as her areas

12 of testimony in this proceeding.

13 And I think this clearly -- this question

14 asked and the answer given clearly comes within the

15 scope as set out in my Decision No. R 10-0746-I.

16 So, Mr. Douglas, you may continue.

17 MR. DOUGLAS: Thank you, Your Honor.

18 BY MR. DOUGLAS:

19 Q Dr. Sheffrin, you -- I believe you just

20 said that your opinion is that these future placeholder

21 resources, the solar thermal -- the three facilities

22 are -- I think your words were very unlikely. Can you

23 tell me what the basis is for that opinion?

24 A Yes. I base that opinion on a number of

25 factors, review of the current economic conditions,


59
1 review of alternative renewables and their costs. I do

2 look at the exhibits that showed the trend on RESA

3 dollars and that's what's used to pay for these

4 renewables, the fact that the cost of solar thermal is

5 among the highest of the renewables, and there may be

6 much more cost-effective renewables available.

7 Q Okay. And as far as the 2010 Compliance

8 Plan that Ms. Hyde was discussing, that she was relying

9 on, has anything changed in your opinion, since that --

10 as far as assumptions and things like that, since that

11 modeling was done?

12 A Again, I looked as an economist at the

13 current environment when I reviewed that plan. And I

14 heard Ms. Hyde mention far lower natural gas prices,

15 lower energy sales forecast; the fact that they got bid

16 prices in for solar thermal which were higher than what

17 was assumed in the 2010 Compliance Plan, and also, of

18 course, the impact on carbon -- delaying carbon

19 legislation and therefore the carbon price in those

20 assumptions.

21 So I reviewed all of those and base my --

22 as well as looking at alternative renewables -- cost of

23 alternative renewable resources such as wind and

24 photovoltaic. So I base my opinion on those three

25 250-megawatt plants in that time frame of solar


60
1 thermal, based on all those other factors, making them

2 highly unlikely.

3 Q Okay. And I believe you mentioned four

4 changes; is that right?

5 A Yes, I did.

6 Q And how do those four changes that you

7 discuss from the 2010 Compliance Plan affect your

8 opinion about the likelihood of those solar thermal

9 resources actually being acquired?

10 A I can go through each one.

11 Again, with lower natural gas prices,

12 that means any renewables that are bought have higher

13 premiums and therefore have higher expenditure level

14 from the RESA account balance. The carbon I didn't

15 have to speculate, it was right in the table. Let's

16 see, which exhibit was that?

17 Q I believe --

18 A Table 7.3 and 7.4.

19 So the impact of delaying carbon

20 legislation had an impact on, again, when RESA dollars

21 would be available to pay for the three solar-thermal

22 plants.

23 The bid price also given in the 2010

24 Compliance Plan modeled the original prices for solar

25 thermal would have a negative effect, as well as the


61
1 reduced energy forecast would mean less revenues coming

2 into the RESA balance account. So all those four

3 factors, in my mind, would mean much higher RESA

4 balances or dollars available to pay for those three

5 solar thermal plants.

6 Q I'm sorry, you said much higher RESA

7 dollars?

8 A Much higher RESA expenditures for the

9 available dollars.

10 Q So I want to be sure I understood a

11 couple of these points: On the effect of the delay in

12 carbon legislation, you were referring to Table 7-3 and

13 7-4 which are Public Service's estimates on that issue

14 in Exhibit 141; is that -- is that correct?

15 A Yes. Yes.

16 Q Okay. And then as to the bid price, I

17 think you were referring to Ms. Hyde's testimony that

18 the original 2010 Compliance Plan modeling was based on

19 the old bid and now the new bid is different; did I

20 understand that correctly?

21 A Yes.

22 Q And how is that affected again?

23 A Well, the balance -- RESA balance has an

24 expense her for those three solar thermal plants; and

25 with higher bid price, I -- I believe that it will be


62
1 higher cost that have to be paid out of the RESA

2 balance, leaving the RESA balance to be more negative

3 than what's displayed in Table 7-3 and 7-4.

4 Q Now, are you familiar with the testimony

5 given on Monday and also the information in the

6 application to amend, where Public Service questions

7 whether even the revised bid, the 125-megawatt solar

8 thermal with storage facility proposed for the San Luis

9 Valley is in the public interest as a Section 123

10 resource, given that they can no longer assert that

11 it's in a reasonable cost range as compared to a

12 natural gas facility?

13 A Yes, I did hear that.

14 Q Does that testimony have any impact on

15 your opinion about the likelihood of Public Service's

16 future solar acquisitions in the San Luis Valley?

17 A It does. Again, as a resource planner, I

18 would be concerned if that first Section 123 resource

19 was found not to be in the public interest, because

20 that is the plan by which Public Service and the

21 ratepayers in Colorado would learn about the technology

22 and gain operational experience with the technology.

23 So if that turns out not to be approved, then my

24 opinion that those three future 250-megawatt plants are

25 likely is not true.


63
1 Q Now, specifically as to the delay in

2 carbon legislation and the reduction in the forecast

3 for natural gas, I'm not sure I completely understand

4 how that relates to or how that impacts -- or why that

5 impacts the RESA dollars. And can you explain that to

6 me as to those two?

7 A I'm sorry, the carbon legislation and the

8 natural gas?

9 Q Yes.

10 A The RESA dollars -- the RESA account

11 comes from the premium -- I'm sorry, the RESA dollars

12 comes from the renewable portfolio minus, if no

13 renewables are added and only thermal resources were

14 added. So that difference is -- goes into the RESA

15 balance; and with lower natural gas prices -- I mean,

16 there is a higher premium to be paid for renewables.

17 Q Okay, for the natural gas. And what

18 about for the carbon?

19 A If you could just give me one moment.

20 Q Sure.

21 A For the carbon, I simply looked at Table

22 7.3 and 7.4 and saw that the impact on carbon is again

23 a negative effect on RESA balance dollars.

24 Q Okay. Is that because that's related to

25 the incremental cost or the cost of the resources


64
1 against which the renewables are compared?

2 A Yes. Therefore natural gas resources are

3 cheaper.

4 Q And I think you said that the -- that

5 compared to thermal resources, the baseline renewables,

6 do you mean natural gas resources?

7 A Yes, thermal natural gas resources.

8 Q Now, are you familiar with Ms. Hyde's

9 testimony that she gave on Monday where she suggested

10 that certain changes related to the way that Public

11 Service can collect and pay out costs relating to

12 retail distributed generation could potentially have a

13 positive impact on the RESA dollars that would be

14 available for future renewable resource acquisition?

15 A Yes, I did hear her say that.

16 Q Do you agree with her testimony on that

17 point?

18 A Yes, I think it can have an impact,

19 albeit a small impact compared to the other. So those

20 impacts would be positive impacts on the RESA balancing

21 account. The other factors I talked about would be

22 negative.

23 I think that Ms. Hyde's -- the two

24 factors she talked about, the collection from on-site

25 solar projects -- customers, on their electric bill,


65
1 what she called a fair share, as well as the reduction

2 in the standard rebate offered per watt, decreasing it

3 from the present $2 level. I think those would have a

4 positive impact on RESA dollars -- I'm sorry the RESA

5 balancing account; but I think it's very small compared

6 to the negative impacts that I just talked about from

7 carbon and natural gas.

8 And I did -- I really didn't quantify or

9 try to quantify the impacts from the lower -- though

10 it's the -- though the impact is in the same

11 direction -- and lower sales or the fact that a higher

12 premium for solar thermal would have to be paid out of

13 the RESA account.

14 Q Do you have an opinion about the overall

15 impact on the RESA account of these changed economic

16 circumstances you have discussed, the negative impacts

17 on those dollars, as potentially offset by the positive

18 RESA impacts that Ms. Hyde discussed?

19 A I do have an opinion on that. My opinion

20 is that the negative impact on the RESA account from

21 carbon and natural gas is very large; by 2020, could be

22 as much as a billion dollars.

23 MR. SOPKIN: Your Honor, I object. Now

24 we're getting into the exhibit. This is exactly an

25 exhibit -- her testimony is now inextricably


66
1 intertwined with her analysis and we are prejudiced by

2 this testimony. She is testifying to exactly the

3 assumptions she made in that exhibit which were

4 provided to us for the first time via a simple E-mail

5 to our in-box at that time.

6 We are being prejudiced by this testimony

7 because we have not had time to properly develop an

8 analysis of her exhibit and get up to speed with our

9 own experts on this subject because of the late timing

10 of it.

11 And there are more objections to follow,

12 but she is now getting into the numbers, Your Honor.

13 A.L.J. JENNINGS-FADER: Other parties

14 before I hear Trinichera Ranch?

15 Mr. Douglas?

16 MR. DOUGLAS: Your Honor, Dr. Sheffrin

17 has opinions about the offset of the positive that Ms.

18 Hyde talked about and the negative impact of these

19 other things, some of which Public Service quantified,

20 some of which they did not. The specific numbers that

21 she has calculated are derived from an analysis that

22 she did that was -- Mr. Sopkin described it as put in

23 his E-mail in-box, but it was a formal supplement to

24 the discovery response by Public Service to all parties

25 on Tuesday when it was completed.


67
1 And we can certainly talk about that

2 analysis; but in my view, Dr. Sheffrin has opinions on

3 the subject; they have been provided with the basis for

4 those opinions. They had an opportunity to depose her

5 about that. They deposed her on Wednesday and she

6 should be allowed to express these opinions.

7 A.L.J. JENNINGS-FADER: Mr. Sopkin or

8 Mr. McGann -- I'm not sure who should do this -- but

9 could you provide me a little bit more information with

10 respect to Mr. Douglas' statements having to do with

11 how the information came to Public Service and

12 Tri-State and possibly the rest the parties; when and

13 why and whether or not there was a subsequent

14 deposition of Dr. Sheffrin at which she's -- during

15 which these issues were explored?

16 MR. McGANN: I can, Your Honor.

17 Mr. Douglas is correct and Mr. Sopkin is

18 correct. Essentially there was a series of

19 spreadsheets that were provided to us in an E-mail,

20 Tuesday morning, that essentially purport to

21 calculate -- they essentially take the Tables 7-3 and

22 7-4 and recalculate them with changed assumptions and

23 then reach a conclusion as to the rolling balance in

24 the RESA account.

25 We received that exhibit on Tuesday


68
1 morning. And when we went into the deposition of Dr.

2 Sheffrin on Wednesday, we asked her about the creation

3 of that exhibit, when it had been created and learned

4 during the course of the deposition that actually Dr.

5 Sheffrin's work on the exhibit began after Ms. Hyde's

6 deposition. It was not created for the purposes of the

7 witness disclosure, it was created after June 25th.

8 And actually work began on it in early July.

9 And then Dr. Sheffrin went on vacation

10 and turned it over to her research assistants the

11 beginning of July. And then when Dr. Sheffrin came

12 back from vacation, she completed the work with her

13 research assistants and apparently came into the

14 hearing room on Monday with a version of the exhibit.

15 And when it was disclosed she had used the wrong

16 numbers because she had not used the correct exhibit,

17 the exhibit was updated apparently Monday night and

18 then turned over to us on Tuesday.

19 And, you know, again, it was our

20 understanding that exhibits that were to be disclosed

21 to the parties -- exhibits that were to be used during

22 the hearing were to be disclosed as part of the witness

23 disclosure.

24 We also asked a discovery request to

25 which Trinichera Ranch responded on June 21. This was


69
1 not included either in their witness disclosure or in

2 our discovery request to them that asked for the

3 exhibits that were going to present at the hearing as

4 well as the analyses that underlie the -- underlie

5 their witness testimony here at the hearing. And

6 neither was provided -- and frankly when we got the

7 E-mail on Tuesday that provided the spreadsheets,

8 essentially the analyses that was conducted or the

9 background work papers behind the spreadsheets were not

10 included with those spreadsheets. So we don't have

11 those either.

12 (Pause.)

13 MR. McGANN: And I can go further, Your

14 Honor, into our general objections to the exhibit

15 but --

16 A.L.J. JENNINGS-FADER: Right now I'm

17 focusing on the sequence of events.

18 All right, what -- when was the discovery

19 served requesting the -- whatever analyses or

20 whatever --

21 MR. McGANN: I believe we served that on

22 June 11 and that was a ten-day turnaround, and we

23 received the answer on June 21st.

24 A.L.J. JENNINGS-FADER: And if I

25 understand what you have indicated or stated, it was


70
1 supplemented on the 28th of July -- I'm sorry, the 27th

2 of July, based on evidence adduced at the hearing on

3 the 26th?

4 MR. McGANN: It was -- it was changed.

5 It was actually ready, apparently, on Monday, but was

6 changed because as you recall at the hearing on Monday

7 it was discovered that the -- that the Table 7-3 and

8 7-4 had been amended during the course of the 2010 RES

9 Compliance Plan; and apparently, based upon that

10 information, Dr. Sheffrin went back and changed the

11 analysis.

12 A.L.J. JENNINGS-FADER: Again I'm trying

13 to get sequencing. Was Public Service provided with a

14 copy of the original pre-- the original study --

15 exhibit -- potential exhibit on the 26th or was it

16 provided only with the amended corrected and updated

17 document on the 27th?

18 MR. McGANN: We simply received the

19 corrected or amended document the next day, on the

20 27th.

21 A.L.J. JENNINGS-FADER: And then there

22 was a deposition on the 28th of July of Dr. Sheffrin.

23 MR. McGANN: That's correct.

24 A.L.J. JENNINGS-FADER: What time was the

25 deposition?
71
1 MR. McGANN: The deposition was at 9:00

2 in the morning and lasted until about 1:30 or 2:00 in

3 the afternoon.

4 During the course of the deposition, we

5 went into the creation of the exhibit, not the

6 substance behind the exhibit.

7 A.L.J. JENNINGS-FADER: Thank you.

8 Mr. Douglas?

9 MR. DOUGLAS: Thank you.

10 A.L.J. JENNINGS-FADER: With that sort

11 of -- first of all, is that sort of a correct

12 chronology in your opinion?

13 MR. DOUGLAS: I believe there is more to

14 the chronology. That is a partial description of the

15 chronology and I would be happy to go into the rest of

16 it if that would be of assistance.

17 A.L.J. JENNINGS-FADER: Are the critical

18 dates correct?

19 MR. DOUGLAS: Um.

20 A.L.J. JENNINGS-FADER: That is it to

21 say, there was a discovery served by Public Service

22 Company, response by Trinichera Ranch, that did not --

23 the response did not include Dr. Sheffrin's analysis?

24 MR. DOUGLAS: Yes. But it could not

25 possibly have included.


72
1 A.L.J. JENNINGS-FADER: I'm just --

2 MR. DOUGLAS: Okay, I apologize, Your

3 Honor.

4 A.L.J. JENNINGS-FADER: I'm trying to get

5 the chronology.

6 MR. DOUGLAS: Okay.

7 A.L.J. JENNINGS-FADER: Then there was an

8 update to the discovery response on the 27th of July,

9 followed within 24 hours or so by deposition of Dr.

10 Sheffrin.

11 MR. DOUGLAS: That's correct.

12 A.L.J. JENNINGS-FADER: And commencement

13 of the deposition.

14 MR. DOUGLAS: That's correct. I think it

15 was 9 a.m. on the 27th when this was sent to them,

16 which was approximately 24 hours before Dr. Sheffrin's

17 deposition.

18 A.L.J. JENNINGS-FADER: Okay. And I

19 also -- was Mr. McGann, I believe, also correct when he

20 indicated the general chronology that is that Dr.

21 Sheffrin began work on her analysis sometime in early

22 July and continued until the document was produced to

23 Public Service Company -- I mean, she or her research

24 assistant?

25 MR. DOUGLAS: Yes, in general, that's


73
1 correct.

2 A.L.J. JENNINGS-FADER: And that she --

3 did she commence work before or after the initial

4 Trinichera Ranch response to Public Service Company's

5 discovery?

6 MR. DOUGLAS: That would be after.

7 MR. McGANN: Your Honor, if I can add --

8 A.L.J. JENNINGS-FADER: I'm sorry, I'm

9 just --

10 MR. McGANN: Your Honor, if I can add --

11 A.L.J. JENNINGS-FADER: I'm reviewing the

12 specific language of my order with respect to analysis

13 and documents -- responsive documents. I'm just

14 reviewing the language and then I will continue.

15 Thank you. Yes, sir.

16 MR. McGANN: I was simply going to add

17 that again our understanding is that Dr. Sheffrin began

18 her work in July. And she was asked during her

19 deposition why the work could not have been completed

20 and essentially turned over to us prior to the time she

21 left on vacation; and Dr. Sheffrin said that it was her

22 duties with respect to her professorship at Tulane

23 which essentially did not enable her to complete the

24 analysis before she left for vacation. And my

25 understanding is she left for a 15-day vacation.


74
1 MR. DOUGLAS: Your Honor?

2 A.L.J. JENNINGS-FADER: Yes?

3 MR. DOUGLAS: I believe there is a lot

4 more to the story that I would --

5 A.L.J. JENNINGS-FADER: You certainly

6 may.

7 MR. DOUGLAS: -- that I would like to

8 present.

9 Thank you.

10 Your Honor, I don't believe there is any

11 dispute over the relevance of this. This directly

12 responds to the testimony of Ms. Hyde, given on Monday,

13 about this potential positive impact of the distributed

14 generation collection procedures and rates on the RESA

15 balance. And the reason that this could not have been

16 provided in response to that first discovery request is

17 that Public Service did not include this issue or any

18 mention of that opinion by Ms. Hyde in either of the

19 two witness disclosures that related to Ms. Hyde's

20 testimony which were filed on April 16 and on June 4.

21 It was not until Ms. Hyde's deposition on June 25th

22 that she first made Trinichera Ranch aware that she

23 held such an opinion.

24 And Ms. Hyde's deposition was received by

25 me on June 28th. And then as Mr. McGann described, it


75
1 was early July when Dr. Sheffrin -- and she described

2 this at her deposition that she had the idea that this

3 opinion that Ms. Hyde had just told us about and how it

4 related to the RESA balance and the negatives and the

5 positives is something that she might be able to

6 quantify.

7 So in early July, Dr. Sheffrin set about

8 trying to figure out how to quantify that. It's not

9 simply typing a couple numbers into a calculator;

10 first, it's an update to the very in-depth and complex

11 tables in Table 7-3 and 7-4 that Public Service

12 prepared, as part of its 2010 Compliance Plan, figuring

13 out what all the numbers are, where they come from,

14 what all the assumptions are, and then trying to figure

15 out a methodology to both update that with the negative

16 effects and also somehow model the potential positive

17 effects that Ms. Hyde talked about.

18 And Dr. Sheffrin worked diligently to

19 come up with that methodology, figure out what

20 information was available for Public Service -- from

21 Public Service; sometimes you have to back into these

22 calculations from charts or spreadsheets they have

23 given us to come up with some of the numbers she

24 needed.

25 She then testified in her deposition that


76
1 she did get a team of analysts working on that that

2 first week of July, before she left for -- left the

3 country for over two weeks.

4 And this is further complicated by the

5 fact that some of the specific numbers that are used in

6 Dr. Sheffrin's calculations come from the spreadsheet

7 that's now in evidence as Exhibit 137 from Public

8 Service, which was produced to Trinchera Ranch for the

9 first time on July 6. That spreadsheet -- and there

10 was ongoing -- there was an ongoing discovery dispute

11 essentially and a threat of a motion to compel by

12 Trinichera Ranch that led to supplemental disclosures

13 by Public Service after the Hyde deposition that went

14 on until July 13th.

15 And, in fact, that spreadsheet that was

16 produced on July 6th, which is -- Your Honor, at any

17 time, if it would help to have Dr. Sheffrin's analysis

18 and we could point to some of these things, if that

19 would be helpful.

20 A.L.J. JENNINGS-FADER: I guess at this

21 juncture, since we're already 90 percent of the way

22 into it, do you intend to offer Dr. Sheffrin's analysis

23 as an exhibit?

24 MR. DOUGLAS: I would like to, but --

25 A.L.J. JENNINGS-FADER: Why don't you.


77
1 MR. DOUGLAS: Okay.

2 A.L.J. JENNINGS-FADER: Then we'll just

3 sort of back-date all of this argument to address

4 the -- as part of an argument with respect to

5 introduction of what is marked for identification as

6 Exhibit 145.

7 MR. DOUGLAS: Okay, if I may approach?

8 A.L.J. JENNINGS-FADER: You may.

9 (Discussion off the record.)

10 (Whereupon, Exhibit No. 145 marked for

11 identification.

12 A.L.J. JENNINGS-FADER: We're off the

13 record to sort out the exhibit situation.

14 (Discussion off the record.)

15 A.L.J. JENNINGS-FADER: We'll be back on

16 the record.

17 Mr. Douglas, an extraordinarily out of

18 whack process, but have you an exhibit to offer? So if

19 you could have the witness identify it and we'll go

20 forward from there.

21 BY MR. DOUGLAS:

22 Q Dr. Sheffrin, do you have Exhibit 145 in

23 front of you?

24 A I do.

25 Q Is that a true and accurate copy of a


78
1 spreadsheet analysis?

2 A It is.

3 Q Is this something that was prepared under

4 your direction?

5 A It was.

6 Q And have you independently verified the

7 accuracy of the methodology, assumptions and findings

8 in this exhibit?

9 A I have.

10 MR. DOUGLAS: Okay, Your Honor, I would

11 offer Exhibit 145.

12 A.L.J. JENNINGS-FADER: Exhibit 145 for

13 identification has been offered. Voir dire or

14 objection?

15 MR. McGANN: Both, Your Honor.

16 A.L.J. JENNINGS-FADER: You may proceed

17 with voir dire, Mr. --

18 MR. McGANN: May I do it from counsel

19 table?

20 A.L.J. JENNINGS-FADER: Certainly. There

21 is a lot of paper floating around.

22 VOIR DIRE EXAMINATION

23 BY MR. McGANN:

24 Q Good morning, Dr. Sheffrin.

25 My name is David McGann. We met at your


79
1 deposition on Wednesday.

2 A Yes. Good morning.

3 Q I would like to ask you just a couple of

4 questions if I could about the -- what this exhibit

5 purports to show. And I'm referring now to what's been

6 identified as Hearing Exhibit 145.

7 Let me start out by saying, is your

8 opinion in this proceeding based in part on the

9 analysis that's contained in Exhibit 145?

10 A I --

11 MR. DOUGLAS: Objection, vague; what

12 opinion are we talking about? She has a number of

13 opinions.

14 A.L.J. JENNINGS-FADER: And actually

15 beyond that, I'm not sure how that goes to voir dire of

16 the document.

17 MR. McGANN: Let me continue then, Your

18 Honor.

19 BY MR. McGANN:

20 Q It's my understanding, if I take a look

21 at the first page of the exhibit, Dr. Sheffrin, you

22 have assumed, I believe in here, that carbon

23 legislation is delayed until 2014.

24 A I haven't assumed that. I used the

25 assumption from Public Service Company in their Table


80
1 7.3, 7.4.

2 Q And is it your understanding of that

3 assumption that there were no carbon costs included in

4 Table 7.4; is it your understanding that there were no

5 carbon costs included in the costs calculation of

6 renewable -- renewables until 2014?

7 MR. DOUGLAS: Your Honor, I object. I'm

8 not sure how this relates to the admissibility of this

9 document.

10 A.L.J. JENNINGS-FADER: I agree.

11 MR. McGANN: I'm simply trying to

12 understand a little further -- I can move forward, Your

13 Honor and move to my objection. I was simply trying to

14 understand the calculations that went into the exhibit,

15 but I can certainly move forward with my objections to

16 the exhibit.

17 A.L.J. JENNINGS-FADER: Let's start with,

18 I assume all the preceding discussion with respect to

19 the testimony of Dr. Sheffrin as it may relate to this

20 exhibit are part of your objection.

21 MR. McGANN: Yes.

22 A.L.J. JENNINGS-FADER: Okay, so we can

23 move forward from there.

24 MR. McGANN: Okay.

25 A.L.J. JENNINGS-FADER: Please.


81
1 MR. McGANN: Well, Your Honor,

2 essentially I've already gone through our primary

3 objection, which is that we have been prejudiced by the

4 fact that this was given to us so late. I don't think

5 there has been any justification for the fact that it

6 was presented to us at such a late date.

7 I note that Mr. Douglas suggested, for

8 example, that Trinichera Ranch would not have been able

9 to produce the exhibit -- or that they were -- until --

10 were not aware that the exhibit should be produced

11 until Ms. Hyde's deposition was taken.

12 I take issue with that because

13 essentially the testimony in this proceeding or -- let

14 me just say it this way, Ms. Hyde's deposition does not

15 form the shape and scope of this proceeding.

16 Essentially their witness disclosure should have been

17 prompted by -- and their exhibit should have been

18 prompted by the notice that Public Service sent out in

19 terms of Ms. Hyde's testimony, as well as Your Honor's

20 order shaping the scope of the proceeding. Simply

21 because something was mentioned in Ms. Hyde's

22 deposition does not somehow change the scope of this

23 proceeding.

24 I can tell you there were a number of

25 things that were discussed in Ms. Hyde's deposition


82
1 that are beyond the scope of this proceeding. So we

2 can't use Ms. Hyde's deposition as somehow

3 justification for the production of this document.

4 I would furthermore note that you have

5 heard Mr. Douglas describe Dr. Sheffrin's work in terms

6 of the creation of this exhibit and the fact that it

7 took a team of researchers to create the exhibit.

8 Mr. Douglas has somehow suggested that by

9 giving us this exhibit on Tuesday and producing Dr.

10 Sheffrin Wednesday morning for a deposition that

11 somehow we had sufficient time to analyze this exhibit,

12 prepare for a deposition, and determine how to approach

13 Dr. Sheffrin with respect to this exhibit.

14 I would submit to you, Your Honor, that

15 quite frankly, that claim is not worthy of your belief

16 either.

17 With respect to -- with respect to the

18 issue of surprise and the issue of prejudice and the

19 production of exhibits during discovery and their

20 exclusion during the course of this hearing, Your

21 Honor, you will recall, Your Honor, that in the hearing

22 Ms. Hyde's testimony concerning resources needs after

23 2015 was stricken from the record because of the

24 perceived failure to disclose load and resource tables

25 after 2015 during the course of discovery.


83
1 You will also recall that during the

2 initial hearing we attempted to introduce an exhibit at

3 the hearing on the rating of the Western area power

4 line and were not allowed to do so because the

5 assertion was -- that was Exhibit 61. And we were not

6 allowed to do so in part because the information had

7 been disclosed two days before the hearing in an

8 E-mail.

9 And, so, for all of those reasons, we

10 believe that the exhibit should be excluded. We have

11 not -- and, again, as I reiterated before, even though

12 we were given the exhibit, we were not given the work

13 papers, which we did ask for in our discovery request

14 that was sent out on June 11th. Even when the exhibit

15 was produced, there was no supporting analysis produced

16 with the exhibit. And, also, it was not produced in an

17 executable format. So, we weren't even able to

18 determine what formulas were behind the numbers that

19 were in the exhibit.

20 So, we were not given the time, nor were

21 we given the information necessary to analyze the

22 exhibit for purposes of this hearing. So, I think,

23 because of the lateness of the exhibit, and the fact

24 that we were not given sufficient time or information

25 to analyze it, I think, on that basis alone, it should


84
1 be excluded.

2 A.L.J. JENNINGS-FADER: With respect to

3 the last point, about the exhibit was not produced in

4 executable format, thereby precluding identifying --

5 opening it up and identifying the underlying formulas,

6 is that the basis of the concern?

7 MR. McGANN: It's certainly -- yes,

8 certainly did not allow us to analyze it.

9 A.L.J. JENNINGS-FADER: As to that --

10 MR. McGANN: Yes.

11 A.L.J. JENNINGS-FADER: Did the discovery

12 request, in response to which this document was

13 produced, request the documents be produced in an

14 executable format that allowed opening of the formulas?

15 MR. McGANN: It asked for -- no. What it

16 did ask for was an electronic format, and it asked for

17 the results and supporting data of any study or report

18 conducted, commissioned or relied upon by such

19 witnesses. And we believe that this spreadsheet, in

20 executable format, or this work paper supporting the

21 worksheet, fall under that request and those were not

22 provided.

23 A.L.J. JENNINGS-FADER: You may --

24 MR. McGANN: And if I may move on, Your

25 Honor, with my -- I have gone into, you know,


85
1 essentially, the spreadsheet, and why we believe the

2 information should be excluded for failure to comply

3 with Your Honor's order, our discovery request and just

4 simply the fact that it was produced so late.

5 We also believe the exhibit was not

6 relevant. It's based on speculation, and that it was

7 not performed in compliance with the Commission's

8 rules. This exhibit essentially purports to calculate

9 a retail rate impact outside the context of a RES

10 Compliance Plan. That is our understanding of the

11 purpose behind this exhibit. To me, it's one thing to

12 explore various assumptions and how they may impact the

13 calculation. It's quite another to use this docket to

14 attempt to predict how the Commission will decide

15 certain issues and assumptions, and then use those

16 predictions to precisely quantify what those retail

17 rate impacts will be, which is, essentially, I think,

18 what we're doing here. This is, essentially,

19 Dr. Sheffrin's speculation as to what the Commission

20 might do in the future, and we believe, as a result,

21 it's irrelevant and has no probative value.

22 Let's go into some of the assumptions, as

23 we understand them, from our brief review, and how

24 those assumptions were used in the exhibit. My

25 understanding is carbon costs are calculated starting


86
1 in 2014. And my understanding is that is based upon

2 the fact that, in our amended resource plan, our

3 calculations began, the calculation of carbon costs, in

4 2014. As we have stated time and again, it really

5 doesn't matter what we put forward to the Commission.

6 It matters what the Commission decides, pursuant to

7 40-2-123. They are specifically given the discretion

8 to determine how carbon should be taken into account in

9 resource planning acquisition decisions. And, so far,

10 they have said that carbon should be taken into account

11 at a $20-per-ton level, and they have not changed that

12 decision.

13 And so, under the Commission's rules,

14 essentially, that it is that number that is used, from

15 the resource plan decision, that is used for

16 calculating RES compliance. And so, again, we're

17 speculating as to what the Commission might do with an

18 amended resource plan that uses a different starting

19 date for carbon.

20 Furthermore, it appears that

21 Dr. Sheffrin's analysis essentially did not take into

22 account the fact that there are certain incremental

23 costs of renewables that have already been locked down.

24 They include an assumption of a $20-per-ton carbon

25 rate. They include an assumption of natural gas rates


87
1 at the time the resources were locked down. They

2 assume -- and so, at that particular point in time, I

3 think this actual exhibit is actually inaccurate, in

4 terms of how it portrays the RESA balances, because

5 those different numbers should not be used for

6 resources that have already been locked down.

7 Furthermore, next month -- or, excuse me,

8 it's still July -- in September, we are going to file a

9 2010 RES Compliance Plan or a 2011 RES Compliance Plan,

10 in which we're going to seek to lock down further

11 resources, and in that plan, we may seek to still use

12 the 2007 Resource Plan numbers, with respect to carbon,

13 and with respect to some of the other numbers that were

14 decided in the resource plan. So, again, this is

15 speculation as to what we might do with our 2011

16 Resource Plan and what resources we may lock down.

17 If you take a look at the increased

18 contributions to the RESA from distributed generation

19 customers, that this particular issue is at issue in a

20 current rulemaking, Docket 10R-243E. By my count,

21 there are currently three different proposals as to how

22 to calculate that contribution, one by the --

23 A.L.J. JENNINGS-FADER: I'm sorry. I'm

24 sorry. My apologies. When you started the docket

25 number, I got confused. What is the specific item?


88
1 MR. McGANN: It is how to calculate the

2 contribution to the RESA from distributed generation

3 customers.

4 A.L.J. JENNINGS-FADER: Thank you.

5 MR. McGANN: And that is the subject of

6 that rulemaking, which is 10R-243E.

7 With respect to a lower -- moving onto

8 another assumption, which is the lower standard rebate

9 for Solar Rewards customers, Dr. Sheffrin's assumed 50

10 cents. We don't know why you would assume 50 cents.

11 The statute essentially states that market changes --

12 (Discussion off the record between Public

13 Service Company's representatives.)

14 MR. McGANN: A 50-cent reduction. Excuse

15 me. The statute says that market changes are supposed

16 to support the reduction. It may be greater. We can't

17 litigate that issue in this particular case.

18 I know that Dr. Sheffrin has basically,

19 from what I understand, assumed certain heat rates.

20 And let me look for the specific page, if I might. I

21 believe that's on Table 3. On Table 3, we have been

22 unable to verify those various heat rates and whether

23 or not they are accurate. We also, as far as I know,

24 are unclear as to how Dr. Sheffrin calculated those

25 particular heat rates.


89
1 The sum and substance of all of this is,

2 again, this is essentially -- while this may be an

3 interesting theoretical exercise, this is essentially

4 an attempt to litigate these issues in the context --

5 these RES compliance plan issues in the context of this

6 transmission line docket. We don't believe that's

7 appropriate. We believe it's outside the scope of the

8 reopened hearing. Quite frankly, we believe this is

9 outside the scope of this transmission line docket, and

10 we would be, given the timing, and given the subject

11 matter, we would be severely prejudiced if this exhibit

12 were introduced into the record, and if Dr. Sheffrin

13 were allowed to testify to its contents.

14 And, frankly, we believe that any party

15 that has an interest in the development of renewable

16 energy, or resource planning in Colorado, would be

17 prejudiced by consideration of this exhibit in this

18 transmission line docket, simply because this docket

19 was never noticed for consideration of these particular

20 issues. And I can tell you, from experience in these

21 other dockets, there are a tremendous number of parties

22 that have an interest in the various assumptions and

23 issues that are contained in this particular exhibit.

24 If I may have a moment, Your Honor.

25 A.L.J. JENNINGS-FADER: You may.


90
1 (Discussion off the record between Public

2 Service Company's representatives.)

3 MR. McGANN: So, if you, just to

4 conclude, Your Honor, if you go back to the reasons for

5 why the docket was reopened, it was to consider the

6 effect of House Bill 10-1001 on the line, and to

7 consider the effect of the amendment to the resource

8 plan and the need for the line. And, essentially, this

9 analysis goes far beyond the purposes for which the

10 record was reopened. There is nothing in the amendment

11 to the resource plan that you're going to find that

12 gives rise to any of the analyses that is set forth

13 here.

14 Furthermore, again, to the extent that

15 Trinchera Ranch is somehow suggesting that Ms. Hyde's

16 deposition somehow opened this up to this proceeding,

17 that is simply not the case. The scope of this

18 proceeding and the scope of Dr. Sheffrin's testimony is

19 not established by the scope of the deposition that

20 Trinchera Ranch took of Ms. Hyde.

21 And therefore, we, because the exhibit is

22 based on speculation, it has no probative value. We

23 were prejudiced by the fact that it was given to us so

24 late. And it's beyond the scope of the reopened

25 proceeding. We believe that Dr. Sheffrin should not be


91
1 permitted to testify concerning the exhibit, or any of

2 the conclusions to be drawn from the exhibit, and the

3 exhibit should not be entered into the evidentiary

4 record.

5 A.L.J. JENNINGS-FADER: With respect to

6 the last point, about the document should not be

7 admitted, and no opinion based on the document ought to

8 be admitted?

9 MR. McGANN: Yes, Your Honor.

10 A.L.J. JENNINGS-FADER: No testimony?

11 MR. McGANN: Yes.

12 A.L.J. JENNINGS-FADER: Based in whole or

13 in part on the exhibit?

14 MR. McGANN: No testimony -- perhaps --

15 A.L.J. JENNINGS-FADER: No testimony

16 based in whole, or testimony based in part, on the

17 exhibit, ought to be admitted?

18 MR. McGANN: To the extent that the

19 testimony is based upon the analysis that is set forth

20 in the exhibit, we believe the testimony should not be

21 permitted. We believe the basis for many of

22 Dr. Sheffrin's opinions are the analyses that are

23 contained in this exhibit, and if I may just have a

24 moment with counsel, Your Honor.

25 (Discussion off the record between Public


92
1 Service Company's representatives.)

2 MR. McGANN: My point is this, and I

3 believe I made this point during my objection. It's

4 one thing to essentially testify to how these various

5 numbers -- how changing these assumptions may move the

6 RESA balances. It's another thing to essentially

7 testify to what those balances would be, and use

8 speculation to do that. And, essentially, that's the

9 way I see this exhibit being used.

10 And, so, we have, certainly, in this

11 proceeding, talked about the cost -- how the cost of

12 natural gas affects the cost of renewables, and in

13 matters such as that, but Dr. Sheffrin's specific

14 analysis, with respect to Dr. Sheffrin's opinions, with

15 respect to what this will do to the RESA balances,

16 which she already testified to, and to the extent her

17 opinions are based upon -- any other opinions are based

18 upon that analysis, we object to the introduction of

19 those opinions based upon this analysis.

20 And we point out a very difficult issue,

21 which is, it may be somewhat difficult to tell what

22 opinions are based on this analysis and we may have to

23 ask Dr. Sheffrin that, but I believe it is improper for

24 Dr. Sheffrin, or Trinchera Ranch, to be permitted to

25 allow their expert to conduct analyses, after witness


93
1 disclosures were to be done, after discovery was

2 responded to, and, then, use that analysis to somehow

3 introduce evidence into this record.

4 I don't believe that this analysis would

5 be allowed in a trial court, much less in Commission

6 proceedings, where there is a policy of open disclosure

7 in terms of discovery and prefiled testimony.

8 A.L.J. JENNINGS-FADER: To the extent

9 that the issues addressed by Dr. Sheffrin, in her oral

10 testimony, address testimony made by Ms. Hyde on Monday

11 the 26th of July, and in that, for example, relative

12 movement in the RESA account balance, up, down, no

13 impact, do I understand correctly that Public Service

14 believes that testimony is acceptable from

15 Dr. Sheffrin, responding to that testimony?

16 MR. McGANN: May I consult with counsel?

17 A.L.J. JENNINGS-FADER: You may.

18 (Discussion off the record between Public

19 Service Company's representatives.)

20 MR. McGANN: I think that, to the extent

21 Dr. Sheffrin is responding to Ms. Hyde in terms of her

22 general testimony as to how these various numbers

23 influence incremental costs, as well as the calculation

24 of RESA balances, I believe it's appropriate rebuttal

25 to talk about those issues.


94
1 A.L.J. JENNINGS-FADER: But response --

2 we'll call it, "response testimony"?

3 MR. McGANN: That's correct. Again, the

4 problem I am having is I'm not sure what part

5 of Dr. Sheffrin's analysis results from this chart and

6 what doesn't. What I do think is absolutely improper,

7 however, is to essentially testify to what those hard

8 numbers would be. We simply don't know, and I haven't

9 been able to verify Dr. Sheffrin's analysis.

10 A.L.J. JENNINGS-FADER: All right. So,

11 if -- I'm trying to get the scope of the objection and

12 how it impacts the testimony, both testimony already

13 given and testimony to be given by Dr. Sheffrin.

14 If I sustain your objection as to the

15 exhibit -- I think I now understand that the objection

16 would run to not only Exhibit 145 for identification,

17 but also any oral testimony that, in essence, reads

18 into the record numbers that are contained in the

19 analysis which is set out in Exhibit 145 for

20 identification?

21 MR. McGANN: Yes, Your Honor.

22 A.L.J. JENNINGS-FADER: Okay. Thank you.

23 I am just trying to get the scope here, so we have a

24 very clear understanding for all parties and for the

25 Commission. Any other party before Trinchera Ranch


95
1 responds? Mr. Davidson.

2 MR. DAVIDSON: Yes. For the record, on

3 behalf of Pole Canyon, we would join the objection by

4 Public Service Company as to the admissibility of

5 what's been marked for identification as Exhibit 145,

6 for the reasons stated by the company.

7 A.L.J. JENNINGS-FADER: Are you also

8 joining in the statement in their objection with

9 respect to prejudice? I mean, I understand the scope,

10 and all that. I am just trying to figure out if you're

11 joining the prejudice argument as well?

12 MR. DAVIDSON: Yes, I think so. Given

13 the timing of when this exhibit was produced and

14 provided to the parties, I think the prejudice argument

15 has significant weight, as expressed by the company,

16 and we would join in that portion of their objection as

17 well.

18 A.L.J. JENNINGS-FADER: Thank you. And

19 Mr. Dougherty -- I forgot to ask the other applicant,

20 specifically at that, applicant's position, if any,

21 with respect to the objection?

22 MR. DOUGHERTY: I appreciate that, Your

23 Honor. Tri-State's concern here is not to the

24 substance of this, because it's unique to Public

25 Service Company. Tri-State's concern here, again, is


96
1 it broadens the scope of the record, and anything that

2 would potentially, again, delay the conclusion of these

3 proceedings, and the conclusion of this evidentiary

4 record, and for the reasons stated by Public Service,

5 we believe that this late-provided information does go

6 beyond the scope of this record, and, therefore, we

7 would support the objection.

8 A.L.J. JENNINGS-FADER: Thank you. Any

9 other party? Response by Trinchera?

10 MR. DOUGLAS: Thank you, Your Honor.

11 Obviously, there are a number of things to respond to.

12 I want to start with this relevance question, whether

13 it's relevant and/or as Mr. Dougherty just put it,

14 beyond the scope. And if we take a look at Ms. Hyde's

15 testimony, we are certainly not arguing that something

16 that Ms. Hyde said in her deposition expands the issues

17 in this case.

18 If you look at her Direct Testimony, on

19 Monday, and if it -- actually, Your Honor, I'm not sure

20 you have a copy of that. Would you like a copy of the

21 transcript?

22 A.L.J. JENNINGS-FADER: That's correct, I

23 don't, and, yes, I would, just to read along.

24 MR. DOUGLAS: If I may approach, Your

25 Honor?
97
1 A.L.J. JENNINGS-FADER: You may. I will

2 certainly be happy to return this.

3 MR. DOUGLAS: You may keep it.

4 All right, Your Honor. If we turn to

5 small page 26, or quarter page 26, of the transcript.

6 A.L.J. JENNINGS-FADER: Yes, sir.

7 MR. DOUGLAS: Starting at line 5, and in

8 her direct examination by Mr. McGann, she's asked,

9 "Now, you mentioned the 2% rate cap in your prior

10 answer. Were there any changes in the new legislation

11 that affected that 2% retail rate cap? Her answer is:

12 "Yes, there is a few. We are allowed now to apply

13 interest on the RESA balances. And it's clear that we

14 can borrow-forward the money that could be acquired in

15 future years. We also have the ability to seek

16 reduction to the 3% distributed generation provision,

17 if we need to. We can also seek reduction in the

18 standard rebate offer, if we need to, to make it less

19 than $2, and we can continue to acquire from customers,

20 who install distributed generation, we can continue to

21 acquire money into the RESA on kind of a fair-share

22 basis."

23 So, she's specifically asserting that

24 there is a positive impact on RESA dollars from these

25 changes.
98
1 Then, in cross examination, at page 167

2 of the transcript, starting on line 12, she's asked:

3 "You believe these changes in House Bill 10-1001 that

4 could result in a change to how the distributed

5 generation expenses are calculated for Public Service

6 could offset the negative move in RESA dollars that we

7 discussed from those changed assumptions to some

8 extent; is that accurate?" "Yes. In the hypothetical,

9 knowing that they won't redo the 2010, but I think we

10 have a whole suite of tools in order to manage those

11 RESA dollars."

12 So, she talks about positive effects and

13 the offset of the negative effects. So, from a

14 starting point, Your Honor -- and she's also asked if

15 she quantified that, and she said no.

16 So, a quantification of this assertion

17 that she is making, that there will be a positive

18 impact that will offset the negative impact, that she

19 also acknowledged, couldn't be more relevant to the

20 testimony that she gave at this hearing.

21 To the extent that Mr. McGann had issues

22 with whether he believes the spreadsheet is accurate,

23 that all sounded, to me, like cross examination. That

24 goes to the weight that the calculation should be given

25 by the Commission. It also sounded to me like he has a


99
1 pretty good understanding of the document for cross

2 examination, and issues like the burn rate and the

3 different assumptions and how it all comes together.

4 If he believes that lockdown effects

5 whether the end number in the spreadsheet is accurate

6 or should be revised, he's entitled to cross examine on

7 that subject. That doesn't make the document

8 inadmissible. If he's curious how Dr. Sheffrin got the

9 burn rate, which there is a citation to that in the

10 document itself, and in one of the footnotes, that

11 would have been a good question for the deposition of

12 Dr. Sheffrin. And they had an opportunity to ask

13 questions like that and chose not to do so.

14 But as to his assertion that -- his

15 opinion that this is not accurate, well, that's not

16 determinative. And, in fact, Ms. Hyde's sworn

17 testimony, on Monday, at page 132 of the transcript,

18 was, I asked her, "If we wanted to accurately model

19 today the amount of RESA funds that would be available

20 for future resource acquisitions, we would take the

21 2010 modeling you did," meaning Public Service, in

22 Tables 7-3 and 4, "and we would need to use the revised

23 carbon forecast in the 2007 amendment, right?" Answer:

24 "In part, yes. "And a revised natural gas assumption,

25 right?" And the answer is, "In part, yes."


100
1 So she herself said that if we were to do

2 this modeling today, it would be more accurate to use

3 those two assumptions, which is precisely what

4 Dr. Sheffrin has done.

5 Now, the fact that we don't know what the

6 Commission is going to do is, frankly, a theme that

7 underlies this entire hearing this week. We're

8 talking, hypothetically, if the Commission adopts one

9 of the three levels of generation proposed for the

10 valley, even though yesterday, or the day before, they

11 now dismissed that application, it's all hypothetical.

12 It's all forecasting, or talking about the potential

13 effects on the need for this project, various things

14 that might happen as a result of the House Bill, and as

15 a result of the now dismissed amendment.

16 And to the extent that Public Service is

17 going to try to lobby for certain carbon assumptions

18 and gas prices, in the upcoming filing regarding the

19 2007 RES Compliance Plan, Dr. Sheffrin has just

20 forecasted one potential hypothetical scenario that may

21 occur and what the impact of that would be. And, in

22 fact, sometimes she assumed multiple paths, like with

23 the reduction of the standard rebate. She has a line

24 for both a 50-cent reduction in that rebate, and a

25 dollar reduction, cutting it in half. She put numbers


101
1 forward for both of those.

2 So, we're looking at, hypothetically, if

3 these assumptions are changed to the more accurate

4 ones, as described by Ms. Hyde and as used by Public

5 Service and discussed in their amendment, what's the

6 effect on the RESA balance is specifically tied into

7 Ms. Hyde's testimony on Monday. So, on the relevance

8 point, I just don't think the objection is well-taken.

9 I don't believe there's a foundation or

10 dispute as to authenticity, or anything like that. So,

11 I believe I will address what I believe is the only

12 other attack on the exhibit, which is the element of

13 the unfair surprise, lack of notice, or it should have

14 been done sooner. And, Your Honor, we were sort of in

15 the middle of that discussion when we shifted gears to

16 a formal offering of the exhibit.

17 And, so, Mr. McGann's statement that this

18 should have been part of Dr. Sheffrin's initial witness

19 disclosure -- I am repeating myself a little bit, but

20 to ground ourselves, this opinion by Ms. Hyde that this

21 evidence directly responds to was not, in any way, set

22 out or described in either of her two witness

23 disclosures from April 16th or June 4. So, there was

24 no way for Trinchera to be aware, at the time it filed

25 its witness disclosure, on June 18th, or responded to


102
1 this discovery request, on June 21st, that Ms. Hyde

2 held this opinion that this evidence directly responds

3 to. It's just not there.

4 And, in our witness disclosure, we

5 specifically said that Dr. Sheffrin and Mr. Dauphinais

6 were going to respond to Ms. Hyde's testimony, and in

7 our discovery response, on June 21st, specifically,

8 said that there was an ongoing analysis and that it

9 would be supplemented as additional information became

10 available.

11 Then, on June 25th, Ms. Hyde first raised

12 this issue at her deposition, which she then testified

13 to on Monday, and we have heard about, you know, how

14 the analysis -- or the analysis of Ms. Hyde's opinion

15 and what potential responses might be available began

16 in early July. And what I was getting to, in our

17 previous discussion, was that Dr. Sheffrin, as we

18 talked about, came up with the methodology, figured out

19 that there should be a way to do this, and then had her

20 analysts gathering the information and crunching the

21 numbers while she was out of the country for 15 days in

22 July.

23 And during this time -- and this is

24 actually what led me to hand you the exhibit, Your

25 Honor, is that, in several places, in the spreadsheet


103
1 itself, you can see that the footnotes reference what

2 is Exhibit 137, I believe, yes, 137, which is

3 Attachment TR-26-13A4, as produced by Public Service.

4 There's Footnote 1 on Table 2, and Footnote 1 on Table

5 3. Both make reference to -- that some of the numbers

6 that were required to complete this calculation came

7 from that spreadsheet.

8 And as I discussed, after Ms. Hyde's

9 deposition, and some of the new issues she brought

10 up -- Trinchera had served discovery prior to that

11 deposition, and there were some fairly lengthy e-mail

12 exchanges back and forth, describing a deficiency in

13 the production, that there was additional documents

14 that needed to be produced, based on what Ms. Hyde had

15 said at her deposition. That was one of the documents

16 that was produced, for the first time, on July 26, but

17 there were issues with that document. There were some

18 missing numbers and missing cells in the document and

19 numbers that were clearly incomplete.

20 And I have these e-mail exchanges, if you

21 would like to see them, but, on July 7th, I sent a

22 e-mail to Mr. Sopkin, specifically talking about the

23 missing cells and the missing digits in that

24 spreadsheet that is specifically referenced in the

25 analysis and relied upon for the analysis.


104
1 Public Service did produce a revised

2 spreadsheet on July 9th. It still had the same issues

3 in, specifically, in the row that is cited on Table 3,

4 in Footnote 1.

5 A.L.J. JENNINGS-FADER: I'm sorry. Table

6 3 of the Exhibit 145?

7 MR. DOUGLAS: Yes. Thank you, Your

8 Honor, Table 3 of Exhibit 145, Footnote 1, you can see

9 it cites to the total eligible c-watt, which is

10 calendar-year production, net transfers and wholesale

11 transfers. And, Your Honor, we have all of these

12 spreadsheets. I can show you these, if you like, but

13 there are missing digits in that row that was

14 specifically used in that analysis, even in the version

15 that was produced on July 9.

16 We made Public Service aware of this, and

17 they produced the final version of the spreadsheet with

18 those numbers complete on July 13th. That was almost a

19 week after Dr. Sheffrin had left the country. The

20 numbers were complete -- the number crunching was

21 completed while she was in Brazil. She returned last

22 Friday night, worked over the weekend with her team.

23 She discussed this at her deposition. And Monday

24 morning, they were finalizing the numbers.

25 And that is when it became apparent, when


105
1 Public Service, for the first time, notified us that

2 the Tables 7-3 and 7-4 that we used with Ms. Hyde, at

3 her deposition, were, in fact, out-of-date. So we got

4 new tables. You remember, there was somewhat of a

5 scramble over that on Monday. We used those that day.

6 This analysis was completed and promptly turned over to

7 Public Service at 9 a.m. Tuesday morning.

8 Now, then, Public Service had an

9 opportunity to depose Dr. Sheffrin about this. They

10 had an opportunity to present Rebuttal Testimony and,

11 in fact, in light of the Commission decision on the

12 application to amend the 2007 Resource Plan, it strikes

13 me that if Public Service believes there's prejudice,

14 and they need more time to respond to this exhibit, we

15 have the opportunity to take more time. We could take

16 up this exhibit, testimony about this exhibit, and

17 rebuttal to this exhibit at a several hours or half-day

18 hearing at a later date.

19 At this point, I don't believe that would

20 delay any decision in this case, given that, you know,

21 it would be difficult to issue a decision in this case

22 prior to the time that the Commission has decided any

23 Triple Rs relating to the dismissal, or whether some of

24 the other alternatives that Public Service may have to

25 reduce the solar are things that they pursue.


106
1 So, Your Honor I believe there is little

2 or no prejudice to Public Service, given that the

3 deposition was after the production, and they have an

4 opportunity to present rebuttal testimony, but, if they

5 believe there is prejudice, then let's take some more

6 time.

7 A.L.J. JENNINGS-FADER: I'm sorry,

8 Mr. Douglas. I don't mean to interrupt you. Are you

9 concluded?

10 MR. DOUGLAS: Well, I had a little more,

11 but if you had a question, I am happy to answer.

12 A.L.J. JENNINGS-FADER: With respect to

13 that point, what about the representations by Public

14 Service -- the statements by Public Service that it did

15 not receive documents fully responsive to the discovery

16 requests, because it did not receive, in addition to

17 Exhibit 145 for identification, the underlying work

18 papers -- they received neither work papers nor an

19 executable format of the exhibit that would allow

20 Public Service to, if you will, get behind the numbers

21 or understand the formulas underlying the numbers?

22 MR. DOUGLAS: Your Honor, thank you for

23 reminding me, because I did want to address those

24 points as well.

25 Your Honor, first of all, as to the


107
1 executable format, the parties in this case have

2 produced many different spreadsheets, Table 7-3 and 7-4

3 are two examples of that. It's not been the practice

4 of any party to produce those in executable format.

5 They have been in the format of PDFs. Certainly, if we

6 had 7-3/7-4, in executable format, maybe that would

7 have expedited the whole process, in executable format.

8 There was no request for that, there was no requirement

9 for that, and we did what both sides have been doing in

10 this entire case, is produce the analysis in an

11 electronic PDF format.

12 And as far as work papers, Your Honor,

13 these are the work papers. Dr. Sheffrin has an opinion

14 about the effect on the RESA balance of the positive

15 things that Ms. Hyde talked about and the negative

16 things that the amendment to the resource plan,

17 Ms. Hyde and Dr. Sheffrin also talk about. And these

18 are the work papers supporting her opinions about where

19 the numbers go. And they have footnotes with all of

20 the references to the materials that were used. And,

21 Your Honor, my sense is that we produced, on Tuesday,

22 the work papers relating to her opinions about where

23 the RESA balances goes.

24 I would just add that -- I'm sorry. Did

25 that fully answer your question?


108
1 A.L.J. JENNINGS-FADER: It was very

2 responsive to the question.

3 MR. DOUGLAS: I would add that any small

4 amount of prejudice that may exist was at least, in

5 fact, partly from Public Service's failure to first

6 provide notice of this testimony by Ms. Hyde in the way

7 of witness disclosures. And as far as delay, that,

8 secondly, they failed to produce all supporting

9 documents responsive to our request in a timely manner.

10 And, again, I don't believe it was deliberate, but

11 missing cells and the missing numbers in the

12 spreadsheet that existed also further delayed and would

13 be a contributing factor to the prejudice. That's not,

14 certainly, Trinchera's fault.

15 I would also note that Public Service

16 cannot sit here today and argue that its hands are

17 entirely clean, as far as disclosing information

18 related to this hearing. You may recall that the

19 testimony of James Hill was corrected with some new

20 demand figures, which I would represent were not

21 dramatically different than the original filings, but

22 it was a revision to those. That correction is

23 actually dated July 16th, the corrected testimony

24 itself, and, in fact, the service date on the pleading

25 is dated July 13th. It's then crossed out and July


109
1 23rd is written on it.

2 And that was, in fact, produced to me and

3 the parties at 4:37 p.m. on the Friday before the

4 hearing, July 23rd. Those figures were relevant to the

5 hearing. And I did discuss those with Ms. Hyde. So, a

6 week delay in disclosure was something that Public

7 Service chose to do. That's in direct contrast with

8 this situation where, Your Honor, Dr. Sheffrin got back

9 Friday night. We certainly could not produce to Public

10 Service a preliminary version of the spreadsheet that

11 hadn't even been verified by Dr. Sheffrin herself, when

12 she is the one who's attesting to it, and she worked

13 over the weekend to do that. We finalized that

14 promptly and I turned it over, immediately, to the

15 other side, when I had a final version.

16 So, Your Honor, we believe this

17 testimony -- the exhibit and testimony related to it,

18 that directly responds to really what was the core

19 issue of Ms. Hyde's testimony, that she believes

20 sufficient RESA dollars would be available, we believe

21 that this directly responds to that. It's critical

22 information that the Commission needs to consider, in

23 evaluating that issue. And that it should be admitted

24 at this time.

25 A.L.J. JENNINGS-FADER: Thank you,


110
1 Mr. Douglas. Public Service, any response? And then I

2 am going to take the morning recess so that I can

3 consider this.

4 MR. McGANN: Yes, I do have a brief

5 response, Your Honor.

6 First, with respect to the assertion that

7 somehow Public Service's responses to discovery were

8 somehow responsible for the tardiness or the lateness

9 of the production of this particular exhibit, during

10 Dr. Sheffrin's deposition, we asked her, "Is there any

11 reason you couldn't have completed that study and

12 provided it to us" -- Public Service -- "prior to your

13 vacation"? "Oh, I had so many things going on in terms

14 of my duties as a research professor. They were --

15 Tulane University was demanding a number of things be

16 finished from me as well as they're my main employer,

17 so I have to keep them happy. So, I work with -- I

18 worked as hard as I could. I thought, by working with

19 analysts and telling them what I wanted, and then

20 having them go back and get the specific numbers and

21 stuff, you know, then all I would have to do is review

22 and make sure it's done correctly. That's my style of

23 working with -- work with students. I tried to send

24 everything off. So, I had a lot of people make sure

25 they knew what they had to do while I was gone."


111
1 Question: "Okay. Any other reason?" Answer: "Except

2 that I didn't want to finalize the tables until I had

3 reviewed, you know, every number myself and seen how

4 they were incorporated into the final analysis."

5 So, Dr. Sheffrin, given an opportunity to

6 essentially explain why she was late with the exhibit,

7 basically said it was her work duties and at Tulane,

8 and never mentioned the fact that it had something to

9 do with the fact that there were numbers from Public

10 Service that she needed in order to complete the

11 analysis prior to the time that she left on vacation.

12 So, I don't believe that is a justification for the

13 fact that the exhibit was not produced to us earlier,

14 or was not completed earlier.

15 Furthermore, my understanding is that the

16 discovery that was actually submitted to Trinchera

17 Ranch was actually a couple of numbers, and I have no

18 understanding whatsoever as to whether or not the

19 production of those numbers was -- actually halted the

20 production or stopped the production of this particular

21 exhibit. Again, Dr. Sheffrin says it was the fact that

22 she left, went on vacation and turned the work over to

23 her research assistants that caused the delay in the

24 production of the exhibit.

25 But, now, let's go back to when they


112
1 first decided that they wanted to produce the exhibit.

2 Again, they decided that they wanted to produce the

3 exhibit after Ms. Hyde's deposition. They knew that

4 they had to produce to us their trial exhibits on June

5 18th. Ms. Hyde's deposition didn't take place until

6 June 21st. It -- 25th, excuse me. So, the fact that

7 Ms. Hyde's deposition was taken later on simply is not

8 an excuse for not producing to us this particular trial

9 exhibit.

10 Furthermore, if you take a look at

11 Ms. Hyde's deposition testimony, or if you take a look

12 at her testimony in this proceeding she made -- again,

13 Your Honor, as to the original discussion that you and

14 I had about the scope of the objection -- she made

15 general statements as to how these various assumptions

16 and numbers change -- might change or impact the RESA

17 balance. That is the extent of Ms. Hyde's testimony.

18 Those general statements do not -- in her deposition

19 and through cross examination, by Mr. Douglas -- let's

20 remember that, essentially, Mr. Douglas here is

21 attempting to use his cross examination of Ms. Hyde to

22 somehow expand the scope of this proceeding and somehow

23 incorporate and somehow use that as a justification for

24 this exhibit in Dr. Sheffrin's testimony, and I don't

25 believe that that's proper.


113
1 But, furthermore, consistent with the

2 discussion between you and I, it is specifically the

3 specific numbers and the fact that Dr. Sheffrin is now

4 testifying to what those specific calculations would

5 be, and the impact that would be on the RESA balance,

6 that we're objecting to. And that is not what Ms. Hyde

7 had spoke to or testified to.

8 Had Ms. Hyde somehow come up with a RESA

9 balance calculation, during the course of this

10 proceeding, or during her testimony, perhaps this might

11 be proper rebuttal. But she didn't. Again, she simply

12 testified to what the general impact of these

13 assumptions and numbers are on RESA balances, and

14 that's all. And the fact she's testified to that does

15 not somehow open the door for this particular exhibit.

16 And, again, they knew that they had to produce this

17 exhibit in June, with their original witness

18 disclosure.

19 I just want to address a little bit the

20 fact that the amendment to Mr. Hill's testimony, which

21 was -- it was filed in the amended Resource Plan, on

22 July 22nd, and it was circulated, I believe, which is

23 not the 22nd, it was the Friday before the hearing, so

24 it was that -- the 23rd.

25 A.L.J. JENNINGS-FADER: Third.


114
1 MR. McGANN: As soon as it was

2 circulated, it was turned over to Trinchera Ranch. So,

3 when it was filed in that docket, it was turned over to

4 Trinchera Ranch. There was no delay there in terms of

5 the filing of that exhibit, in the amended resource

6 plan, or that correction to the exhibit and its

7 submission to Trinchera Ranch.

8 Again, I think -- but and all, finally,

9 what's ironic about all of this, I suppose, is that

10 Dr. Sheffrin's deposition was originally scheduled for

11 Sunday of this week. And we actually responded to a

12 request from Trinchera Ranch that the deposition be

13 moved to Wednesday. Had we known that, on Monday,

14 there would have been a new analysis, we certainly

15 wouldn't have agreed to moving the deposition or to --

16 excuse me -- had there been a new exhibit created on

17 Monday, and then corrected Monday night, and given to

18 us on Tuesday, we certainly wouldn't have moved the

19 Sunday deposition. We did that as a courtesy to

20 Trinchera Ranch, without knowing at all the fact that

21 this was brewing behind the scenes, and this exhibit

22 was going to be sprung on us on Tuesday, and that we

23 were, then, going to be taking the deposition on

24 Wednesday, with less than 24-hours notice, that this

25 new exhibit had been introduced.


115
1 So, I believe that's the conclusion of my

2 comments, but if I may consult with my co-counsel?

3 A.L.J. JENNINGS-FADER: Certainly.

4 (Discussion off the record between Public

5 Service Company's representatives.)

6 MR. McGANN: Just one clarification.

7 Apparently, the original agreement was to move the

8 deposition to Tuesday. And we ended up taking it on

9 Wednesday, at the request of Mr. Sopkin. I just wanted

10 to clarify that.

11 A.L.J. JENNINGS-FADER: That's fine.

12 Thank you, Counsel. Let me start -- I have a couple of

13 questions of Mr. McGann.

14 I have been reading sort of around the

15 testimony of Ms. Hyde, your direct examination of

16 Ms. Hyde on Monday. Do you have the transcript?

17 MR. McGANN: I think I have it. I think

18 I have it electronically.

19 A.L.J. JENNINGS-FADER: Let's look at

20 page 25, line 10 through, just for my purposes, 26,

21 line 19. And it continues on, but this will give you

22 the flavor of what I am asking about.

23 MR. McGANN: Yes.

24 A.L.J. JENNINGS-FADER: And that's your

25 direct examination of Ms. Hyde?


116
1 MR. McGANN: Yes.

2 A.L.J. JENNINGS-FADER: Okay. And in

3 that direct examination, you raised the question and

4 she answered the question specifically addressing the

5 impacts of House Bill 10-1001 with respect to the

6 company's -- Public Service Company's plans to acquire

7 renewables.

8 MR. McGANN: Yes.

9 A.L.J. JENNINGS-FADER: And it was in

10 response to that testimony, if I recall correctly, that

11 Mr. Douglas conducted his cross examination going

12 through the specifics with Ms. Hyde. Is that also your

13 recollection?

14 MR. McGANN: I believe that is my

15 recollection, yes, Your Honor.

16 A.L.J. JENNINGS-FADER: And Ms. Hyde also

17 testified, after Mr. Douglas pointed this out, that she

18 did not quantify the impacts of the four principal

19 subject areas that had changed since the 2010

20 Compliance Plan report was filed?

21 MR. McGANN: I believe that's correct,

22 yes.

23 A.L.J. JENNINGS-FADER: Is Public

24 Service's objection in terms of the substance of -- not

25 the prejudice, I got that, but in terms of the


117
1 substance of what is contained in Exhibit 145 for

2 identification, that Trinchera Ranch's witness did the

3 quantification that Ms. Hyde did not do?

4 MR. McGANN: Could you repeat the

5 question again one more time, just so I have it in

6 my --

7 A.L.J. JENNINGS-FADER: Sure. Is the

8 substance of the -- putting aside the question of

9 prejudice, is the objection that Ms. Hyde did not do a

10 quantification of the identified changes -- she spoke

11 generally about shifts, negative, positive, to the

12 overall RESA account balance, but did not quantify

13 those changes. Is the objection, with respect to

14 Exhibit 145 for identification, that it is a

15 quantification of those changes, a quantification with

16 which Public Service may not agree, because of the

17 underlying assumptions within the quantification,

18 right, but that is the problem, that there is now a

19 quantification in the record, a document that

20 quantifies something about which Ms. Hyde testified,

21 but did not provide the quantified data?

22 MR. McGANN: It's actually in addition to

23 that.

24 A.L.J. JENNINGS-FADER: Okay.

25 MR. McGANN: There's, if I may have a


118
1 moment, Your Honor?

2 A.L.J. JENNINGS-FADER: Is that, and

3 something else?

4 MR. McGANN: Yes.

5 A.L.J. JENNINGS-FADER: Okay.

6 (Discussion off the record between Public

7 Service Company's representatives.)

8 MR. McGANN: So, let me start out with my

9 area of agreement, which is, it is the fact that there

10 was a quantification done with which we have not had

11 time to verify, and with which, I can assure you, we

12 disagree. That's No. 1.

13 A.L.J. JENNINGS-FADER: That comes as no

14 surprise.

15 MR. McGANN: No. 2, let's get back to

16 what Ms. Hyde could or could not have done with respect

17 to the recalculation of the 2010 RES Compliance Plan,

18 which is where the tables --

19 A.L.J. JENNINGS-FADER: Okay.

20 MR. McGANN: -- from which this

21 particular exhibit was derived. Quite frankly, it's

22 not appropriate, pursuant to the Commission rules, to

23 recalculate that, those tables that are contained in

24 the 2010 RES compliance plan. Those tables are done

25 pursuant to Commission rules and Commission decisions.


119
1 So, it, quite frankly, it makes no sense to go back and

2 recalculate the 2010 RES compliance plan. Frankly, if

3 I am not mistaken, the Commission just ruled on

4 exceptions in that particular docket. I mean, that

5 docket has been concluded. We are now attempting to

6 get a final order from the Commission.

7 But more to the point, it's not that we

8 disagree with the calculations, that calculations can't

9 be done, these calculations essentially rely on, these

10 calculations that have been done by Dr. Sheffrin, rely

11 on simply speculation as to what will be done by the

12 Commission in future dockets, in present dockets. And,

13 so, the reason we have not performed that calculation

14 is because that calculation, quite frankly, can't be

15 done. We don't know what the Commission is going to do

16 with the standard rebate offer. One of the things

17 that's not in Dr. Sheffrin's calculation, for example,

18 is, we are allowed to seek relief from the 3%

19 distributed generation standard. That is not in

20 Dr. Sheffrin's calculation, so we don't know what the

21 Commission is going to do with that. We don't know

22 what the Commission is going to do with carbon prices.

23 So, it is more to the point that not only

24 can those decisions only be made in other resource

25 planning, RES compliance plan and rulemaking decisions,


120
1 which, it's my understanding, because of that, those

2 are beyond the scope of this particular proceeding,

3 they certainly can't be made in this particular docket.

4 The docket hasn't been noticed for that purpose. And,

5 furthermore, any attempt that we make to quantify those

6 impacts on the RESA balances is pure speculation.

7 A.L.J. JENNINGS-FADER: With respect

8 to -- this is my last question, then we'll take a

9 break, after your response. With respect to the

10 suggestion by Mr. Douglas that, assuming there has been

11 prejudice to Public Service, a proposition with which

12 Trinchera Ranch disagrees, assuming that to be the

13 case, is that prejudice capable of a cure?

14 MR. McGANN: I do not believe it is,

15 because, again going back to the point that I just

16 made, which is no matter what we do, all we would be

17 doing is sharing our speculation as to what the

18 Commission might do in a future proceeding. And I'm

19 not sure that that has any probative value -- actually,

20 I don't believe that this has any probative value in

21 this particular docket, so I don't believe that cures

22 the defect in their analysis or the prejudice.

23 MR. DOUGLAS: Your Honor, may I respond

24 briefly on that point?

25 A.L.J. JENNINGS-FADER: Oh okay.


121
1 MR. DOUGLAS: Well, Your Honor, the

2 premise that it's inappropriate to do these

3 calculations, or they can't be done, flies in the face

4 of the fact that the starting point of Dr. Sheffrin's

5 calculation is Table 7-4, which is Public Service's

6 recalculation of the RESA dollars under the

7 hypothetical sensitivity analysis of the carbon

8 assumption not being what the Commission set it to be

9 in the basecase. So, all she's done is additional

10 sensitivity analyses, just like the one Public Service

11 did do, and could do, if it so chose.

12 It's simply absurd to say that you can't

13 do it. They did it. They did it for carbon. They

14 could have done it for natural gas at the time. They

15 chose not to. They could have done it for natural gas,

16 after we raised that negative impact in Ms. Hyde's

17 deposition, but they chose not to. They could have

18 done it to quantify various sensitivities analyses,

19 which are hypothetical things that may or may not

20 occur, to quantify her statements that the standard

21 rebate is likely to go down and that the fair share is

22 likely to have a positive impact.

23 Those are precisely the kind of

24 sensitivity analyses that Public Service does all of

25 the time, and the fact that they chose not to -- except
122
1 with carbon. They did do that one. And Dr. Sheffrin

2 is doing those analyses that they could have and

3 probably should have done, because, it can't be done?

4 That's simply not true.

5 A.L.J. JENNINGS-FADER: Thank you. We'll

6 be in recess and it's going to be longer than 10

7 minutes. We'll say 20 minutes. We'll be back at 20

8 after the hour.

9 (Recess.)

10 A.L.J. JENNINGS-FADER: We'll be back on

11 the record.

12 Mr. McGann, I have a quick question for

13 you. With respect to Exhibit 141, to the amended

14 Tables 7-1 through and including 7-5, there was

15 considerable testimony with respect to Tables 7-3 and

16 7-4 in Ms. Hyde's oral testimony on Monday.

17 What -- forgive me for not being able to

18 recall this exactly. What costs change in -- excuse

19 me -- in Table 7-3? What was it? Natural gas cost?

20 Was it delay in carbon? I would like to know

21 specifically -- she addressed many different changes.

22 I want to know which, if any, are reflected in 7-3 and

23 7-4?

24 MR. McGANN: May I consult?

25 A.L.J. JENNINGS-FADER: Please. I


123
1 apologize. I just can't recall.

2 (Discussion off the record between Public

3 Service Company's representatives.)

4 MR. McGANN: Your Honor, if I may ask a

5 clarifying question?

6 A.L.J. JENNINGS-FADER: Uh-hum.

7 MR. McGANN: Is your question simply what

8 is the -- what changes, or what the difference between

9 Table 7-3 and 7-4 is, or is your question what changed

10 in Exhibit 141 from what was previously filed in the

11 2010 RES Compliance Plan? I wasn't quite sure what

12 your question was.

13 A.L.J. JENNINGS-FADER: In the 2010 RES

14 Compliance Plan, Public Service had tables that made

15 certain assumptions that resulted in balances, RES

16 balance accumulations or deficits through a given year,

17 2020. Then, the tables were changed, because some

18 assumptions that had been made in creating the original

19 Tables 7-3 and 7-4, those numbers were no longer to be

20 the most accurate -- most reflective of what Public

21 Service believed the future to hold. There were

22 several areas -- natural gas prices, delay in carbon

23 from 2010 to 2014, and some other items, which changed.

24 I wish to know which of those items is

25 reflected in Exhibit 141, Table 7-3 and 7-4. Do you


124
1 understand my question now? Are they all included? Is

2 it limited only to change in natural gas prices? Is

3 it -- hello, Ms. Hyde.

4 MS. HYDE: Hi.

5 A.L.J. JENNINGS-FADER: Does it include a

6 change as to delay in the carbon cost from 2010 to

7 2014, more or less? I am just trying to remember. I

8 can't recall what's reflected in 141.

9 MR. McGANN: If I may have a moment?

10 A.L.J. JENNINGS-FADER: Certainly

11 absolutely.

12 (Discussion off the record between Public

13 Service Company's representatives.)

14 MR. McGANN: Perhaps I can start to

15 answer your question and perhaps that will --

16 A.L.J. JENNINGS-FADER: Uh-huh.

17 MR. McGANN: It may generate more

18 questions, but let me see if I am on the right track

19 here. In terms of the Exhibit 7-3 and 7-4 --

20 A.L.J. JENNINGS-FADER: I'm sorry.

21 Tables?

22 MR. McGANN: Yes. Tables 7-3 and 7-4,

23 the gas -- excuse me -- the carbon prices did not

24 change between or -- let me answer it this way:

25 Actually, just to clarify the record, again, I am


125
1 trying to pinpoint, when you talk about the changes in

2 Ms. Hyde's testimony, actually, do you have a

3 transcript -- apologies.

4 A.L.J. JENNINGS-FADER: No, it's not the

5 changes in Ms. Hyde's testimony. Exhibit 141 was

6 admitted because it presented updated information to,

7 and made consistent with the testimony given in another

8 docket, in the RES compliance docket, the tables in the

9 2010 RES compliance. What I want to know is, what

10 assumptions changed in -- between the tables as

11 originally filed?

12 MR. McGANN: Uh-hum.

13 A.L.J. JENNINGS-FADER: And tables as

14 reflected in 141?

15 MR. McGANN: The natural gas prices and

16 carbon prices did not change.

17 A.L.J. JENNINGS-FADER: Okay.

18 MR. McGANN: The changes that were

19 reflected in what is -- what you have before you as

20 Exhibit 141, were actually errors, unrelated to those

21 assumptions.

22 A.L.J. JENNINGS-FADER: I'm sorry. Go

23 ahead.

24 MR. McGANN: There were errors identified

25 with respect to how a capacity credit was calculated.


126
1 There were errors related to how wind integration costs

2 were calculated.

3 A.L.J. JENNINGS-FADER: Okay.

4 MR. McGANN: There were errors related

5 to, I believe, how the on-site solar resource was

6 incorporated into the exhibit. There was an error

7 identified in the double-counting of credits for wind

8 source. But there were no errors identified with

9 respect to carbon costs and the delay in carbon costs

10 or natural gas prices.

11 A.L.J. JENNINGS-FADER: So, am I correct

12 that Table 7-3 and Table 7-4, in Exhibit 141, assume

13 carbon prices kick in or are -- that start in 2010, as

14 opposed to starting in 2014, is my question?

15 (Discussion off the record between Public

16 Service Company's representatives.)

17 MR. McGANN: Let me answer the question,

18 yes. In Table 7-3, it is carbon starting in 2010. And

19 in Table 7-4, it's the carbon cost starting in 2014.

20 A.L.J. JENNINGS-FADER: Okay. That's the

21 change I was trying to identify.

22 MR. McGANN: Yes.

23 A.L.J. JENNINGS-FADER: And, right. And

24 there is no change, you said, in natural gas prices or

25 any other assumptions, other than the calculation


127
1 errors that you identified?

2 MR. McGANN: The other difference between

3 the two tables is identified on the top right of the

4 two tables, and that has to do with the RESA

5 collections. So, if you take a look at Exhibit 141,

6 Table 7-3, and if you take a look at the top right-hand

7 corner of that page, that table, you will see that RESA

8 revenues are at 2% in 2009 and they go to 1% in 2014,

9 and then they go to zero in 2016. And then let me just

10 stop you there, to make sure that you --

11 A.L.J. JENNINGS-FADER: I got it.

12 MR. McGANN: Then, if you move to Table

13 7-4, take a look at the top right, you will see that

14 the RESA revenue collections are 2% throughout the

15 table, or that percentage is used.

16 A.L.J. JENNINGS-FADER: Okay. Thank you.

17 Thanks for the clarification, to help me get that

18 straight in my ahead.

19 Now, back to the exhibit, Hearing Exhibit

20 145 for identification. I will sustain the objection

21 and not admit Exhibit 145 for identification, but not

22 for the reasons stated by the parties.

23 Let me start by going through the

24 arguments presented by Public Service Company. I do

25 not find there to have been any prejudice to Public


128
1 Service with respect to the process by which this

2 exhibit was developed, and the date and the process by

3 which it was produced to Public Service pursuant to

4 discovery requests and in compliance with my orders in

5 this case, having to do with identification of exhibits

6 and reliance on exhibits. So, I do not find that to be

7 a persuasive argument.

8 With respect to the point that Exhibit

9 145 for identification may or may not rely on -- be

10 consistent with Commission orders, rules of the

11 Commission, may itself contain speculation with respect

12 to what the future holds, that in and of itself is not

13 sufficient to sustain the objection. And I do

14 believe -- and further I find that the Exhibit 145 for

15 identification is within the scope of this proceeding,

16 which leads me to the basis for my decision.

17 I have reviewed this exhibit and

18 considered the arguments and have considered the

19 ramifications of admitting this document with respect

20 to what, then, would transpire in terms of the cross

21 examination, in terms of the possible need to have

22 rebuttal witnesses, possible need to delay the

23 proceeding in order to allow time to develop the

24 overall -- the document to respond to Exhibit 145 and

25 the testimony, and cross examination of any witness


129
1 that would present an exhibit to respond to 145.

2 And I find that, under Colorado Rule of

3 Evidence 403, that the probative value of the Exhibit

4 145 is outweighed by the potential to unduly delay, and

5 the fact that I see this document, if admitted, as

6 requiring a waste of administrative time to respond to

7 the document, which outweighs its overall probative

8 value, in my opinion.

9 So, with that, Exhibit 145 is not

10 admitted. Mr. Douglas -- I'm sorry. Mr. Sopkin.

11 MR. SOPKIN: Your Honor, just a follow-up

12 question, then. I believe Dr. Sheffrin did testify to

13 a number from this exhibit, in her last response to a

14 sensitive question, other than voir dire. And we would

15 move to strike that number.

16 A.L.J. JENNINGS-FADER: Mr. Douglas.

17 MR. DOUGLAS: Your Honor, I don't believe

18 Dr. Sheffrin had the exhibit in front of her at that

19 time, or was specifically referring to the exhibit.

20 She was referring to her opinion on the impact of the

21 factors that we've been discussing on the RESA balance.

22 A.L.J. JENNINGS-FADER: That's correct.

23 I don't believe there's been a number cited by the

24 witness with respect to the impact, certainly not any

25 number related to a dollar value impact, which is, as


130
1 far as I can tell, the only numbers that appear in

2 Exhibit 145 for identification.

3 MR. DOUGLAS: Your Honor, I don't believe

4 there was a specific number, but I guess my point was

5 she didn't refer to the document. She didn't read a

6 number from the document. There was a general mention,

7 I believe, of over a billion dollars, which is what my

8 recollection is. I didn't want Your Honor to think

9 that I had misrepresented anything.

10 MR. SOPKIN: That's my recollection as

11 well, Your Honor.

12 A.L.J. JENNINGS-FADER: I am going to let

13 that testimony stand. Frankly, at this juncture,

14 that's sufficiently vague. I appreciate the objection,

15 Mr. Sopkin, but I am not going to go back through the

16 record and strike that. If that was the reference, so

17 be it, but the specific numbers -- any further specific

18 reading from this document, 145, is not -- will not be

19 admitted.

20 MR. DOUGLAS: Thank you, Your Honor. May

21 I proceed?

22 A.L.J. JENNINGS-FADER: You may.

23 DIRECT EXAMINATION (CON'T)

24 BY MR. DOUGLAS:

25 Q All right. Dr. Sheffrin, sorry for the


131
1 long delay. Sometimes we do that around here.

2 If we can just continue what we were

3 talking about, I want to ask you the next series of

4 questions, without asking you about any specific

5 numbers or specific calculations that would relate to

6 Exhibit 145, but, do you have an opinion about the

7 impact of the changed assumptions, since the 2010

8 Compliance Plan modeling was done, in the areas of

9 carbon cost and natural gas, on available future RESA

10 dollars to purchase additional renewable resources?

11 A Yes, I do.

12 Q Okay. And what is that opinion?

13 A In looking at Table -- Exhibit 141,

14 Public Service Company's own table that they submitted,

15 they give an estimate of what the impact on the RESA

16 balance would be from carbon. So, I saw an order of

17 magnitude. And my feeling was that natural gas would

18 have a similar order of magnitude. So, in terms of

19 thinking about what would happen to the RESA balances,

20 from these changed economic conditions, I would say

21 they would become much more negative, and further into

22 the future, than what was shown in Table 7.3 and 7.4.

23 Q Okay. And do you have an opinion about

24 whether the potential positive RESA impact or positive

25 impacts on RESA dollars from the changes in distributed


132
1 generation, that Ms. Hyde discussed, would offset the

2 negative impact from the carbon and natural gas that

3 you just described?

4 MR. SOPKIN: I'm just going to object

5 that. It's vague in terms of changes, in terms of the

6 changes for DG. There are more -- there's more than

7 one provision about DG than Ms. Hyde discussed. So, if

8 you could just be more specific.

9 A.L.J. JENNINGS-FADER: I agree, counsel.

10 Just make the record clear.

11 MR. DOUGLAS: All right.

12 BY MR. DOUGLAS:

13 Q Dr. Sheffrin, you recall that Ms. Hyde

14 talked about two specific areas relating to the

15 distributed generation that could potentially have a

16 positive impact on future RESA dollars; is that

17 correct?

18 A Yes.

19 Q Okay. And what are those two areas?

20 A The two areas that she mentioned were the

21 fair share from on-site solar customers on their bill,

22 what they could pay, not just on their electricity bill

23 currently with solar, but what it might have been

24 without the solar and therefore pay their fair share

25 into the RESA account. And then second was the


133
1 standard rebate on the solar panels being $2 a watt,

2 and, potentially, Public Service Commission being able

3 to file -- PSCo being able to file to the Commission to

4 reduce that $2 rebate, which is, again, is paid out

5 from the RESA balance.

6 Q And do you have an opinion about whether

7 the potential positive effect on the future RESA

8 dollars, from those two changes you just described,

9 would potentially offset the negative impact on RESA

10 dollars from the carbon and natural gas changes that

11 you also described?

12 A I do.

13 Q Okay. What is that opinion?

14 A My opinion is that it would be a small

15 positive offset to the two negative impacts on the RESA

16 account, and it's based on the, simply, volume of the

17 carbon, and the natural gas price effect, you know,

18 production, and very many more megawatt-hours than

19 would be the two positive impacts.

20 So, I think it would be a small net --

21 small impact on the two negative impacts on the RESA

22 dollar.

23 Q Small offset?

24 A Small offset to the negative impact.

25 Q And --
134
1 A To the large negative impact. I'm sorry.

2 I'm trying to keep these things relative.

3 Q Right. And that large negative impact

4 that you're describing, and how that compares to the

5 small positive impact, does that -- do you have an

6 opinion on whether that -- well, let me start over.

7 When you're talking about that small positive impact

8 from the two areas of distributed generation change,

9 and the large impact, my understanding is you were

10 talking to me about carbon and natural gas

11 specifically; is that right?

12 A Yes.

13 Q Okay. Do you have an opinion as to

14 whether there would be additional negative future

15 impacts on RESA dollars from any other changes since

16 the 2010 Compliance Plan model was done?

17 A I do. I can think of two off the top of

18 my head. One was mentioned by Ms. Hyde, was the lower

19 energy sales forecast. That would have another

20 negative impact on the RESA balance dollar account.

21 And the second factor is the higher bid price for solar

22 thermal than what was assumed in the 2007 Resource

23 Plan, and, therefore, in the 2010 compliance -- RESA

24 Compliance Plan.

25 Q Okay. And do you have an opinion about


135
1 the impact that these future negative -- or sorry.

2 Strike that. Do you have an opinion about the impact

3 of these changes in the assumptions that you've

4 discussed, since the 2010 Compliance Plan, on the

5 amount of interest that ratepayers would be paying

6 towards a negative RESA balance through 2020?

7 A Yes, I do. In looking at Table 7.4, I

8 looked at the interest that was accumulating on the

9 negative balances on the RESA account. And with the

10 negative balances that I would project, from all of

11 these changed economic conditions, it would be very

12 high interest costs that ratepayers would pay, and PSCo

13 would earn, associated with the interest expense on the

14 negative RESA balance.

15 Q Okay. And, Dr. Sheffrin, you've

16 discussed, and there's been a lot of discussion about

17 the three 250-megawatt solar thermal placeholder

18 resources in the 2010 Compliance Plan. You're familiar

19 with those?

20 A Yes.

21 Q And do you have an opinion as to how

22 these changed assumptions, from the 2010 Compliance

23 Plan modeling, and the impact on future RESA dollars

24 that you have discussed, how that affects the

25 likelihood that those solar thermal placeholder


136
1 resources will actually be acquired?

2 A Yes, I do.

3 Q And what's that opinion?

4 A That it puts more pressure on how many

5 RESA dollars could pay for it, and as there's a

6 negative impact, and negative balance, and it's carried

7 forward, that it's going to -- paying for these solar

8 thermal plants is going to push the negative RESA

9 balance out more, a number of years and have the

10 Colorado ratepayers pay even a larger interest expense.

11 Q And then, how is that affect the

12 likelihood they would actually be acquired, or what is

13 the likelihood, in your opinion, that they would

14 actually be acquired?

15 A To me, it becomes more remote -- the

16 likelihood of three solar thermal plants to be built in

17 2016, 2017, 2018 becomes even more remote and it's

18 speculative, in my opinion.

19 Q And, in your opinion, how does that

20 remote or speculative chance that they will actually be

21 acquired affect the need for the transmission line in

22 this case?

23 A In my opinion, if those three solar

24 thermal plants are the primary need for this line,

25 then, given how remote they are, and speculative, I


137
1 think that it would be imprudent to use them as the

2 basis to form the need for this line.

3 Q So, you don't believe that they should

4 form any part of the basis for the justification of the

5 proposed project?

6 MR. SOPKIN: Objection, leading.

7 THE WITNESS: I believe --

8 A.L.J. JENNINGS-FADER: Hang on. Sorry.

9 Parties, other parties? Mr. Douglas.

10 MR. DOUGLAS: I'm happy to rephrase. I

11 didn't think it was that leading, but if I did, I'm

12 happy to proceed to --

13 A.L.J. JENNINGS-FADER: Why don't you

14 rephrase.

15 BY MR. DOUGLAS:

16 Q All right. Do you have an opinion about

17 whether the solar thermal placeholder resources in the

18 2010 Compliance Plan should be used as justification

19 for the need for the proposed project in this case?

20 MR. SOPKIN: Objection. Asked and

21 answered.

22 A.L.J. JENNINGS-FADER: Could you just

23 repeat the question, please?

24 BY MR. DOUGLAS:

25 Q Sure. Dr. Sheffrin, do you have an


138
1 opinion about whether the 250-megawatt solar thermal

2 placeholder resources should be considered as

3 justification for the need for the proposed project in

4 this case?

5 MR. SOPKIN: I believe it's the same as

6 the last question. Her response was if the three

7 250-megawatt placeholders are a primary justification

8 for the project, it would be imprudent to use that as

9 the basis for the need for the project. I think the

10 same question is being answered.

11 MR. DOUGLAS: Your Honor, I think that

12 was her answer to a different question and this is a

13 different question.

14 A.L.J. JENNINGS-FADER: I would overrule

15 the objection, Mr. Douglas -- or, actually,

16 Dr. Sheffrin.

17 BY MR. DOUGLAS:

18 Q Do you recall the question?

19 A If you could repeat it for me?

20 Q Sure. Do you have an opinion as to

21 whether the three 250-megawatt solar thermal

22 placeholders described in the 2010 RES Compliance Plan

23 should be considered as a justification for the need

24 for the proposed line in this case?

25 A I do not think that they should be


139
1 considered because they are so highly unlikely.

2 Q And given what you say is the highly

3 unlikely nature of these resources, from your

4 perspective as an economist, do you have an opinion as

5 to whether there's any value to waiting, as far as the

6 potential construction of transmission to accommodate

7 those resources?

8 A I do.

9 Q And what is that opinion?

10 MR. SOPKIN: Your Honor, I'm going to

11 object. And this is based on Your Honor's ruling that

12 some parts of Dr. Sheffrin's testimony come in and some

13 parts do not.

14 And I am looking at, essentially,

15 Footnote 14 of Decision R10-0746-I, as well as page 24

16 of that decision. I understand that Dr. Sheffrin is

17 allowed to testify to two areas, as indicated in

18 paragraph 61 of that decision. And in paragraph 63 of

19 that decision, Your Honor stated that the second motion

20 in limine was granted with respect to the remaining

21 areas of Dr. Sheffrin's proposed testimony.

22 When I look at those two areas that are

23 allowed, one area is whether Public Service's

24 expectation that there be a significant further

25 expansion of solar generation of resources in the


140
1 San Luis Valley, beyond the 185-megawatt level, is

2 supportable, in light of the number contained in the

3 application to amend the PSCo 2007 Resource Plan. And

4 secondly, the effect of the application to amend the

5 Public Service 2007 Resource Plan vis-a-vis whether

6 Public Service is likely to acquire more cost-effective

7 alternative renewable resources and less high-cost

8 alternative renewable resources and the resulting

9 impact on the need for the identified segment.

10 Now, those two areas were listed in

11 Trinchera Ranch's paragraphs 11 and 12 of their second

12 notice of witness testimony. And the areas -- the

13 other areas listed here included exactly what the

14 question that's being elicited now concerns. And that

15 is -- I think, it's the beginning of paragraph 12,

16 Dr. Sheffrin's -- the second sentence. "Dr. Sheffrin

17 plans to testify that changes in assumptions that

18 necessitated the amendment similarly require

19 reevaluation of Public Service's long-term acquisition

20 plans in the San Luis Valley, and that a rational

21 reevaluation of resource needs must be considered, the

22 best and most up-to-date information.

23 Maybe I am wrong, but I took it, from

24 Your Honor's ruling, that since you said the remaining

25 areas of her proposed testimony were disallowed, that


141
1 was not specifically included in that paragraph 61 of

2 Your Honor's decision. I believe what's going to

3 happen, now, based on what I know is, we are going to

4 go into this whole team concept that was developed by

5 Dr. Sheffrin, and all of the information that should be

6 considered in a reevaluation process, and I think

7 that's, if it's not within the scope of what her

8 testimony is allowed, I think that's a waste of time.

9 A.L.J. JENNINGS-FADER: Other parties?

10 Trinchera Ranch.

11 MR. DOUGLAS: Your Honor, I don't believe

12 the question called for any opinion about any

13 reevaluation or this team approach. I actually wasn't

14 going there. And it was simply the, given the, well,

15 given the opinion about the likelihood, or lack

16 thereof, that these are going to be acquired -- and

17 this is getting back to the sentence that you

18 specifically have allowed -- is the resulting impact on

19 the need for the identified segment. And she talks

20 about her perspective as an economist, and she talks

21 about what she looks at as an economic analysis of need

22 for the line, how does that uncertainty or lack of

23 likelihood for these resources impact that analysis.

24 And I, frankly, think it was one question, and it

25 doesn't call for these two things that Mr. Sopkin


142
1 raised, and is within bounds.

2 A.L.J. JENNINGS-FADER: The question, as

3 asked, I think, falls outside the scope of the

4 identified areas. Perhaps by asking a slightly

5 different question, one might be able to fall within

6 the scope. But, as asked, I would sustain the

7 objection.

8 MR. DOUGLAS: Okay.

9 BY MR. DOUGLAS:

10 Q Dr. Sheffrin, I believe you testified

11 that the 250-megawatt solar thermal placeholders we've

12 been discussing are, I think your word was,

13 "speculative"; is that accurate?

14 A Yes.

15 Q And does the fact that -- strike that.

16 Does your opinion that those resources are speculative,

17 from your perspective, as an economist, affect the

18 stated need for the transmission line in this case?

19 A Yes.

20 Q And how does it do that?

21 A My opinion is that -- and, again, it's

22 based on sound economic principles of making decisions,

23 large capital-intensive decisions in the face of

24 uncertainty. Given that those three plants are highly

25 likely speculative or uncertain, what would a rational


143
1 person do, a rational decision-maker, in the face of

2 that uncertainty.

3 I rely on many articles written on that

4 topic in the economics profession, as well as in the

5 finance profession. And, essentially, the key

6 principle that I apply, that if you are contemplating a

7 large irreversible decision, such as building this

8 segment of the transmission line, and there is a lot of

9 uncertainty as to the future outcome, such as will more

10 solar be built in that area, will the line be

11 underutilized, a lot of bad outcomes may come to be.

12 In the face of what is called," bad

13 news," that might arise from your investment decision,

14 the rational thing to do, and the correct thing to do

15 is to wait and let those uncertainties be resolved

16 before undertaking a large irreversible investment.

17 So, I rely on all of the economic articles and

18 principles that are laid out in answering and forming

19 my opinion.

20 Q Okay.

21 MR. SOPKIN: Your Honor, I move to strike

22 that answer as not responsive to the question. The

23 question was, Dr. Sheffrin, how does the fact that you

24 consider the three 250-megawatt placeholders as

25 speculative affect the stated need for the project.


144
1 Her answer went into what a rational decision-maker

2 would do with a large irreversible decision, what to do

3 about uncertainty and bad outcomes and waiting, which

4 was, I think, the answer to the original question that

5 was not allowed, which is, is there value for waiting

6 for more information.

7 MR. DOUGLAS: Your Honor, I believe the

8 question also, in addition to what Mr. Sopkin read,

9 asked for her perspective as an economist. And she

10 specifically brought in a economic perspective and need

11 and justification for a transmission line, in light of

12 that uncertainty, and how it plays out. I think that

13 was responsive to the question.

14 A.L.J. JENNINGS-FADER: I will allow the

15 question and -- sorry -- and the response.

16 MR. DOUGLAS: Thank you, Your Honor.

17 BY MR. DOUGLAS:

18 Q Dr. Sheffrin, we have been talking about

19 the impact on future RESA dollars. And I want to come

20 back to that, just for one more issue.

21 Are you familiar with Ms. Hyde's

22 testimony in this proceeding on Monday, where she

23 talked about how Public Service can borrow-forward

24 against future collection of RESA dollars from

25 ratepayers, in order to pay for the immediate


145
1 acquisition or shorter term acquisition of renewable

2 resources, and, then, in that situation, that's

3 justified by the ratepayers getting the benefit of

4 receiving that renewable generation earlier. Are you

5 familiar with that testimony?

6 A Yes.

7 Q Okay. Do you have an opinion on that

8 issue?

9 A Again, as an economist, I would say that

10 is an option available to Public Service Company, but

11 it truly puts an undue burden on the ratepayer in

12 paying back, with interest, these negative balances

13 that they borrow-forward with and earn interest on.

14 And the ratepayer hadn't been asked whether they want

15 to make that choice. Right now, all the ratepayer

16 knows is that 2% of their bill goes to acquire

17 renewables, not that their -- this acquisition may

18 result in an unlimited amount of time in which they

19 have to continue to pay the 2%.

20 Also, not only has the ratepayer not been

21 asked their preference on that, secondly, it may be

22 that those RESA dollars can be spent more

23 cost-effectively, getting renewables from another mix

24 of more cost-effective renewables than a high-cost

25 solar thermal plant.


146
1 Q I want to talk a bit about the last thing

2 you just said, which is more cost-effective renewable

3 resources. Do you have an opinion as to whether the

4 solar thermal with storage placeholder resources,

5 discussed in the 2010 Compliance Plan, or even the

6 125-megawatt solar thermal revised bid that's been

7 discussed, whether those fit under your definition of a

8 cost-effective renewable resource?

9 A They would not fit under my definition of

10 a cost-effective renewable resource, because I would

11 look at the cost of alternative renewable resources,

12 and I have done so. And my finding is the solar

13 thermal renewable resource is, in fact, one of the most

14 expensive renewable resources, whereas wind,

15 photovoltaic, even repowering existing wind can be a

16 much more cost-effective investment for renewables.

17 MR. SOPKIN: Your Honor, I am going to

18 object for the same reason I objected to Mr. Dauphinais

19 on Monday, and I believe it was sustained; that, right

20 now, Dr. Sheffrin is going outside of the application

21 to amend the 2007 Resource Plan, and drawing upon her

22 own research and experience outside that filing. The

23 objection I posed then, and I pose now, is that the

24 issue in today's hearing is the effect of the amendment

25 on the 2007 Resource Plan.


147
1 I would further state that, in terms of

2 Your Honor's decision, R10-746-I, indicating the

3 remaining areas of Dr. Sheffrin's testimony are not

4 allowed in, and the description of her testimony in

5 paragraph 11 -- if I may have one moment?

6 A.L.J. JENNINGS-FADER: Certainly.

7 (Pause.)

8 MR. SOPKIN: And in paragraph 12, the

9 first sentence is, "Dr. Sheffrin further expects to

10 testify that these changed economic circumstances

11 identified in the amendment, coupled with other changed

12 circumstances noticeably absent from the amendment,

13 will likely impact Public Service's long-term

14 acquisitions," and I believe that phrase, "coupled with

15 other changed circumstances," relates to Dr. Sheffrin's

16 opinion that solar thermal is more expensive than other

17 resources. So, I don't believe it's been allowed by

18 that decision.

19 A.L.J. JENNINGS-FADER: Mr. -- other

20 parties? Mr. Douglas.

21 MR. DOUGLAS: Thank you, Your Honor.

22 Paragraph 61 of Your Honor's order -- I can't remember

23 the order number, but the one we're talking about --

24 allows Dr. Sheffrin to discuss whether Public Service

25 is likely to acquire more cost-effective alternative


148
1 renewable resources and less high-cost alternative

2 renewable resources. And I am specifically asking what

3 she means by those terms. And she has, in part, relied

4 on the information in the amendment itself, related to

5 the bid prices. That's one source.

6 Also, she is a very highly qualified

7 expert in this area, spent 30 years following the

8 prices of renewable resources, in fact, evaluated and

9 implemented resource plans concerning those herself.

10 And Ms. Hyde specifically testified that she thinks

11 there will be enough RESA dollars to acquire these

12 resources.

13 So, to put it into context, these

14 resources, compared to what else might be available,

15 when Ms. Hyde said she won't even need them until 2029,

16 there are options, and how they compare, as far as what

17 RESA dollars they are going to eat up, as a general

18 matter, without asking for the Commission to rule on

19 precisely what each resource costs, is a relevant

20 context and responding directly to Ms. Hyde's

21 testimony.

22 A.L.J. JENNINGS-FADER: I would overrule

23 the objection.

24 Firstly, my recollection of the question,

25 what's your definition of cost-effective and does the


149
1 solar thermal fall within that definition, and that was

2 the response was given. Secondly, I think it does come

3 within the scope of testimony, particularly as set out

4 in paragraph 61, parens -- and then within that

5 paragraph, paren b, of Decision No. 10-476-I. And,

6 lastly, I believe it's in response to testimony given

7 by Ms. Hyde. So, continue.

8 MR. DOUGLAS: Thank you, Your Honor.

9 BY MR. DOUGLAS:

10 Q Dr. Sheffrin, what is the basis for your

11 opinion that solar thermal is not a cost-effective

12 renewable resource in comparison to other renewable

13 resources that you described?

14 A I looked at a number of studies, as well

15 as the amendment, and the 2007 Colorado Resource Plan,

16 and the assumption on renewable technologies in that

17 plan. And I compared it to my own knowledge of where

18 those costs for those technologies are.

19 Q Do you have an opinion about the cost to

20 construct a solar thermal with storage plant comparable

21 in size to one of the 250-megawatt solar thermal

22 placeholders we've been discussing?

23 A Yes, I do.

24 Q What is that opinion?

25 A That it is -- did you want me to give an


150
1 estimate, or excuse me, if I could.

2 Q Well, sure.

3 A I have looked at published studies,

4 well-regarded studies, estimating what solar thermal

5 costs are. I also have looked at what Public Service

6 has made publicly available in terms of what their

7 current bid is for a proposed solar thermal plant. And

8 those fall in the range, levelized cost range from $190

9 to 200 some odd dollars per kWh of power production in

10 solar thermal. So, that's among the highest of the

11 other renewable costs that I've looked at and know

12 about.

13 Q What about the overall cost to construct

14 a facility of that size? Do you have an opinion about

15 that?

16 A Yes. Can you just excuse me for one

17 moment?

18 Q Sure.

19 A As I recall, in the popular press, there

20 are solar thermal plants under construction, and they

21 have noted what their costs are likely to be. And

22 they're, for a 280-megawatt facility, they are in the

23 range of $1 1/2 billion to $2 billion.

24 Q Now, you mentioned a published report of

25 some estimates that you had reviewed as part of your


151
1 work in this case, developing an opinion about relative

2 cost of the resources; is that true?

3 A Yes. I reviewed the RETI Phase 2B

4 Report, which I feel has among the most up-to-date

5 costs for renewable resource. And it was published in

6 May of 2010. And it provides a comparison of renewable

7 resources on a both dollars-per-kW and levelized cost

8 basis.

9 Q Okay. And we heard a lot of

10 discussion -- there was some discussion in the first

11 round of hearings in this case about a REDI Report.

12 That was R-E-D-I. And I want to make sure it's clear

13 that we're talking about something else. You're

14 talking about the R-E-T-I Report?

15 A Yes. And that was a report published in

16 May of 2010. It's R-E-T-I, Phase 2B Final Report,

17 published in May of 2010. And it is talking about --

18 I'm sorry. It's the result of a stakeholder analysis

19 of renewable costs that was held in California.

20 Q Okay. Prior to being asked to consult on

21 this case, did you have familiarity with this RETI 2B

22 Report?

23 A I did because, while I was employed at

24 the California ISO, although I did not sit in on any of

25 their proceedings, the California ISO was represented


152
1 by two people, and those two people worked in my

2 division. So, I knew them and talked to them about the

3 progress of that RETI initiative.

4 Q Okay. So as an expert in this field, you

5 followed the development of this RETI 2B Report?

6 A I did. Again, I wasn't directly

7 involved. I just followed the development.

8 Q All right. And do you -- you described

9 that there was a relative cost analysis from that RETI

10 2B Report. Is that something that, in your opinion, is

11 applicable to Colorado?

12 A I believe it is, because I believe it is

13 a very authoritative document. It has data from the

14 WREZ effort, which Colorado data was provided in that

15 report. So, it provides a comparison between the RETI

16 estimates and the WREZ estimates for these alternate

17 renewable technologies, and the engineering company

18 Black & Veatch, conducted both of those studies. So,

19 they built up a very authoritative database on

20 renewable technologies and were used in both efforts.

21 Q And do you have an opinion about the

22 quality of that cost analysis from the RETI 2B Report?

23 A Yes, I do.

24 Q What is that?

25 A I believe it's high quality. It's just


153
1 recently been updated, and they have made a tremendous

2 effort to try to get the latest information on these

3 technologies.

4 Q And is that analysis, in the RETI 2B

5 Report, in your opinion, authoritative in the electric

6 utility and renewable energy field?

7 A Yes, it is.

8 Q Okay.

9 MR. DOUGLAS: Your Honor, if I may

10 approach?

11 A.L.J. JENNINGS-FADER: You may.

12 (Whereupon Exhibit No. 146 was marked for

13 identification.)

14 BY MR. DOUGLAS:

15 Q Dr. Sheffrin, do you have Exhibit 146 in

16 front of you?

17 A I do.

18 Q And is this a document that you're

19 familiar with?

20 A Yes.

21 Q Is it something that was prepared under

22 your direction?

23 A Yes, it was.

24 Q And did you rely upon it in forming your

25 opinions in this case?


154
1 A I did.

2 Q Can you just briefly describe for me what

3 it is?

4 MR. SOPKIN: Object, Your Honor, to the

5 extent she's going to go into the actual figures here,

6 I believe.

7 A.L.J. JENNINGS-FADER: Well, Mr. Sopkin,

8 there will be no testimony about figures until the

9 exhibit is admitted.

10 MR. SOPKIN: Thank you.

11 A.L.J. JENNINGS-FADER: So, we're --

12 BY MR. DOUGLAS:

13 Q With that clarification, Dr. Sheffrin, I

14 am not asking about any figures. Generally, what is in

15 Exhibit 146?

16 A This Exhibit 146 is based on data and a

17 graph that is in the RETI Report, comparing cost ranges

18 for various renewable technologies.

19 Q Okay.

20 MR. DOUGLAS: Your Honor, I would --

21 well, one more question.

22 BY MR. DOUGLAS:

23 Q Is this report and this information,

24 taken from the RETI 2B Report, the type of information

25 reasonably relied upon by experts in your field?


155
1 A Yes, it is.

2 Q Okay.

3 MR. DOUGLAS: Your Honor, I would offer

4 146 at this time.

5 A.L.J. JENNINGS-FADER: Exhibit 146 for

6 identification has been offered. Voir dire or

7 objection?

8 MR. SOPKIN: Your Honor, I object on the

9 basis of completeness. We went over the RETI Report

10 during the deposition, and I cannot voir dire this

11 witness without having the whole report in front of me,

12 and I believe there are substantial flaws in the report

13 that need to be discussed in voir dire.

14 MR. DOUGLAS: Your Honor, if I could --

15 A.L.J. JENNINGS-FADER: Okay.

16 MR. DOUGLAS: -- address that. Okay.

17 Your Honor, the RETI 2B Report is quite thick. In an

18 attempt not to burden the record, this chart actually

19 appears in the RETI 2B Report. It is taken directly

20 out of that, not modified. We can -- as far as the

21 numbers that are on this Exhibit 146 -- if Mr. Sopkin

22 wants to offer the whole thing into the record, or

23 cross examine Dr. Sheffrin on the whole RETI 2B Report,

24 they identified that, that's perfectly fair. That

25 doesn't make an excerpt, essentially, from the RETI 2B


156
1 Report, inadmissible.

2 A.L.J. JENNINGS-FADER: Yes, sir.

3 MR. SOPKIN: The problem, Your Honor, is

4 the rest of the report informs this page, Exhibit 146.

5 And, so, I cannot conduct a voir dire based on this

6 document alone. I would need the other portion of the

7 RETI Report to do that. I don't want to seek to

8 introduce that document. I simply want to voir dire.

9 And I can't do that without the complete report.

10 MR. DOUGLAS: I've got copies of the

11 complete report here, if Mr. Sopkin wants a copy of it.

12 A.L.J. JENNINGS-FADER: That's fine.

13 MR. SOPKIN: That's fine. The witness

14 doesn't have the complete report, as I understand it,

15 so I would just need a copy presented to her in order

16 to voir dire.

17 A.L.J. JENNINGS-FADER: We do -- we

18 should have, if we must have copies for voir dire.

19 MR. DOUGLAS: If I may approach, Your

20 Honor?

21 A.L.J. JENNINGS-FADER: You may.

22 Dr. Sheffrin, while the documents are being passed out,

23 I have a question to ask you about Document 146 for

24 identification -- Exhibit 146 for identification.

25 THE WITNESS: Certainly.


157
1 A.L.J. JENNINGS-FADER: In the upper

2 left-hand corner is the date, "7/27/2010." Do you know

3 what that date is?

4 THE WITNESS: That was simply the date

5 that this was printed.

6 A.L.J. JENNINGS-FADER: Thank you.

7 Mr. Sopkin, voir dire?

8 MR. SOPKIN: Yes. Should I do it from

9 here?

10 A.L.J. JENNINGS-FADER: You may do it

11 from there, if that's more convenient for you.

12 VOIR DIRE EXAMINATION

13 BY MR. SOPKIN:

14 Q Good afternoon, Dr. Sheffrin.

15 A Good afternoon.

16 Q You do have the entire Renewable Energy

17 Transmission Initiative Report Phase 2B table -- or

18 the, report, May 2010, before you, correct?

19 A I do.

20 Q Okay. And you have analyzed this whole

21 report, correct?

22 A I have.

23 Q Okay. All right. If you would turn to

24 page 1-3 of that document.

25 A Yes.
158
1 Q Under Section 1.3, you would agree

2 that -- excuse me. Actually, that's not my question.

3 Let me -- it indicates, if you look at page 1-1, there,

4 "The RETI Report is a statewide planning process to

5 identify transmission projects needed to accommodate

6 California's renewable energy goals." Do you see that?

7 A Yes.

8 Q So, this document is created for the

9 purpose of a California initiative; is that correct?

10 A Yes.

11 Q All right. And looking at that same

12 page, a couple of sentences down, it states, "This

13 Phase 2B Report documents key changes made in the

14 economic model, technology assumptions, competitive

15 renewable energy zones and out-of-state resources"; is

16 that correct?

17 A Yes.

18 Q Okay. And if you turn to page 1-5 of the

19 document, under Table 1-2, the sentence below that

20 says, "All of the resources in Alberta, Montana and

21 Colorado were screened out of the analysis since there

22 appear to be lower cost resource options in adjacent

23 states." Do you see that?

24 A I do.

25 Q If you turn to Section 4 of this


159
1 document, that's entitled, "Technology Assumption

2 Adjustments." Do you see that?

3 A Yes.

4 Q And you would agree that that Section 4

5 informs the remainder of the report, as to the cost of

6 solar thermal resources?

7 A Yes, I believe so.

8 Q All right. And under 4.1, Updating

9 Process, the first sentence says, "Adjustments were

10 made to key assumptions, based on input from the Phase

11 2B work group, which consists of industry

12 representatives, developers, utilities and other

13 interested stakeholders." Do you know what or who the

14 stakeholders were that provided that input to those key

15 assumptions?

16 A This was an open process and these

17 documents were publicly posted on the Web. So, I

18 believe they got input from a wide variety of

19 stakeholders.

20 Q And do you know whether any of the

21 stakeholders provided input with regard to Colorado

22 data?

23 A As reading from the same paragraph that

24 you did, about the updating process, it states here,

25 "Black & Veatch also presented an assumption developed


160
1 as part of the similar stakeholder process for the

2 Western Regional Energy Zones (WREZ) work in 2009."

3 My understanding is that Colorado

4 information was available and therefore available to

5 Black & Veatch. I believe Black & Veatch was the

6 engineer who did both efforts.

7 Q So, you know for a fact that Colorado

8 data was included?

9 A In reading the WREZ report, which did

10 include Colorado, and this references that report, I

11 would have to draw from that, that, yes.

12 Q Okay. Turning to page 4-5, there's a

13 section entitled, "4.6.1 Solar Thermal." Do you see

14 that section?

15 A I'm sorry. Show me again.

16 Q On page 4-5?

17 A I am there.

18 Q There's a heading, "4.6.1 Solar Thermal."

19 Are you there?

20 A Yes.

21 Q And the second paragraph begins, "Solar

22 thermal plants can either be wet or dry-cooled and RETI

23 Phase 1B wet cooling was allowed for projects near

24 populated sources, where a source of reclaimed water

25 might be available." And then it says, "The


161
1 wet-cooling policy for solar thermal projects has been

2 revised." Do you see that?

3 A Yes.

4 MR. DOUGLAS: Your Honor, I am going to

5 object. I think we're getting into cross examination.

6 I'm not sure what this has to do with admissibility.

7 MR. SOPKIN: Your Honor, what I am trying

8 to show is that the exhibit, which they wanted

9 admitted, has one cost for solar thermal trough, which

10 is the, I believe, the relevant technology to what

11 we're talking about in this case. It is not divided up

12 into solar thermal wet-cooled and solar thermal

13 dry-cooled. What I am trying to show is that the cost

14 increase reflected in this has nothing to do with solar

15 thermal dry cool. That's why this document, I believe,

16 is not relevant or misleading.

17 A.L.J. JENNINGS-FADER: Could you get to

18 that point?

19 MR. SOPKIN: I am trying to. Okay.

20 Thank you, Your Honor.

21 BY MR. SOPKIN:

22 Q Dr. Sheffrin, turning to the third

23 sentence of the third paragraph, under Section 4.6.1,

24 it says, "For this update," meaning this RETI Phase 2B,

25 "it is now assumed that no storage is used" -- I'm


162
1 sorry.

2 Going back to the previous paragraph, the

3 third sentence of that paragraph, "Wet cooling is now

4 only allowed in cases where a plant is already

5 permitted to use water." Do you see that?

6 A Yes.

7 Q And it says, "This has resulted in an

8 increased capital cost and decreased capacity factor

9 for solar thermal plants." Do you see that?

10 A Yes.

11 Q And you would agree that this change,

12 this assumption that wet-cooled solar thermal is no

13 longer used in the analysis, does not in and of itself

14 affect the cost of a dry-cooled thermal facility?

15 A The cost as reflected where?

16 Q Just, well, the cost of a dry-cooled

17 facility as analyzed in this report.

18 A I'm sorry. Again, could you ask the

19 question one more time?

20 Q Would you agree that the change in

21 policy, the wet cooling policy, for solar thermal

22 projects, the change that that can no longer be

23 assumed, and you have to assume dry cooled, does not in

24 and of itself affect the price of a dry-cooled solar

25 thermal plant?
163
1 MR. DOUGLAS: Your Honor, I am going to

2 object. It's vague. I am not quite sure how the

3 change in the wet-cooled policy affects the

4 admissibility of this document, or where we're going

5 with this, or really understand the question.

6 MR. SOPKIN: Your Honor, I am just trying

7 to establish that this solar thermal trough amount,

8 this range, was adjusted, I guess, in this report,

9 higher, and that adjustment has nothing to do with the

10 price of a dry-cooled facility, which is what we're

11 talking about in this case.

12 A.L.J. JENNINGS-FADER: I will sustain

13 the objection, but I didn't understand the question to

14 go to that point.

15 MR. SOPKIN: Okay. Okay. Moving to the

16 next paragraph of this document. It indicates the

17 default storage assumption has also been changed,

18 although, projects with storage have favorable

19 economics in the model, few projects in development

20 have opted to use storage. For this update, it is now

21 assumed that no storage is used. Do you see that?

22 A I do.

23 Q And you agree that the solar thermal

24 facilities we're talking about in this case are with

25 storage?
164
1 A I'm sorry. I'm sorry. Again, what are

2 you asking me for?

3 Q I am not asking about this document

4 presently. I am asking, do you agree that, in this

5 case, the San Luis Valley transmission line case, that

6 the solar thermal resources that we have been

7 discussing are with storage?

8 A I agree with that statement, but I don't

9 think I agree with how -- whether the solar thermal in

10 this chart, or in this report, included storage or not.

11 Q You don't agree with the report stating

12 that, for this update, it is now assumed that no

13 storage is used?

14 A Well, the next sentence says, "Table 4-5

15 and Table 4-6 showed the updated costs and performance

16 for solar thermal with no storage and with 6 hours of

17 storage respectively." So, it does have storage.

18 Q And Dr. Sheffrin, if you looked at

19 Exhibit 146, do you see, at the bottom of that, it

20 says, "Source: PIG State of California Renewable

21 Energy Transmission Initiative, Phase 2B Final Report,

22 May 20, page 4-8"?

23 A Yes.

24 Q Okay. And, so, that, this levelized cost

25 for generation relies on Table 4-8; isn't that


165
1 correct -- or excuse me, Figure 4-1, which is on page

2 4-8?

3 A Again, what are you asking me? I'm

4 sorry.

5 Q I am asking you, isn't it true that

6 Exhibit 146 relies, for its information, on Figure 4-1,

7 that appears on page 4-8 of the RETI Phase 2B Report?

8 A Yes.

9 Q Okay. And in terms of the assumption for

10 the cost that's represented in Figure 4-1, isn't it

11 true that it's now assumed that no storage is used,

12 unless it has been preidentified for a specific site?

13 A My assumption is that the cost reflected

14 in Figure 4-1 does have solar thermal trough technology

15 with storage, as well as without storage. And that's

16 what the range of costs there are, along with other

17 attributes of that technology.

18 Q You do agree that this report states,

19 "For this update, it is now assumed no storage is used

20 unless it has been preidentified for a specific site"?

21 MR. DOUGLAS: Your Honor, I believe that

22 one has been asked and answered.

23 A.L.J. JENNINGS-FADER: No. Actually,

24 she gave what she assumed. She didn't respond to what

25 the report stated.


166
1 MR. DOUGLAS: All right.

2 BY MR. SOPKIN:

3 Q Isn't that what the report states?

4 A Again, looking at page 4-6, Table 4-6,

5 solar thermal assumptions, 6-hour storage, is the input

6 to Figure 4-1. So, reading this, my assumption was

7 that, within that range, solar thermal trough

8 technology does include storage as well as without

9 storage.

10 Q Well, let's first get an answer to my

11 question. You would agree that on page 4-5 of this

12 report, it states, "For this update, it is now assumed

13 that no storage is used unless it has been

14 preidentified for a specific site," correct?

15 A I see that sentence, yes.

16 Q Okay. And, so, you're simply assuming

17 that, even though that sentence states that, that the

18 report does, in fact, assume storage is used in

19 computing the cost of solar thermal as reflected in

20 Exhibit 146?

21 MR. DOUGLAS: Your Honor, I am going to

22 object. She's already explained, somewhat, her

23 assumptions and what it's based on. And this is asked

24 and answered and redundant, and we need to move on.

25 A.L.J. JENNINGS-FADER: I will allow it.


167
1 THE WITNESS: In reading the next

2 sentence, "Table 4-5 and Table 4-6, show the updated

3 cost and performance assumptions for solar thermal with

4 no storage and with 6 hours of storage respectively."

5 So, again, my assumption is that that cost range

6 includes solar thermal with storage.

7 BY MR. SOPKIN:

8 Q That's your assumption, based on that

9 sentence, correct?

10 A Yes.

11 MR. SOPKIN: Your Honor, that's all I

12 have for voir dire. I believe the report is -- I do

13 object to its admissibility. I believe the report is,

14 on its face, does not include data for solar thermal

15 with storage, unless it has been preidentified for a

16 specific site. I do not think it's evident that, from

17 this, that the mere fact there's a couple of tables

18 listed of solar thermal assumptions, no storage, and

19 solar thermal assumptions of hours 6 storage, mean that

20 that data was included in Exhibit 146. So, I believe

21 it's misleading.

22 A.L.J. JENNINGS-FADER: Doctor, could you

23 help me to understand one thing about Exhibit 146 for

24 identification?

25 THE WITNESS: Yes.


168
1 A.L.J. JENNINGS-FADER: The proposed

2 exhibit itself.

3 THE WITNESS: Yes.

4 A.L.J. JENNINGS-FADER: Is this a table

5 taken directly -- excuse me. Is this graph taken

6 directly from the Renewable Energy Transmission

7 Initiative Phase 2B Final Report of May 2010?

8 THE WITNESS: The numbers are taken

9 directly, but not -- the figure is not an exact

10 replication.

11 A.L.J. JENNINGS-FADER: Okay. Thank you

12 for the help clarifying that. Mr. Douglas.

13 MR. DOUGLAS: Your Honor, if I may ask

14 just a couple of clarification questions?

15 A.L.J. JENNINGS-FADER: You may. I'm

16 sorry. And back -- I'm sorry, Mr. Sopkin. My

17 apologies. So, the essence of the objection is?

18 MR. SOPKIN: I guess twofold. One is

19 relevance. The other is the exhibit is misleading,

20 because it only purports to show a cost of solar

21 thermal trough. It does not say, with storage. The

22 report indicates that the assumption is now no storage,

23 unless its been specifically identified. So, I believe

24 it's not relevant.

25 A.L.J. JENNINGS-FADER: Thank you.


169
1 MR. DOUGLAS: Thank you, Your Honor.

2 Dr. Sheffrin.

3 DIRECT EXAMINATION (CON'T)

4 BY MR. DOUGLAS:

5 Q Dr. Sheffrin, just to clarify the last

6 point that Your Honor asked about Figure 4-1, which you

7 were asked about, which is the basis of your Exhibit

8 146, is it accurate that that includes cost figures

9 from both RETI 2 and RETI 1?

10 A No. It only includes figures from RETI

11 1 -- RETI 2.

12 Q I'm sorry. Your exhibit only does?

13 A Yes. My exhibit only does.

14 Q But Figure 4-1 in the RETI Report

15 includes both RETI 2 and, then, RETI 1 figures?

16 A Yes, it does.

17 Q And the RETI 1 figures were the ones that

18 were updated in this RETI 2 analysis?

19 A Yes.

20 Q So, your Exhibit 146 simply sets forth

21 the more updated RETI 2 figures as opposed to the older

22 RETI 1 figures?

23 A Yes, it does.

24 Q Okay. And on this Table 4-6 you were

25 asked about, at page 4-6 of the RETI 2B Report, does


170
1 that Table 4-6 have specifically information about the

2 cost of a dry-cooled parabolic trough facility with 6

3 hours of storage?

4 A Yes, it does.

5 Q And how does that relate to your

6 understanding of these future 250-megawatt solar

7 thermal placeholders that have been discussed?

8 A.L.J. JENNINGS-FADER: I'm sorry. Are

9 we still dealing with the levelized cost in Exhibit 146

10 for identification?

11 MR. DOUGLAS: Yes. Your Honor, it was

12 Dr. Sheffrin's testimony that that -- well, the point

13 that Mr. Sopkin is trying to make is that these numbers

14 don't relate to dry-cool parabolic trough with 6 hours

15 of storage. And I believe Dr. Sheffrin's testimony was

16 that Table 4-6 is, in fact, incorporated into that

17 table about solar thermal trough figures. So, I am

18 just trying to establish the connection between that

19 and the resources we're talking about in this case.

20 A.L.J. JENNINGS-FADER: Thank you.

21 BY MR. DOUGLAS:

22 Q Thank you. Let me try that again. Does

23 Table 4-6 in the RETI Report provide or -- well, strike

24 that. How does the cost information in Table 4-6, in

25 the RETI Report, relate to the specific solar thermal


171
1 placeholder resources that have been discussed in this

2 case?

3 A They are very similar technologies.

4 Q Okay. And can you, from looking at your

5 Exhibit 146, that first row for solar thermal trough, I

6 believe that you said that that range, in your

7 understanding, that range includes the information both

8 for solar thermal without storage and with storage?

9 A Yes, that's my understanding.

10 Q Okay. And can you, well, can you tell,

11 from looking at Table 4-6 in the RETI Report, whether

12 the cost figures for the solar thermal with storage in

13 that chart are within the range listed on your Exhibit

14 146?

15 A I believe they are within the range.

16 Q And does the bid price for the solar

17 thermal resource proposed for the San Luis Valley, the

18 125-megawatt bid price, that was in the application to

19 amend, does that provide you with any information about

20 whether this first range in your Exhibit 146 would

21 apply to a solar thermal bid in Colorado?

22 A I believe --

23 A.L.J. JENNINGS-FADER: Just a quick --

24 Doctor, excuse me just a moment. The bid price and the

25 bidder are still confidential material; is that


172
1 correct?

2 MR. SOPKIN: Yes.

3 A.L.J. JENNINGS-FADER: So, counsel for

4 Public Service, can you help me out about how -- does

5 this question create difficulties for Public Service?

6 MR. SOPKIN: It does, Your Honor.

7 A.L.J. JENNINGS-FADER: In terms of

8 confidential information having to do with the bid

9 price itself?

10 MR. SOPKIN: Yes.

11 A.L.J. JENNINGS-FADER: See, I just don't

12 know where we are with respect to that question.

13 MR. DOUGLAS: Well, would it be -- may I

14 address counsel?

15 A.L.J. JENNINGS-FADER: You certainly

16 may. We'll be off the record for a moment. You all

17 may be able to discuss this.

18 (Discussion off the record.)

19 A.L.J. JENNINGS-FADER: Okay. Excuse me.

20 We'll be back on the record. Mr. Douglas, were you

21 able to discuss, with Public Service, whether this

22 question is acceptable or some form of this question is

23 acceptable?

24 MR. DOUGLAS: I was, Your Honor, and I

25 think we're good. So, let me take a shot at it.


173
1 A.L.J. JENNINGS-FADER: Thank you.

2 BY MR. DOUGLAS:

3 Q Dr. Sheffrin, does the information that

4 you've reviewed in this case, relating to the price of

5 a 125-megawatt solar thermal with storage bid that is

6 discussed in Public Service's application to amend its

7 Resource Plan, give you any information about whether

8 this range discussed in your Exhibit 146 for solar

9 thermal trough would be generally applicable to

10 Colorado?

11 A Yes. I am comfortable that the solar

12 thermal trough dollars per megawatt-hour, as

13 represented in Exhibit 146, is representative of the

14 prices for solar thermal in Colorado.

15 MR. DOUGLAS: Okay. All right. And with

16 that I would --

17 THE WITNESS: I'm sorry. Solar thermal

18 with storage in Colorado.

19 MR. DOUGLAS: With that, I would offer

20 146 into evidence. And, Your Honor, if there are

21 issues with respect to completeness that Mr. Sopkin

22 has, I would be happy to mark and offer the entire RETI

23 2B Report, if the issue is it is not a complete record

24 by itself.

25 A.L.J. JENNINGS-FADER: So, do you wish


174
1 to present argument with respect to relevance and

2 whether or not this Exhibit 146 for identification, as

3 presented, is misleading?

4 MR. DOUGLAS: Yes, Your Honor. The

5 relevance we have discussed at the beginning of this, I

6 guess, line of questioning, the relevance of the

7 relative costs of the technologies Dr. Sheffrin

8 specifically relied on, at least in part, on this

9 study, and the numbers from this studies, she says it's

10 the most up-to-date, authoritative cost information

11 that's out there.

12 The only thing I believe Mr. Sopkin is

13 trying to establish, as far as admissibility, is his

14 assertion that this first figure, the solar thermal

15 trough figure, does not have information about solar

16 thermal with storage. And, in fact, I don't think

17 that's what this says. It says, "It's assumed that no

18 storage was used unless it has been preidentified for

19 specific sites," which means there were some certain

20 bids that were factored in there.

21 And as Dr. Sheffrin described her

22 understanding of what all that means, and the fact they

23 have the specific cost figures for both no storage and

24 with storage, some bids have storage, some bids did

25 not, that's what leads to that significant range that's


175
1 presented in Figure 4-1 of the RETI 2B Report, which is

2 what she has -- which is the source of her information.

3 She also specifically said that the WREZ data, which

4 did specifically include Colorado and Colorado data,

5 was used by the same contractor, Black & Veatch, who

6 did both that study and this study. In fact, if you

7 look at page 4-6 of the RETI Report, they even set out

8 the WREZ cost data, and then compare it. Sometimes

9 they went with their same old numbers, sometimes they

10 had changed, for various reasons, but that cost data

11 was specifically considered in this analysis.

12 And, in fact, you can see, from Table

13 4-6, that the cost for dry-cooled solar thermal with

14 6-hour storage from the WREZ, as set forth in this

15 table, which did include Colorado, is identical to the

16 final numbers that the RETI 2B estimated for this

17 technology. So, I believe it's relevant to the

18 relative cost of solar thermal, as compared to other

19 technologies in Colorado. It's thorough and

20 comprehensive information, on that subject, that's

21 reasonably relied upon by experts in Dr. Sheffrin's

22 field; and, therefore, the document is admissible.

23 I guess, Your Honor, just one final

24 point; that Dr. Sheffrin confirmed that the actual

25 Colorado bid that we have, is, you know, comparable to


176
1 this range that we're talking about, and which further

2 confirms the relevance and admissibility of the

3 document.

4 MR. SOPKIN: Your Honor --

5 A.L.J. JENNINGS-FADER: Mr. Sopkin.

6 MR. SOPKIN: Actually, I actually had a

7 couple of follow-up voir dire questions. I don't know

8 if it's appropriate now to ask them.

9 A.L.J. JENNINGS-FADER: We're this far

10 down the path. Sure.

11 VOIR DIRE EXAMINATION

12 BY MR. SOPKIN:

13 Q Dr. Sheffrin, looking at Exhibit 146 and

14 the levelized cost of generation listed for the solar

15 thermal trough, is it your testimony that -- you stated

16 that that range listed there, $195 per megawatt-hour to

17 $226 per megawatt-hour, was, in your opinion,

18 representative of Colorado. And, then, I believe your

19 counsel said it's based on actual bids. That's my

20 question. Is it your testimony that the actual bid

21 before Public Service Company for the 125-megawatt

22 solar thermal plant is within those two figures, $195

23 and $226?

24 A No. What I was looking at, the range of

25 costs for delivery of thermal trough, $195 per


177
1 megawatt-hour to $226 --

2 A.L.J. JENNINGS-FADER: Well, ouch. We

3 weren't going to read the numbers, but that's okay.

4 We're done. Mr. Sopkin put in the numbers, so,

5 continue. They are included in his question. But it's

6 okay, Doctor, continue.

7 MR. SOPKIN: Without stating the bid

8 number, the actual bid number.

9 A.L.J. JENNINGS-FADER: Right. But the

10 range, as stated in the exhibit, 195 to 226, that's

11 where you were.

12 THE WITNESS: Right. I said that it gave

13 me confidence that this range would be generally

14 applicable.

15 BY MR. SOPKIN:

16 Q And --

17 A I didn't mean that the exact Colorado bid

18 information was in that range.

19 Q Okay. So, can you just tell me whether

20 the actual bid is below or above that number, please,

21 the range?

22 MR. DOUGLAS: Your Honor, if we're going

23 to get into this, and talk about how close it is, we're

24 getting into the confidential number, I am happy to do

25 that, but Mr. Sopkin is implying that it's way off from
178
1 the bottom. And, I think, if we actually get into the

2 confidential information, that's not what it's going to

3 show.

4 BY MR. SOPKIN:

5 Q Let me ask you, Doctor, if you look at

6 page 4-8 of the RETI Report, and you see Figure 4-1?

7 A Yes.

8 Q And you see there, at the top row, is,

9 "Solar Thermal Trough RETI 2," is listed in the top row

10 and RETI 1 is listed below that. Would you agree that

11 the range, 158 to $219 for RETI 1 is representative of

12 Colorado?

13 A The only question I have is I think they

14 said they assumed, in that RETI 1, that it was all

15 wet-cooled technology. So, I think that would make a

16 difference. That's why I think that the range, 195 to

17 226, is much more representative of the exact

18 technology we're talking about, solar thermal with dry

19 cooling and storage.

20 Q And, again, you're assuming that RETI 2

21 includes storage?

22 A Yes.

23 Q Okay.

24 MR. SOPKIN: Those are -- one moment.

25 A.L.J. JENNINGS-FADER: Yes.


179
1 (Discussion off the record between Public

2 Service Company's representatives.)

3 BY MR. SOPKIN:

4 Q Another question, Dr. Sheffrin, on page

5 4-7 of this document.

6 A.L.J. JENNINGS-FADER: Are you referring

7 to this?

8 BY MR. SOPKIN:

9 Q I'm sorry. Page 4-6 of the RETI 2B

10 Report.

11 A Yes.

12 Q You indicated that the total project cost

13 dollars per-kilowatt -- and now I am looking at Table

14 4-6, under, "Economics," do you see it says, "Total

15 project costs dollar per kilowatt"?

16 A Yes.

17 Q And you said that the range listed there

18 for WREZ and RETI 2B, which is $76.50 per kilowatt to

19 $78.50 per kilowatt, is, I guess, within the same range

20 as your Exhibit 146, which shows dollars per

21 megawatt-hour for solar thermal trough?

22 MR. DOUGLAS: Objection, Your Honor. I

23 don't think she specifically said that those numbers

24 are within the range. I think it mischaracterizes her

25 testimony.
180
1 MR. SOPKIN: I don't recall the exact

2 words.

3 BY MR. SOPKIN:

4 Q Help me out. What did you say that it's

5 representative of?

6 A Representative technology, which is,

7 then, converted and levelized into dollars per

8 megawatt-hour.

9 Q Okay. And in order to do that, don't you

10 need to know a project cost, financing, a number of

11 factors, in order to convert dollars per kilowatt to

12 dollars per megawatt-hour?

13 A Yes.

14 Q And have you done that in this instance?

15 A I have taken the assumptions that were

16 used in the RETI 2 report. I didn't make my own

17 assumptions on that. They have an algorithm, that they

18 converted it, and I took those to be the information.

19 Q You physically did the math for Table 4-6

20 specifically?

21 A No. I took what was in the report,

22 because they did the calculation. Black & Veatch did

23 the calculation.

24 Q Okay. When you say, "they did the

25 calculation," are you referring to Exhibit 146?


181
1 A Yes.

2 Q Okay. So, once again, it's your

3 assumption that the 6 hours of storage was included in

4 that figure?

5 A Yes.

6 MR. SOPKIN: All right. Those are all my

7 questions, Your Honor.

8 A.L.J. JENNINGS-FADER: Thank you.

9 Mr. Douglas, anything further?

10 MR. DOUGLAS: Nothing further.

11 A.L.J. JENNINGS-FADER: I will not admit

12 Exhibit 146. I'm not persuaded that it is

13 representative of numbers, as they would apply in

14 Colorado. Even the solar thermal trough range is

15 questionable, because there are so many, at least based

16 on the information available, to me, so many questions

17 with respect to what is included there. And I have no

18 information with respect to whether the other

19 technologies, photovoltaics, thin-film photovoltaic,

20 biomass, wind and the geothermal numbers relate in any

21 way to Colorado. So, this exhibit is not admitted.

22 MR. DOUGLAS: If I could have just one

23 just moment, Your Honor?

24 (Discussion off the record between

25 Intervenors' representatives.)
182
1 MR. DOUGLAS: Your Honor, if I may

2 approach the witness?

3 A.L.J. JENNINGS-FADER: You certainly

4 may.

5 (Whereupon Exhibit No. 147 was marked for

6 identification.)

7 DIRECT EXAMINATION (CON'T)

8 BY MR. DOUGLAS:

9 Q Dr. Sheffrin, do you have Exhibit 147 in

10 front of you?

11 A I do.

12 Q Okay. Is that a copy of the full RETI 2B

13 Report that you were just talking about?

14 A Yes, it is.

15 Q And does that RETI 2B Report,

16 specifically Section 4, contain a cost analysis

17 relating to various renewable technologies?

18 A Yes, it does.

19 Q Okay. And what technologies are part of

20 that analysis that's in Section 4 of the report?

21 A Biomass, geothermal, wind, solar, solar

22 thermal, solar photovoltaic, and, then, a general cost

23 summary in comparison of all of those generation --

24 renewable generation sources.

25 Q And do you have an opinion about whether


183
1 the cost analysis in this RETI 2B final report provides

2 information useful to an expert in your field,

3 regarding the relative costs of these various

4 technologies, generally?

5 A Yes, I think, yes. I think it provides

6 very good information about the relative costs of these

7 technologies.

8 Q And do you believe that that information,

9 about the relative cost of those technologies is

10 informative in determining the costs or the relative

11 costs of renewable resources in Colorado?

12 A I do feel that it is informative. These

13 technologies are available nationwide, if not

14 worldwide, and anyone ordering these technologies would

15 face similar costs for those technologies. There may

16 be small differences, due to land costs and things, by

17 state, but I believe the hardware and the technology

18 itself would be very similar.

19 Q And is this cost analysis, in the RETI 2B

20 Report, Exhibit 147, something that experts in your

21 field would reasonably rely upon for information about

22 the relative costs of these different renewable

23 technologies nationwide?

24 A Yes, I do.

25 MR. DOUGLAS: Your Honor, with that I


184
1 would offer Exhibit 147.

2 A.L.J. JENNINGS-FADER: Exhibit 147 for

3 identification has been offered. Voir dire or

4 objection?

5 MR. SOPKIN: Brief voir dire, Your Honor.

6 A.L.J. JENNINGS-FADER: You may. And

7 Mr. Sopkin, only one chance.

8 MR. SOPKIN: Thank you.

9 VOIR DIRE EXAMINATION

10 BY MR. SOPKIN:

11 Q Dr. Sheffrin, you indicated that the

12 costs shown here for renewable resources would be --

13 well, let me start with, you agree that this Renewable

14 Energy Transmission Initiative Report is meant to --

15 it's a statewide planning process to identify the

16 transmission projects needed to accommodate

17 California's renewable energy goals, correct?

18 A Yes.

19 Q All right. And are there assumptions in

20 this report, as to capital costs, labor costs, land

21 costs, and the quality of renewable resources by

22 geographic area?

23 A Yes.

24 Q And you would agree that, from one state

25 to another -- let's just use Colorado and California --


185
1 that the capital costs might differ?

2 A I believe they would be very similar.

3 Q Might they differ?

4 A I'm sorry. You're referring to some

5 specific reason?

6 Q Well, how about the cost of capital

7 between different utilities? Well, do those vary?

8 A They do vary.

9 Q And, also, labor costs between states

10 vary?

11 A Labor costs wouldn't go into capital

12 costs.

13 Q Right now I am not asking about capital

14 costs.

15 A Oh.

16 Q I've switched the subject to labor costs

17 between states would vary?

18 A Yes.

19 Q And land costs between states would vary?

20 A Yes.

21 Q Quality of renewable resources between

22 state would vary?

23 A The quality of renewable resources across

24 the state was taken into account in this report.

25 Q In Table 1-2, on page 1-5, do you see


186
1 that? Are you there?

2 A Not yet -- yes, I see that.

3 Q And that states, "Out-of-State Resource

4 Estimates (MW)"?

5 A Yes.

6 Q And in the leftmost column, it indicates,

7 "Region," and there's a number of states listed?

8 A Yes.

9 Q Do you see Colorado listed there?

10 A No, I do not, but, can I just say, that

11 table reflects what would be available for California

12 consumers to buy, what renewable resources, from other

13 states, would be available for California consumers to

14 buy, so. . .

15 Q Would you agree that Black & Veatch, in

16 preparing this report, would want to reflect in the --

17 I'm sorry -- use assumptions that are valid for the

18 State of California, because the purpose of the report

19 is to inform California decision-makers with regard to

20 transmission facilities and renewable resources?

21 A I believe that the stakeholders in this

22 process in California, each of them had very different

23 costs of capital. Certainly municipal agencies, such

24 as SMUD, would have a very different cost than Pacific

25 Gas & Electric Company.


187
1 So, I believe that they all had input

2 into that. And it's not to say that the costs in this

3 report would not be applicable to SMUD. I think the

4 best way to read this report is the relative cost

5 across the technologies, rather than the absolute cost.

6 Q Sure. There's a range of costs listed in

7 this report for different renewable resources, right?

8 A Yes.

9 Q And would you agree that Black & Veatch,

10 in preparing this report, would want to make sure that

11 range of costs is valid for the State of California?

12 A Again, I don't know what Black & Veatch

13 would want.

14 Q Okay.

15 MR. SOPKIN: Your Honor, I would just

16 object, because it's impossible to tell, on the face of

17 this report, whether Colorado data was included or was

18 not included. The expert has admitted that the cost of

19 different renewable resources are going to depend on a

20 number of assumptions. I don't think any of those

21 assumptions from Colorado are input into the costs that

22 are shown in this report.

23 So, I think in terms of, well, we just

24 object that it's not relevant and it may be misleading,

25 because it's impossible to tell whether the appropriate


188
1 data is in here.

2 A.L.J. JENNINGS-FADER: Mr. Douglas.

3 MR. DOUGLAS: Thank you, Your Honor. I

4 believe that the witness has clearly stated that this,

5 No. 1, includes in Colorado data that was established

6 before, but No. 2, that it's informative of the

7 relative costs of these technologies nationwide, and

8 whether there are some specific fluctuations up or down

9 in resources in a particular state, that Mr. Sopkin can

10 fully explore those on cross examination. That may go

11 to the weight it is to be given, but, in fact,

12 Dr. Sheffrin just said she wouldn't be relying on this

13 to pinpoint the precise costs in a particular state,

14 but in comparing the relative costs of these different

15 technologies, based on the most updated information we

16 have today, and those relative costs nationwide. It's

17 informative and relevant and should be admitted.

18 MR. SOPKIN: Your Honor, I was just

19 nudged by my colleague. I am wondering if I can point

20 out one more thing. I am not going to ask a question

21 of the witness.

22 A.L.J. JENNINGS-FADER: You may.

23 MR. SOPKIN: On page 6-3 of this report,

24 the Resource Screening, and this specifically did talk

25 about datasets that were relied on for this update.


189
1 And there are a number of states listed, none of which

2 are Colorado, for solar -- for any of the resources

3 mentioned there. And, again, it states, "All of the

4 resources in Alberta, Montana and Colorado were

5 screened out of the analysis since there appear to be

6 lower cost resource options in adjacent states."

7 A.L.J. JENNINGS-FADER: And, in fact,

8 Mr. -- excuse me, Mr. Sopkin. That's what -- I was

9 looking through the document. It appears to me that

10 every reference to every resource involves a state

11 other than Colorado. Thank you for pointing that

12 specific language out, but there's nothing in here that

13 indicates that Colorado data was included.

14 While I appreciate and understand that

15 this is a document on which experts, persons such as

16 Dr. Sheffrin, on which they would rely, I will not

17 admit it into evidence in this case, because it does

18 not appear to have information with respect to

19 Colorado, in particular. These may be numbers of

20 interest in California, they may be numbers of interest

21 in the abstract, but, in this proceeding, it's too far

22 removed. It's not admitted.

23 MR. DOUGLAS: Your Honor, I'm not looking

24 at my watch, but my stomach is reminding me of the

25 time. I wonder if this would be an appropriate time


190
1 for the lunch break.

2 A.L.J. JENNINGS-FADER: Well, we'll be

3 off the record.

4 (Discussion off the record.)

5 A.L.J. JENNINGS-FADER: We'll be back on

6 the record. Off the record, we discussed the

7 remainder, generally, the remainder with respect to

8 witnesses. We will take the lunch break at this time.

9 We will stick to the 45-minute lunch break today. So

10 we'll be back -- I think that puts it at about 10

11 minutes after 2, then, continue with the direct

12 examination, move to cross examination, and see where

13 we are.

14 So, we're in recess for lunch. Thank

15 you, Dr. Sheffrin.

16 THE WITNESS: Thank you.

17 (Lunch recess.)

18 A.L.J. JENNINGS-FADER: Back on the

19 record after lunch break. Before we start, any

20 preliminary matters?

21 MR. SOPKIN: No.

22 A.L.J. JENNINGS-FADER: Excellent.

23 Mr. Douglas.

24 MR. DOUGLAS: Thank you, Your Honor.

25 BY MR. DOUGLAS:
191
1 Q Good afternoon, Dr. Sheffrin.

2 A Good afternoon.

3 Q Dr. Sheffrin, do you have an opinion as

4 to whether Public Service's plans, that it has

5 discussed, about solar generation additions at this

6 hearing, adequately take into account the economic

7 changes that you have identified in your testimony

8 today?

9 A Yes, I have an opinion on that.

10 Q What is that opinion?

11 A That, as we've been discussing today,

12 there's been a tremendous number of changes in the

13 regulations and regulatory environment that have

14 occurred since the 2007 Colorado Resource Plan and 2010

15 RES Compliance Plan. Among the changes that were

16 already noted, lower load forecast, drop in natural gas

17 prices, carbon legislation being delayed, and then

18 solar thermal prices coming in higher than what was

19 assumed in the 2007 Colorado plan, as well as

20 technological changes and trends in renewable

21 technologies, such as a tremendous drop in solar

22 photovoltaic costs and thin film technology. So, those

23 are all really fundamental changes in the industry and

24 in the economy which need to be reflected in resource

25 decision-making.
192
1 Now, Public Service Company has already

2 reflected the changed economic environment in terms of

3 their request to reduce the solar thermal acquisition

4 in the 2007 Resource Plan from 345 down to 60-, 90- or

5 185-megawatts of solar resources in the San Luis

6 Valley. To me, that was the right change to make. And

7 given the changed economic circumstances, they made the

8 right short-term decision.

9 But those fundamental economic changes

10 also affect long-term decision-making, and that has not

11 been reflected in the 2010 Compliance Plan, but I have

12 confidence it will be reflected in the next resource

13 plan that they file in 2011, and they should affect the

14 resource acquisitions that will come forward at that

15 time after 2015.

16 Q And, Dr. Sheffrin, how does your opinion

17 about these economic changes or impacts to future

18 available RESA dollars, from those economic changes you

19 just described, combined with your opinions about the

20 cost-effectiveness of solar thermal generation as

21 compared to other renewable generation technologies,

22 affect your opinion about the need for the proposed

23 project?

24 A I looked to a number of documents that I

25 reviewed, including Exhibit 137, that said that no new


193
1 renewable resources would have to be added to Public

2 Service Company's generation mix until after 2029;

3 that, with the existing mix and the acquisitions

4 planned in the 2007 Resource Plan, they can meet the

5 new Renewable Portfolio Standard of 30% energy coming

6 from renewable sources.

7 So, fundamentally, they don't have to add

8 any new renewable resources beyond what's already

9 identified in the approved acquisition plan from the

10 Commission. So that, you know, very much tells me,

11 okay, you don't have to add a lot. The changed

12 economic conditions are likely to lead to lower RESA

13 dollars available to pay for the renewable technology,

14 and RESA balances being negative for a much longer

15 period of time.

16 So, again, those are all pressures that,

17 in my mind, should have Public Service Company relook

18 at their need for the three solar plants, and, in my

19 mind, make them highly unlikely and highly speculative.

20 And given that, and given the fact that this is the

21 sole basis on which Public Service Company has said the

22 line is needed, I would have to say that speculative

23 resources should not be the basis for building a large

24 transmission line.

25 Q All right. And I want to make sure


194
1 something is clear, for the record. You have not been

2 asked and don't have any opinions about the issue of

3 reliability and whether there is a need or

4 justification relating to reliability in the San Luis

5 Valley related to the proposed project; is that

6 accurate?

7 A Yes.

8 Q Okay. And, so -- and when you say these

9 future solar thermal placeholders as the sole basis,

10 you are talking specifically, then, about the stated

11 need to export future generation that may be located in

12 the San Luis Valley?

13 A Yes. And, again, how many megawatts will

14 be located there, based on new economic conditions, new

15 regulations, is very highly unlikely and speculative,

16 and, therefore, you shouldn't make a major investment

17 decision, in this era of uncertainty, at this time.

18 You should wait, get better information on where the

19 renewable technologies will be going, factor in the new

20 economic conditions, see what you can afford, look at a

21 more cost-effective investment in renewables for those

22 RESA dollars, like wind or expiring -- existing wind

23 contracts, or wind power or taking advantage of the new

24 solar photovoltaic, all of which are lower cost than

25 the solar thermal plants that are planned.


195
1 Q And in making these opinions and coming

2 to these conclusions, do you have an understanding as

3 to whether conclusions -- do you have an understanding

4 as to whether the proposed project by Public Service

5 would be needed to accommodate the generation to the

6 60, 90 or 185 levels that they at least proposed in

7 their application to amend the 2007 Resource Plan?

8 A Again, my reading of it is that the

9 current transmission line, with some upgrades, can

10 accommodate their new plan for short-term acquisition

11 of solar.

12 Q Okay.

13 MR. DOUGLAS: Your Honor, I don't have

14 anything further.

15 A.L.J. JENNINGS-FADER: Thank you.

16 Parties, other than the applicants, cross examination

17 of this witness? I see many heads saying no. Cross

18 examination Tri-State?

19 MR. DOUGHERTY: Tri-State has no

20 questions for Dr. Sheffrin.

21 A.L.J. JENNINGS-FADER: Thank you.

22 Mr. Sopkin.

23 MR. SOPKIN: Thank you, Your Honor.

24 CROSS EXAMINATION

25 BY MR. SOPKIN:
196
1 Q Good afternoon, Dr. Sheffrin.

2 A Good afternoon.

3 Q Mr. Douglas is nicer than I so he is not

4 going to object to any of my questions, okay?

5 MR. FLANAGAN: But I am over here.

6 BY MR. SOPKIN:

7 Q Dr. Sheffrin, at one point in your

8 testimony, you indicated that if the three 250-megawatt

9 solar thermal placeholders are the primary need for the

10 San Luis Valley transmission project, it would be

11 imprudent to use that as a basis for a need for the

12 line; is that correct?

13 A Yes, it is.

14 Q Okay. And, as I understand your

15 testimony, you believe solar PV plants are more

16 cost-effective than the solar thermal plants; is that

17 correct?

18 A Yes, right now they are.

19 Q Okay. And that would include central

20 solar resources, large solar PV resources that are not

21 on-site of the customer's facility, but could be an

22 independent power producer that sells power to the

23 utility, for example?

24 A Yes.

25 Q Okay. Would you agree that nothing


197
1 precludes Public Service from acquiring large central

2 solar resources in the San Luis Valley?

3 A I would agree that nothing precludes

4 Public Service Company from acquiring large central

5 solar in San Luis Valley or anywhere else.

6 Q Okay. And we already have evidence in

7 the record about the quality of solar resources, so I

8 am not going to go there. You would agree that --

9 A Can I just say something about the

10 quality of solar resources?

11 Q Not unless I ask you a question, ma'am.

12 A All right.

13 Q Would you agree that both solar PV and

14 solar thermal generation resources have declining cost

15 curves?

16 A Yes, they do.

17 Q And at some point, do you agree that the

18 cost per megawatt-hour of generic solar PV will reach

19 parity with that of generic gas combined cycle? Do you

20 agree with that?

21 A Yes, I do.

22 Q And do you think that will occur in five

23 to six years, so that would be around the 2015 to 2016

24 time period; is that correct?

25 A Yes.
198
1 Q And do you agree that the cost of solar

2 DG also will reach parity with that of a generic gas

3 combined cycle plant?

4 A Yes, I do.

5 Q Okay. And do you have a time estimate

6 for that?

7 A I think they are very similar

8 technologies. So, I wouldn't say that there's a

9 difference.

10 Q So, in the 2015 to 2016 time period?

11 A Yes.

12 Q Would you agree, then, that in terms of a

13 standard rebate offer that Public Service provides to

14 solar DG customers, that that standard solar rebate

15 offer should go down to zero, once solar DG reaches

16 parity with a gas-combined-cycle generic unit?

17 A Again, it could. I don't have an opinion

18 on that matter. You know, again those are decisions

19 that would be made by the Commission, based on findings

20 of fact that Public Service Company presents on market

21 conditions.

22 Q Well, do you have an expert opinion as to

23 that? I mean, assuming that there is cost parity

24 between solar DG and the generic-gas-combined-cycle

25 units, that the standard rebate offer should then go


199
1 down to zero?

2 A I don't have an opinion on that.

3 Q Okay. And you would agree that wind,

4 solar PV and solar DG are intermittent resources?

5 A Would you read the list again for me,

6 please?

7 Q Wind, solar PV and solar DG are

8 intermittent resources?

9 A Yes.

10 Q And the capacity factor of solar thermal

11 with storage is higher than wind or solar PV or solar

12 DG?

13 A I don't think I can make that statement,

14 offhand, because I have seen some high capacity factors

15 for wind, especially in certain locations. So, I

16 couldn't make that --

17 Q And would those locations include

18 Colorado?

19 A In Colorado or close to Colorado, yes.

20 Q Okay. So, okay. Are you familiar with

21 capacity factors that are assigned to different types

22 of renewable facilities, based on whether they can meet

23 peak load needs?

24 A Yes, I am.

25 Q And are you aware of the capacity factors


200
1 that Public Service Company assigns to the renewable

2 resources with regard to meeting peak load needs?

3 A Yes. Yes. If you are referring to a --

4 are you referring to effective load-carrying capability

5 of these renewables?

6 Q I am simply referring to the capacity

7 factor that's assigned by Public Service Company in

8 terms of renewable energy meeting peak load needs?

9 A I don't know that they assigned a

10 capacity factor. I think they assigned a capacity

11 credit.

12 Q Okay. What's your understanding of a

13 capacity credit for wind resources on Public Service

14 Company's system?

15 A I'll venture a guess. I think it might

16 be something like 12%.

17 Q Okay. And how about solar -- as far as

18 solar PV resources?

19 A Again, it depends on where those central

20 solar PV resources are located. I have read some

21 studies that Public Service Company has done with

22 central solar PV being located in a variety of places,

23 Pueblo, Denver and Alamosa. I have seen that

24 comparison.

25 Q You are saying there's a different


201
1 capacity credit assigned by different geographic areas?

2 A There's a different coincident of output

3 with Public Service Company's peak load.

4 Q That's not what I am asking you about. I

5 am simply asking you about what capacity credit does

6 Public Service Company assign to central solar PV, if

7 you know?

8 A I would be guessing.

9 Q And you don't know the solar thermal with

10 storage either?

11 A Yes, I do know with -- central solar with

12 thermal, sufficient storage, I believe its 100%

13 capacity credit.

14 Q Okay. Would you agree that the cost of

15 integrating wind into the Public Service system is

16 higher than solar thermal integration costs?

17 A Can I answer that question with some

18 background? What I would be assuming before I answered

19 that?

20 Q Sure.

21 A Because it depends. I'm sorry. Could

22 you repeat the question?

23 Q I can do that, if you give me one moment.

24 Do you agree that the integration costs for solar

25 thermal with storage are lower than with wind?


202
1 A Now I recall the question. All I wanted

2 to explain, before I answered your question, was that

3 the integration of solar costs -- solar integration

4 costs on the Public Service Company's system very much

5 depend on the resource mix that they have, how much

6 coal, how much gas, you know, all of those resources

7 that would help successfully integrate those.

8 As I understand, with the acquisitions

9 under the 2007 Resource Plan, PSCo is getting a lot

10 more gas-fired plants. And, so, I believe it really is

11 dependent on that mix of resources, how you would

12 calculate those costs. So, I would say it depends,

13 but, in general, solar thermal integration could be

14 lower than central PV.

15 Q Okay. Do you recall your deposition

16 being taken in this proceeding?

17 A I do.

18 Q Okay.

19 MR. SOPKIN: May I approach, Your Honor?

20 A.L.J. JENNINGS-FADER: You may.

21 BY MR. SOPKIN:

22 Q These are -- turn to page 123 of your

23 deposition. Oh, I'm sorry. I didn't give one to the

24 Judge. May I approach, Your Honor?

25 A.L.J. JENNINGS-FADER: You may.


203
1 MR. SOPKIN: Sorry.

2 A.L.J. JENNINGS-FADER: You certainly

3 may.

4 MR. SOPKIN: Sorry.

5 BY MR. SOPKIN:

6 Q And you're at page 123 of your

7 deposition?

8 A Yes.

9 Q And starting on line 6, "Question: Okay.

10 So -- okay. So, you did take into account the

11 integration costs of wind. How does the cost of solar

12 thermal with storage differ from the cost of wind?

13 Answer: Well, there's a whole array of integration

14 costs, but certainly, for solar thermal with storage,

15 the integration costs are lower than with wind." Do

16 you recall that being your testimony?

17 A Yes.

18 Q Thank you. And you talked about

19 development of technology -- renewable energy

20 technology. And I believe you stated you do try to

21 keep up on the current state of technology advances

22 with regard to renewable resources. Do you recall

23 that?

24 A Yes, I do.

25 Q Okay. Would you agree that there is


204
1 substantial investment and research in solar generation

2 resources and better efficiencies are expected for

3 solar thermal in the future?

4 A I would agree that that's true of all of

5 the renewable technologies, not specifically solar

6 thermal.

7 Q Okay. And you are aware that Google,

8 that large silicone valley company, is working to

9 develop its own new mirror technology that could reduce

10 the cost of building solar thermal plants by a quarter

11 or more?

12 MR. DOUGLAS: Your Honor, I am going to

13 have to object. I am not sure of the relevance or the

14 foundation for the fact that, if true, that Google may

15 have gotten into the solar thermal industry.

16 A.L.J. JENNINGS-FADER: Other parties?

17 Mr. Sopkin.

18 MR. SOPKIN: Your Honor, thanks.

19 Dr. Sheffrin testified previously, and in a very broad

20 manner, that the cost of solar PV, and I think she said

21 thin film solar technology, have decreased lately --

22 recently. And, so, I'm just asking her what her

23 knowledge is with regard to what technological

24 developments are going on out there. If she doesn't

25 know, she doesn't know, but she can certainly verify


205
1 whether, in fact, it's true.

2 A.L.J. JENNINGS-FADER: I would overrule

3 the objection. Dr. Sheffrin, you may answer the

4 question, if you recall.

5 THE WITNESS: I recall it as, am I

6 familiar with the research and development effort that

7 Google has undertaken on mirror arrays?

8 BY MR. SOPKIN:

9 Q Right. New mirror technology that could

10 reduce the costs of building solar thermal plants by a

11 quarter or more.

12 A Yeah. I am familiar with the press

13 release from Google, but my reading of it was that it

14 was very much an R&D effort, and they prided themselves

15 on being ahead of the curve in R&D areas. So, I don't

16 believe there was a time line associated with whether

17 those costs would drop as compared to when I talked

18 about the current solar photovoltaic and thin film

19 technology that's happening now, today, and not as a

20 result of R&D efforts, but as a result of large

21 manufacturers coming in, suppliers, and competing,

22 especially the Chinese firms dropping the price of

23 those panels, solar panels.

24 So, it's very different, a mature market

25 with a lot of suppliers, than just an initial R&D


206
1 effort.

2 Q One of your opinions is that, in light of

3 the proposed amendment to the 2007 Resource Plan, that

4 there's more pressure for Public Service to acquire

5 more cost-effective alternative resources and less

6 high-cost alternative resources, which you say is solar

7 thermal, correct?

8 A Correct.

9 Q And in coming to that conclusion, you

10 have looked at the cost of various kinds of renewable

11 technology, not limited to the State of Colorado, just

12 generally; is that correct?

13 A Industrywide, yes.

14 Q Industrywide. And you agree that there

15 is a pressure in the State of California, also, for

16 that state, to acquire the most cost-efficient and

17 low-cost renewable resources, correct?

18 A Yes.

19 MR. SOPKIN: May I approach?

20 A.L.J. JENNINGS-FADER: You may.

21 (Whereupon Exhibit No. 148 was marked for

22 identification.)

23 BY MR. SOPKIN:

24 Q Dr. Sheffrin, do you have Exhibit 148 --

25 A I do.
207
1 Q -- in front of you? And you're pretty

2 familiar with the California Public Utilities

3 Commission; is that true?

4 A Yes, I am.

5 Q Do you recognize what this is?

6 A Yes, I do.

7 Q Tell me what it is?

8 A It's a report from the California Public

9 Utilities Commission, a quarterly report, I believe,

10 stating where the utilities are in their acquisition

11 for meeting 33% of their energy from renewable

12 resources by 2020.

13 Q Okay.

14 MR. SOPKIN: Your Honor, I would seek

15 admission of Exhibit 148. I think it's a matter of

16 administrative notice. It is a California Public

17 Utilities Commission docket that can be accessed on the

18 web. And it's issued by the California Public

19 Utilities Commission, as opposed to it being an

20 advocacy pleading or something. And I believe

21 Dr. Sheffrin has verified the authenticity of this

22 document.

23 A.L.J. JENNINGS-FADER: Exhibit 148 for

24 identification has been offered. Voir dire or

25 objection. Mr. Douglas?


208
1 MR. DOUGLAS: Thank you, Your Honor.

2 Yes. I would object to the relevance of this purely

3 California data under the traditional goose/gander

4 rule. Mr. Sopkin --

5 A.L.J. JENNINGS-FADER: Is it goose

6 versus gander or --

7 MR. DOUGLAS: Mr. Sopkin spent

8 considerable time arguing against, and eventually

9 successfully, the admissibility of the California data

10 that the Trinchera Ranch presented and offered into

11 evidence. And now he wants to come back and present

12 his own California data, and I believe it's not

13 relevant, based on Your Honor's prior ruling.

14 A.L.J. JENNINGS-FADER: Any other party?

15 Mr. Sopkin.

16 MR. SOPKIN: I am going to have to use

17 that sometime. Well, the witness has testified that

18 she has general knowledge of the cost of renewable

19 resources, industrywide. And there is pressure in

20 California, just as there is in Colorado, for the state

21 to acquire the most cost-efficient and low-cost

22 renewable resources. The purpose of this document is

23 to show that California, despite these pressures, is

24 going-forward with the acquisition of solar thermal

25 resources. And it is a first quarter, 2010 document,


209
1 so it's pretty darn recent.

2 A.L.J. JENNINGS-FADER: I find the citing

3 authority of goose versus gander to be persuasive. Mr.

4 Sopkin, this is California data. It's no more

5 admissible now than it was earlier today.

6 MR. SOPKIN: That's fine. Thank you,

7 Your Honor.

8 A.L.J. JENNINGS-FADER: I'm sorry. So,

9 the objection is sustained. 148 is not admitted.

10 BY MR. SOPKIN:

11 Q Dr. Sheffrin, turning now to your

12 opinions with regard to the -- I think we've been

13 calling them, "the changed economic circumstances," the

14 demand forecast, natural gas price forecasts, higher

15 incremental costs of solar thermal, and carbon

16 legislation. Let me first turn to natural gas.

17 You would agree that, over the next 10

18 years, natural gas prices are volatile in that they can

19 have a large variance from average price?

20 A I would agree with that.

21 Q Then, in terms of the proposed

22 amendments, higher incremental cost of the solar

23 thermal plant, would you agree that one of the reasons

24 for that increased incremental cost is based on the

25 size of the project, the fact that the megawatt level


210
1 has been reduced from 250 to 125 megawatts?

2 A I believe it was just one of three

3 factors.

4 Q Right. And in terms of those three

5 factors, you don't know how much of the increase -- the

6 incremental price increase is related to that first

7 reason and how much of the incremental price increase

8 is related to the latter two reasons?

9 MR. DOUGLAS: Your Honor, I would object

10 at this point. I believe Dr. Sheffrin would love to

11 answer that question, had Public Service provided the

12 information that would have allowed her to look at

13 that, those three different factors and how much each

14 contributed to the increased bid price. That

15 information was not produced by Public Service. They

16 did produce the e-mail that set out what the three

17 reasons were, but no information about how they break

18 down.

19 So, for Mr. Sopkin to try to impeach the

20 witness, based on the fact they didn't give her the

21 information she would have needed to answer that

22 question, I believe is improper.

23 A.L.J. JENNINGS-FADER: Other parties?

24 Mr. Sopkin.

25 MR. SOPKIN: I am not trying to impeach


211
1 her. We stated, quite clearly, in our discovery

2 response that we don't know. We don't know. She

3 doesn't know. That's what I am trying to establish. I

4 am not -- we didn't withhold any information from

5 Mr. Douglas. I believe it was intimated in her

6 testimony that the technology cost itself has

7 increased. And I am simply trying to establish that we

8 don't know what portion of the price increase is based

9 on the economies-of-scale issue.

10 A.L.J. JENNINGS-FADER: Perhaps you might

11 ask the question in that way.

12 MR. SOPKIN: Okay.

13 A.L.J. JENNINGS-FADER: So, I will

14 sustain the objection as to form.

15 MR. SOPKIN: Okay.

16 BY MR. SOPKIN:

17 Q Dr. Sheffrin, in terms of the three

18 reasons that the bidder has provided for the increased

19 incremental cost of the solar thermal bid, you would

20 agree that you don't know how much of that increase is

21 due -- is divided among the three reasons?

22 A I do not know.

23 Q Okay. Thank you. In terms of the delay

24 in expected carbon legislation, you do believe that the

25 carbon legislation, cap and trade, or some type of a


212
1 carbon tax is likely to occur in the next 10 years,

2 correct?

3 A Yes, I agree some type is likely to occur

4 in the next 10 years.

5 Q And do you have any opinion about the

6 likelihood of the Environmental Protection Agency

7 regulating carbon in the event that the Federal

8 Congress does not act?

9 A I don't have an opinion on that.

10 Q Okay. And you do agree that individual

11 states -- that some individual states have not waited

12 for the Federal Congress to act, or the EPA to act.

13 That some states, in fact, have undertaken their own

14 effort to address carbon emissions from the power

15 plants?

16 A Yes. I understand that to be the case.

17 Q And do you believe that the State of

18 Colorado has the right to address carbon emission

19 without waiting for Federal regulation or legislation?

20 A I believe it is, in the face -- in the

21 lack of Federal legislation, each state seems to be

22 doing -- making their own decision on that.

23 Q You would agree that utilities should be

24 taking steps to plan for reducing their carbon

25 emissions in the future, because of the expectation of


213
1 carbon legislation?

2 A I agree that there are many steps that a

3 utility can take, in many ways, to do that, not just

4 one way to do that.

5 Q Okay. Now, I wanted to talk to you

6 about -- at some point you were asked about the

7 borrow-forward provision with regard to RESA dollars.

8 Do you recall that discussion?

9 A Yes.

10 Q All right. And I believe that you had

11 stated -- correct me if I am wrong -- that that has an

12 impact on ratepayers and nobody asks the ratepayers for

13 permission. Is that the gist of your testimony?

14 A That was one point.

15 Q Okay.

16 A I had a second point as well.

17 Q Well, let me address that first. Do

18 you -- as I recall, you did indicate that you have

19 reviewed Commission decisions in the RES compliance

20 plan cases; is that correct?

21 A Yes.

22 Q And also in the resource plan cases; is

23 that correct?

24 A Yes.

25 Q Okay. So, you do know that the


214
1 Commission has allowed Public Service Company to use a

2 borrow-forward provision as discussed?

3 A Yes. I understand that it has allowed

4 it, though, I don't know if there's any limitation

5 that's placed on that. And my answer was in response

6 to how long can it go on, and how negative can the

7 balance be, and how expensive can the interest

8 accumulate to be.

9 Q And do you know whether, in those cases

10 that have discussed the borrow-forward provision,

11 whether the Office of Consumer Counsel was part of that

12 case?

13 A I would imagine they would have been.

14 Q And do you know whether the Office of

15 Consumer Counsel purports to represent consumers in the

16 State of Colorado?

17 A I believe that is one of their primary

18 job functions.

19 Q And do you know whether any Public

20 Service Company ratepayers intervened in those cases

21 that discussed the borrow-forward provision?

22 A I don't have that information.

23 Q Okay. Now, in terms of the impact, this

24 impact on ratepayers -- you were concerned about impact

25 on ratepayers, correct?
215
1 A Yes.

2 Q And when you were at CISO, you proposed a

3 rule to be adopted by the Federal Energy Regulatory

4 Commission for, essentially, a five-year loan from

5 ratepayers to generators, to help offset the capital

6 investment required for generator trunk lines; is that

7 correct?

8 A Yes. With the caveat that there had to

9 be a general subscription so that we knew generators

10 were willing to pay -- or willing to locate their

11 resources, with some certainty, so only after that

12 certainty.

13 Q Right. And that certainty you are

14 talking about, if it passed a certain threshold, 75% of

15 subscription of the proposed generator trunk line, then

16 the California ISO would proceed to build that trunk

17 line to access that group of renewables, even though

18 the build-out might happen over 5 to 10 years, correct?

19 A (Nodding in the affirmative.)

20 Q And, in fact, you supported that rule

21 proposed by California ISO, that it be accepted or

22 adopted by the FERC, correct?

23 A I did.

24 Q All right. And do you know if ratepayers

25 were asked to approve that particular rule?


216
1 A Yes. We had a very extensive stakeholder

2 process in that, in which both the public utilities

3 commission and a number of private citizens did

4 weigh-in with comments, as well as whatever process --

5 as well as the process that the Federal Energy

6 Regulatory Commission uses to get input.

7 Q And if it's true that, with regard to the

8 Colorado borrow-forward provision, that the Office of

9 Consumer Counsel intervened and some ratepayers

10 intervened in those proceedings, and stakeholders were

11 involved, would you withdraw your comments that the

12 ratepayers were not asked?

13 A For the borrow-forward provision?

14 Q (Nodding head in the affirmative.)?

15 A Again, I think my answer would depend

16 very much on the limits of that, the timing, how

17 negative can it be, how much interest expense would

18 they be willing to pay. So, I'm not sure if those

19 precise questions were answered in the proceeding.

20 Q And in terms of the ratepayer impact,

21 would you agree that when it comes to a Commission

22 decision with regard to acquisition of renewable

23 resources, that the cost of resources is not the only

24 issue? You also look at public policy considerations?

25 A Among other factors, such as were there


217
1 other alternatives available, yes, other combinations

2 of alternatives, yes, all of those are important

3 elements.

4 Q And you made the comment that, with

5 regard to Exhibit 137, that Public Service can meet the

6 Renewable Energy Standard, the RES standard, through

7 2029, based on the existing plants, correct?

8 A Yes.

9 Q But I believe your testimony -- you

10 testified previously that when you were working at

11 SMUD, that you thought it a good idea to add as much

12 renewable resources as possible, and there was no RPS

13 standard at that time, correct?

14 A No, but there was a budget constraint,

15 with rates not rising. So, there was a budget

16 constraint involved.

17 Q Okay. One of your opinions, as I recall,

18 is that -- correct me if I am wrong -- that a rational

19 person would reevaluate the decision with regard to the

20 San Luis Valley transmission line and essentially wait

21 for more information; is that correct?

22 A Yes, to make a better informed decision.

23 Q Okay. What about irrational people like

24 me? So, in terms of, I guess, waiting and -- I'm

25 sorry -- waiting for more information, you would agree


218
1 that gas price and energy forecasts are pretty much

2 constantly changing, correct?

3 A They are, but we do forecast those, and

4 we use the most current information to forecast them,

5 including fundamentals such as energy efficiency

6 standards and fundamentals such as the amount of

7 reserves and technology which might impact future gas

8 prices. All those should go into the equation in

9 looking at the forecast, and my opinion is you should

10 use the most current information.

11 Q But, at some point, just out of pure

12 pragmatics, a Commission has to make a decision on a

13 CPCN line application, for example?

14 A I'm sorry. Tell me again in what

15 context? With good information or without good

16 information?

17 Q Well, whether -- let me not put it in

18 those terms. That even though information is pretty

19 much constantly changing, that a state utility

20 commission has to make a decision at some point with

21 regard to a CPCN application?

22 A It does, but there is different ways to

23 manage the uncertainty involved in that decision.

24 Q And it's your opinion that transmission

25 lines are an irreversible decision?


219
1 A Yes, it is.

2 Q And, just briefly, what do you mean by

3 that?

4 A Once you decide to build a transmission

5 line, it has a very long life to it. It impacts the

6 environment, impacts the land, okay? And, so, you

7 should make those decisions with a lot of care. And if

8 there is uncertainty as to why you would need it, you

9 should wait until you have the best available

10 information before entering into that large

11 irreversible investment. You can't sort of take back

12 the decision by taking the line down, or, usually, that

13 is not done.

14 Q But would you agree that there can be

15 some positive effects to making an investment decision,

16 for example, a transmission upgrade can be viewed as a

17 type of insurance policy against extreme events,

18 correct?

19 A It can be used as a type of insurance

20 policy, but there may be other types of insurance

21 policies that are available to the decision-maker.

22 Q You do agree that providing the

23 additional capacity incurs capital and operating costs,

24 but the benefit is that the impact of extreme events is

25 reduced or eliminated, correct?


220
1 A My fundamental view, you have to compare

2 the costs and benefits on a case-by-case basis. The

3 circumstances can change.

4 Q If you turn to page 73 of your

5 deposition. Are you there?

6 A Yes, I am.

7 Q Page 73, line 2: Question: "And you

8 agree that providing the additional capacity incurs a

9 capital and operating cost but the benefit is that the

10 impact of extreme elements is reduced or eliminated,

11 correct?" I said that's -- just a second. Next

12 sentence that I read, your answer is, "Oh, yes, I see

13 that." "Question: Do you agree with that?" "Answer:

14 Yes." That was your testimony, correct?

15 A Yes, that was my testimony. I don't

16 think that's the same question you just asked me.

17 Q Okay. Well, we'll let the record decide.

18 A Okay.

19 Q Now, in terms of this issue of

20 irreversible decisions, you were worried that there can

21 be regret or bad news that comes later, correct?

22 A Yes. That's a very important principle

23 in economic theory, as well as in financial theory.

24 Q Okay. But you would also agree that

25 certain decisions not to invest can lead to regret as


221
1 well, correct?

2 A I think you would have to explain to me

3 the circumstance? What I was referring to when I

4 talked about bad news or regret has been -- is the Ben

5 Bernanke article.

6 Q Right. I am not referring to that. I am

7 just referring to the testimony you gave here.

8 A Okay.

9 Q You agree that it can go both ways?

10 There can be regret from the failure to make a positive

11 investment decision and there can be regret from making

12 a positive investment decision, correct?

13 A It can go both ways and would have to

14 depend on the circumstances of the situation and the

15 value -- I mean, what Ben Bernanke did, and the

16 profession does, is calculate what the impact of the

17 regret might be. So you would have to do that

18 calculation on a case-by-case basis.

19 Q Okay. And as an example, in terms of

20 transmission lines, you believe that had the California

21 Path 15 transmission improvement been built prior to

22 the 2001 energy crisis, California would have saved $30

23 billion, correct?

24 MR. DOUGLAS: Your Honor, at this point I

25 am going to object as relevant. We're getting pretty


222
1 far afield from the actual issues in this case,

2 whether -- the decision to build or not build some

3 transmission line in California at some point in the

4 past. There's been no tie, at this point, as to how

5 that relates to the issue we're here to talk about

6 today, so I would object as on relevance.

7 A.L.J. JENNINGS-FADER: Anyone else?

8 Mr. Sopkin.

9 MR. SOPKIN: Your Honor, I think it's

10 entirely relevant. The context of her testimony on

11 direct examination was specifically about the

12 transmission line in this case, whether it could lead

13 to bad news or regret. And I am simply trying to

14 establish, in the context of a transmission line, that

15 the regret can go the other way. In fact, this witness

16 has expressed her own regret going the other way.

17 MR. DOUGLAS: Your Honor, I think the

18 question was whether there was regret on the line in

19 California. If you are going to ask the question about

20 whether there can be regret here, I think that's a

21 different question than was asked.

22 A.L.J. JENNINGS-FADER: I am going to

23 sustain the objection. I think there's a sufficient

24 response in the fact it can go either way. One can

25 draw what conclusion one will from argument on that.


223
1 BY MR. SOPKIN:

2 Q Well, let me ask you this, Doctor: Would

3 you agree, hypothetically, that the decision to not

4 build a transmission line could result in certain

5 renewable resources that have net economic benefits to

6 Colorado consumers and producers never being built?

7 A I'm sorry. I didn't understand that

8 question. If you could rephrase it for me?

9 Q Okay. Would you agree, hypothetically,

10 that the decision to not build a transmission line

11 could result --

12 A.L.J. JENNINGS-FADER: I'm sorry. Not

13 building this transmission line?

14 MR. SOPKIN: A hypothetical transmission

15 line that receives renewable resources.

16 A.L.J. JENNINGS-FADER: In Colorado?

17 MR. SOPKIN: In Colorado.

18 A.L.J. JENNINGS-FADER: Okay. Thank you.

19 MR. SOPKIN: The Colorado part is not

20 hypothetical. The hypothetical is the rest of it.

21 BY MR. SOPKIN:

22 Q Hypothetically, the decision to not build

23 a hypothetical transmission line that serves renewable

24 resources could result in certain renewable resources

25 that have net economic benefits to Colorado consumers


224
1 and producers not being built?

2 MR. DOUGLAS: Your Honor, I am going to

3 object. That calls for speculation, the way it's

4 phrased. I don't know how it relates to anything that

5 we're talking about. He's talking completely in the

6 abstract and has many assumptions that haven't been

7 explained or discussed or tied to this case.

8 A.L.J. JENNINGS-FADER: Anybody? Mr.

9 Sopkin.

10 MR. SOPKIN: I tried to talk in the

11 nonabstract. That was objected to because it was

12 nonabstract. Now I am trying to talk in the abstract,

13 just to go to the general notion that, yes, that can

14 happen, in a hypothetical factual situation.

15 A.L.J. JENNINGS-FADER: I will allow the

16 question.

17 BY MR. SOPKIN:

18 Q Do you understand the question?

19 A Are you asking my opinion if that can

20 happen?

21 Q Yes.

22 A And my opinion is it depends. There's a

23 lot of potential renewable resources out there. We

24 can't build transmission lines to all of them. We need

25 to make a very careful analysis and build what we call


225
1 the "least-regrets line." But you can build a line

2 that's underutilized, and that can be harmful as well

3 as not building a line to a very, you know,

4 commercially viable place. And, so, I guess my answer

5 is, again, it depends on the circumstances. And we

6 can't build all of the transmission lines to all of the

7 renewables, potential renewables zones.

8 Q But do you allow that one possibility is

9 that beneficial renewable resources, that have net

10 economic benefits -- and I think you understand that,

11 as an economist -- may not be built if a transmission

12 line is not built?

13 A Hypothetically it could happen.

14 Q And one opportunity cost for waiting is

15 that, for example, Colorado consumers might not be able

16 to use Federal tax credits, or other Federal incentives

17 for beneficial energy resources, if transmission is not

18 built for renewable energy fast enough and those

19 Federal dollars go away?

20 A.L.J. JENNINGS-FADER: I am going to say

21 that I can't follow the question. I mean the witness,

22 who is undoubtedly smarter than I, probably can but I

23 literally cannot follow the question.

24 MR. SOPKIN: Okay.

25 BY MR. SOPKIN:
226
1 Q Would you agree that Federal incentives

2 for renewable energy might, in fact, disappear over the

3 next several years?

4 A I understand that Federal incentives for

5 renewables, which apply to all different types of

6 renewables, may expire if there isn't additional action

7 by Congress in the next five years.

8 Q Do you believe that a utility, well, for

9 example, I believe you stated your opinion that no need

10 has been shown to build a transmission line beyond the

11 2007 Resource Plan, the 60 to 90, 185 megawatts,

12 correct?

13 A Yes.

14 Q All right. And do you believe that a

15 utility should have renewable resource contracts in

16 hand as a prerequisite to justify a transmission line?

17 A I believe that is one important element

18 in the justification.

19 Q Okay.

20 A Because it's no longer just hypothetical

21 and speculation, but it is -- both parties have put

22 down their intent, and in dollars, on the line. So, we

23 know we're building the line to actual projects.

24 Q While you were at California ISO, did you

25 support California ISO approving large transmission


227
1 projects that would serve potential renewable resources

2 located in a geographic cluster?

3 A I would have to answer that question,

4 yes, but in a very specific process, which helped

5 identify what we call, "least-regrets lines." So,

6 those would be needed regardless of a whole variety of

7 scenarios, and would be highly subscribed as well.

8 Q Well --

9 A.L.J. JENNINGS-FADER: Pardon me.

10 Highly subscribed?

11 THE WITNESS: Yes.

12 A.L.J. JENNINGS-FADER: Okay. Thank you.

13 Sorry.

14 MR. SOPKIN: That's okay.

15 BY MR. SOPKIN:

16 Q For example, while you were at California

17 ISO, it approved the $1.8 billion, and you are going to

18 help me with this pronunciation, the --

19 A Tehachapi.

20 Q Tehachapi transmission plan that will

21 interconnect an expected 4350 megawatts of renewable

22 energy; is that correct?

23 A Yes.

24 Q And those 4350 megawatts of expected

25 renewable resources were not in existence when


228
1 California ISO approved the Tehachapi transmission

2 plan, correct?

3 A I'm sorry. Were they in existence?

4 Q In existence.

5 A There were purchase powers agreements for

6 them, so, there was a high probability that they would

7 be built.

8 Q They all had purchase power --

9 A A large majority of them did, yes.

10 Q Okay. You have touted that Tehachapi

11 transmission plan as an example of proactive

12 transmission planning for future clusters of renewable

13 generation, that remove the problem of transmission

14 planning that plans for reliability upgrades only and

15 economic upgrades to be market driven; is that correct?

16 A I'm sorry. What was the question again?

17 Q Well, I will tell you what. Can I try to

18 refresh the witness' recollection?

19 A.L.J. JENNINGS-FADER: You certainly

20 may.

21 (Discussion off the record.)

22 A.L.J. JENNINGS-FADER: Back on the

23 record. You are using this to refresh her

24 recollection?

25 MR. DOUGLAS: If I can interject. I


229
1 believe the witness asked him to restate the question.

2 I don't think, at this point, there's a basis for

3 response unless he reasks the question.

4 MR. SOPKIN: I can reask.

5 BY MR. SOPKIN:

6 Q The question is, in fact, you have touted

7 that Tehachapi transmission plan as an example of

8 proactive transmission planning for future clusters of

9 renewable generation, that removes the problem of

10 transmission planning that plans for reliability

11 upgrades only and economic upgrades to be market

12 driven, correct?

13 A I'm sorry. Could you show me what page

14 you are asking me to take a look at?

15 Q Okay. What I have handed you -- correct

16 me if I am wrong -- this is a PowerPoint presentation

17 given at the APEX 2007 program, October 15, 16, 2009

18 and this is your PowerPoint presentation. There are no

19 pages numbers on this, but if you would turn to the

20 thirteenth page in. Do you see that?

21 A Yes.

22 Q Why don't I do it this way: California

23 ISO, well, in terms of the problem that is identified

24 as planning for reliability upgrades only and economic

25 upgrades to be market driven, you have touted the ISO


230
1 proposed solution of proactive transmission planning

2 for future clusters of renewable generation; is that

3 correct?

4 A Yes, I have, but I just would point out,

5 on the slide before, we talked about there being

6 significant potential development in that area as

7 meeting -- with meeting a commercial test of sufficient

8 generator interest.

9 Q Understand.

10 A Yes.

11 Q Thank you.

12 MR. SOPKIN: One moment, Your Honor.

13 A.L.J. JENNINGS-FADER: All right.

14 (Pause.)

15 BY MR. SOPKIN:

16 Q And in addition to that, you have

17 advocated a distinct new category of transmission

18 serving multiple power plants, in areas where the

19 energy sources cannot be transported, in order to

20 facilitate capturing economies of scale associated with

21 renewable energy development and promoting overall

22 development of diverse renewable resource

23 opportunities, correct?

24 A Yes. Again, though, the criterion, which

25 lines you select, are very specific.


231
1 Q Okay.

2 MR. SOPKIN: Your Honor, may I have one

3 moment?

4 A.L.J. JENNINGS-FADER: You may.

5 (Discussion off the record between Public

6 Service Company's representatives.)

7 MR. SOPKIN: I have no further questions,

8 Your Honor.

9 A.L.J. JENNINGS-FADER: Thank you.

10 Mr. Dougherty, on behalf of Tri-State, any questions of

11 this witness?

12 MR. DOUGHERTY: No questions, Your Honor.

13 A.L.J. JENNINGS-FADER: Thank you.

14 Ms. Mandell?

15 MS. MANDELL: No questions, Your Honor.

16 Thank you.

17 A.L.J. JENNINGS-FADER: Thank you. And I

18 think I already heard from the OCC, no questions and

19 also from Pole Canyon.

20 MR. DAVIDSON: No questions, Your Honor.

21 A.L.J. JENNINGS-FADER: Thank you. No

22 other party had indicated an interest in cross

23 examining this witness in the prefiling. Is there

24 anyone who now wishes to cross examine, based on the

25 testimony given today?


232
1 MS. HICKEY: No, but, thank you.

2 A.L.J. JENNINGS-FADER: Okay. Redirect?

3 MR. DOUGLAS: Thank you, Your Honor.

4 REDIRECT EXAMINATION

5 BY MR. DOUGLAS:

6 Q All right. Dr. Sheffrin, you're almost

7 there.

8 A Okay.

9 A.L.J. JENNINGS-FADER: Off the record.

10 (Discussion off the record.)

11 A.L.J. JENNINGS-FADER: We'll be back on

12 the record.

13 BY MR. DOUGLAS:

14 Q Dr. Sheffrin, you were asked, on cross

15 examination, about your support for a couple of

16 transmission lines that I am not going to attempt to

17 pronounce, in the past, in your work with ISO in

18 California. Do you recall that?

19 A Yes, that Tehachapi project.

20 Q That was one of them. And I think there

21 was one other that Mr. Sopkin asked you about, but does

22 your support for those specific projects in California

23 indicate that you support the proposed project in this

24 case?

25 A No, it does not, because the


233
1 circumstances are very different and it, really, I look

2 at each transmission addition based upon the

3 circumstances for each case.

4 Q And how are the circumstances of the

5 proposed project in this case different than those

6 lines that you supported in California?

7 A There are a number of differences in the

8 Tehachapi area. There were signed purchased power

9 agreements for wind projects. We had done a

10 comprehensive study to ensure that, under a variety of

11 futures, that that would be a least-regrets line, that

12 it would show up -- that line would show up, we had a

13 high degree of confidence it would be highly utilized.

14 So, those were all criteria that made the Tehachapi

15 transmission line a no-regrets line.

16 I cannot see similar types of studies or

17 a high degree of likelihood associated with this

18 particular transmission line.

19 Q Okay. And what did you see, as far as

20 confidence in your opinion that it would be

21 sufficiently utilized commercially?

22 A My concern is that we don't know really

23 how much development there will be of the solar

24 thermal.

25 A.L.J. JENNINGS-FADER: I'm sorry. I'm


234
1 sorry, Doctor. He asked, I believe, about the

2 California line, what you saw in California that gave

3 you the high degree of confidence that it would be

4 used, the line would be used. That was the question.

5 MR. DOUGLAS: That wasn't the question I

6 intended.

7 A.L.J. JENNINGS-FADER: Well, that's the

8 question you asked.

9 MR. DOUGLAS: Oh, okay. Well, then, let

10 me reask it. Thanks for the clarification, Your Honor.

11 BY MR. DOUGLAS:

12 Q Dr. Sheffrin, in your review of this

13 proposed transmission line, what degree of confidence

14 do you have that it will be utilized as, I think, you

15 said?

16 A.L.J. JENNINGS-FADER: Thank you.

17 THE WITNESS: Again, the circumstances in

18 this case, I would look to the degree of likelihood

19 that the three solar thermal plants would be built,

20 because that's what the need is based on in this case.

21 And my review of the likelihood of the need for those

22 three solar thermal plants is very low. So, I would

23 have to say that I don't have the same degree of

24 confidence that there will be that development of

25 generation in a timely manner, and, therefore, the line


235
1 would be utilized fully.

2 BY MR. DOUGLAS:

3 Q And you mentioned the commercial test of

4 sufficient generator interest, I believe. Is that

5 something that's as simple as just looking at the

6 generation interconnection queue and seeing if there's

7 some bids in there?

8 A No, it isn't. To define a least-regrets

9 line, first we do a number of scenario studies to make

10 sure that line shows up in all of those scenarios.

11 Then, we look at future commercial interest, either

12 with signed purchased power agreements or a signed

13 generator interconnection agreement, which means all of

14 the studies have been done to connect those potential

15 generators, and the generator has agreed to pay for the

16 upgrade costs. And, so, they have put down a deposit,

17 shown that they will pay -- have site control, so

18 there's a high degree of certainty. Simply looking at

19 the queue, depending on what the rules are to stay in

20 the queue, has not been a good indicator, in my

21 experience.

22 Q And I believe you told Mr. Sopkin, in the

23 context of the trunk line and the potential loan to

24 generators for part of the cost of the trunk line, that

25 the level of subscription from the -- of this


236
1 commercial interest required -- was something in the

2 area of 75%?

3 A When we were originally talking it over

4 with stakeholders, I believe it was 75%. I think it's

5 gone through an evolution since then, and I believe it

6 is 25%, with a signed PPA, and another 25% with either

7 an executed LGIP -- I'm sorry -- large generator

8 interconnection agreement.

9 Q All right. And have you seen any

10 evidence in this case of that level of subscription or

11 commercial interest in the capacity of the proposed

12 project?

13 A No, I haven't. The only need I have seen

14 are for those three solar thermal plants, which I feel

15 are highly speculative.

16 Q On top of what's in the 2007 Resource

17 Plan?

18 A Yes. All of this is on top -- my

19 assumption that the resource plan acquisitions are in

20 place.

21 Q Or I guess, technically, some reduction

22 of that to maybe 60, 90 or 185?

23 A Yes. Depending on those scenarios.

24 Q Okay. And as far as -- you testified or

25 Mr. Sopkin asked you about the waiting and the


237
1 uncertainty of the least-regrets line. And I believe

2 you said to him there were a number of ways to manage

3 that uncertainty involved in a CPCN decision, where

4 there's this much uncertainty. What are the ways to

5 manage that uncertainty?

6 A There's a number of very classic ways to

7 manage future uncertainty with regard to large

8 irreversible investments like transmission. One is to

9 stay flexible, only do a small upgrade, if it can meet

10 your immediate needs. So, stay flexible, stay small,

11 look at all of your alternatives and finally wait and

12 get the best information possible before you make that

13 irreversible decision.

14 MR. DOUGLAS: Thank you. I have nothing

15 further.

16 A.L.J. JENNINGS-FADER: Thank you.

17 Dr. Sheffrin. I would very much like to thank you for

18 appearing today and providing testimony. It's been

19 extremely helpful and you are excused. Thank you.

20 THE WITNESS: Thank you, Your Honor. It

21 was my pleasure to come here and I certainly enjoyed

22 the hospitality.

23 A.L.J. JENNINGS-FADER: It was certainly

24 welcoming, yes. And just as a reminder, if you could

25 just leave all the officially marked exhibits at the


238
1 front, we would appreciate it. Thank you very much.

2 Trinchera Ranch, anything further?

3 MR. DOUGLAS: No, Your Honor.

4 A.L.J. JENNINGS-FADER: No other party

5 had indicated an interest in presenting witnesses in

6 this proceeding. Public Service, anything by way of

7 rebuttal?

8 MR. SOPKIN: No, Your Honor.

9 A.L.J. JENNINGS-FADER: Tri-State?

10 MR. DOUGHERTY: No rebuttal witnesses,

11 Your Honor.

12 A.L.J. JENNINGS-FADER: Thank you. I

13 believe that puts us at the conclusion of the

14 evidentiary record. And when I say that, I mean really

15 the conclusion of the evidentiary record in this

16 proceeding.

17 I'm just going to go over, briefly, where

18 we ended up by way of additional exhibits. We had gone

19 through and including 131 in the original proceeding,

20 so I am going to pick up with Exhibit 132. So,

21 Exhibits 132, 133, 137, 138, 139, 140, 141, 143, and

22 144 have been admitted into the evidence in this

23 proceeding. We discussed exhibits all of the way to

24 148, but only those numbers I have given have been

25 admitted into the evidentiary record in this


239
1 proceeding.

2 Anything further before I close the

3 evidentiary record from any party?

4 MR. DOUGLAS: Your Honor, I do have one

5 more small thing to the record.

6 A.L.J. JENNINGS-FADER: Tiny.

7 MR. DOUGLAS: If I may, very small.

8 A.L.J. JENNINGS-FADER: Tiny.

9 MR. DOUGLAS: It is tiny. Your Honor,

10 Trinchera Ranch had originally designated Mr. Bill

11 Powers as an additional witness in this case. Based on

12 Your Honor's ruling on the motion in limine, his

13 testimony was excluded in its entirety. I just want to

14 state for the record that, at this time, had he not

15 been excluded, we would have called him and

16 incorporated the notice of the testimony that he

17 intended to give as an offer of proof for the record.

18 A.L.J. JENNINGS-FADER: Okay. That's

19 certainly satisfactory, Counsel, so note that for the

20 record. And anything further before I close the

21 evidentiary record?

22 MR. SOPKIN: One moment, Your Honor.

23 A.L.J. JENNINGS-FADER: Certainly. I'm

24 sorry. Just for the record, Mr. Douglas, I just want

25 to be sure that the record is clear, that you are


240
1 referring to, with respect to the offer of proof,

2 Trinchera Ranch's notice of witness testimony that was

3 filed the 22nd of April, 2010?

4 MR. DOUGLAS: Yes, that's correct, Your

5 Honor.

6 A.L.J. JENNINGS-FADER: Thank you. I

7 just wanted to get that clear.

8 MR. SOPKIN: Your Honor --

9 A.L.J. JENNINGS-FADER: Yes, sir.

10 MR. SOPKIN: I've just been caucusing

11 with my brothers here, I guess the feeling is we would

12 perhaps appreciate some guidance as to where we go from

13 here with regard to this docket's relation to the

14 application docket, on the application for the amended

15 2007 Resource Plan. If you have any thoughts as to --

16 I don't know if I am going to be more specific than

17 that, but obviously there has been an oral decision

18 rendered by the Commission, it has not come out yet in

19 writing. And at this point, we don't know if anybody

20 is going to be filing Triple Rs, whether the time line

21 of this docket is somehow affected by that docket.

22 A.L.J. JENNINGS-FADER: I am prepared to,

23 actually, to respond to that. From my perspective,

24 before I do, I wish to know whether that involves

25 maintaining -- holding open the evidentiary record for


241
1 any reason?

2 MR. SOPKIN: We do not believe --

3 MR. DOUGHERTY: (Shaking head in the

4 negative.)

5 MR. SOPKIN: -- that we need to hold it

6 open.

7 A.L.J. JENNINGS-FADER: In that event, I

8 would now close the evidentiary record or perhaps I am

9 premature.

10 MR. FLANAGAN: Oh, no, no. This was the

11 point I was trying to speak to this morning. I mean,

12 we, depending on what happens -- if you are going to

13 close the record, you are going to close the record,

14 but depending on what happens in 447, we think it might

15 generate a motion to reopen the record here. And we

16 wanted to make that very, very clear this morning; that

17 we think they have tied these two proceedings together

18 by claiming it was the basis to continue this -- to

19 continue an earlier hearing, and it was certainly one

20 of the noticed reasons for the reopening.

21 And, so, while we think that's a corner

22 they have put themselves into, it's nothing that's not

23 on the administrative law judge. It's on the agents of

24 the applicant, and specifically Public Service Company

25 in this proceeding, and depending on what happens


242
1 there, there might well be a motion to reopen the

2 record by somebody who rhymes with Trinchera.

3 A.L.J. JENNINGS-FADER: That's right.

4 Whose initials are Trinchera Ranch.

5 MR. FLANAGAN: Yeah.

6 A.L.J. JENNINGS-FADER: We'll close the

7 evidentiary record at this point. I have identified

8 the exhibits which have been offered into evidence.

9 The testimony, given over the last couple of days of

10 hearing, constitute the evidentiary record and the

11 reopened record is closed.

12 Now, sort of addressing the conglomerate

13 of questions, and the points, as far as I am concerned,

14 speaking for myself only -- I can't speak for the

15 Commission on this point -- there is no relationship at

16 this juncture directly tying what happens in the other

17 docket, which is Docket No. 10D-377E, to this

18 proceeding. I mean, I foresee no reason to hold in

19 abeyance coming to some decision in this proceeding,

20 this instant proceeding on the application, pending

21 final Commission decision, even involving Triple R in

22 the other docket, Docket No. 10A-377I, which I think,

23 Mr. Sopkin, is the essence of your question.

24 MR. SOPKIN: It is.

25 A.L.J. JENNINGS-FADER: To Mr. Flanagan's


243
1 point, I understand -- I hope everyone does -- we're

2 all on notice that there is the possibility that the

3 Commission may do something in the other proceeding,

4 which will warrant someone's filing a motion to reopen

5 the evidentiary record; that, should it occur, will be

6 handled in due course. But it does not, in any way,

7 affect what happens today, nor with respect to the

8 record. So, I am not holding anything open. It's

9 closed. What happens in the future is as it will be.

10 So, I don't know -- although, we all understand,

11 Mr. Flanagan, we're all on notice about what the

12 situation is.

13 MR. FLANAGAN: Well, even in this docket,

14 something happened this morning in terms of there was

15 an indication on the Commission's docket next week,

16 that they are considering changing from an initial

17 Commission decision to an initial --

18 A.L.J. JENNINGS-FADER: Recommended

19 decision.

20 MR. FLANAGAN: To a recommended decision

21 by the --

22 A.L.J. JENNINGS-FADER: By an unnamed

23 administrative law judge.

24 MR. FLANAGAN: Right. And while we don't

25 claim to be experts in what goes on up here, it appears


244
1 to be rather unique. So, things are moving rather

2 quickly that we don't claim to understand, or know how

3 to react to, but we will do the best we can with what

4 we've got.

5 A.L.J. JENNINGS-FADER: As you have

6 always done to-date, right?

7 MR. FLANAGAN: Yeah.

8 A.L.J. JENNINGS-FADER: On that point,

9 everybody, the Commission will -- that is a Commission

10 decision. And as to that, I can make no comments. But

11 that's why I am very careful. Insofar as I am

12 concerned, that's the situation; that if -- that it's

13 unnecessary to wait for a final decision in Docket No.

14 10A-377E before coming to a decision in the instant

15 application docket. That's just one person speaking.

16 MR. DOUGHERTY: Your Honor, then I would

17 be so bold to reask the question that I asked in

18 February, at the end of the first hearing. Have you

19 any sense of when the decision may render in this

20 docket?

21 A.L.J. JENNINGS-FADER: I think my answer

22 in February was no, and I think my answer in July is

23 no. So, it will be difficult to impeach me since I'm

24 giving the same answer. Anything further? On a

25 serious note, I am going to apologize for devolving to


245
1 levity here at the end. Mr. Sopkin.

2 MR. SOPKIN: As I recall, we have a

3 statement of position due a week from today.

4 A.L.J. JENNINGS-FADER: Correct, the

5 specifics of which are laid out in some decision.

6 MR. SOPKIN: Yeah.

7 A.L.J. JENNINGS-FADER: And I think it's

8 in the decision from May 17th. And parties are free

9 to, if they wish to do so, address the additional

10 questions which are posed, and there is a 20-page

11 limit.

12 MR. SOPKIN: 20-page limit.

13 A.L.J. JENNINGS-FADER: Which I believe

14 is stated in the order.

15 MR. SOPKIN: Okay. Thank you.

16 A.L.J. JENNINGS-FADER: In fact, yes,

17 here we have paragraph 26, Decision R10-0486-I, lays

18 out the date, what the parties may wish to do by way of

19 supplemental briefing, including two questions that are

20 requested that parties may address if they wish to do

21 so.

22 MR. SOPKIN: Could I ask just one more

23 question?

24 A.L.J. JENNINGS-FADER: You may ask many

25 more questions.
246
1 MR. SOPKIN: With regard to that, the

2 last time that briefs were due, there was a request

3 made by one of the parties to this docket to increase

4 the page limit, and I believe it was just a day or two

5 before it was due. And it was granted. And I think we

6 all exercised that, but I would simply, I guess, ask

7 the parties, if they are going to request that, to

8 request it in advance as opposed to the day before,

9 because that made life somewhat awkward.

10 A.L.J. JENNINGS-FADER: I think that's an

11 excellent suggestion, although we only have one

12 calendar week. If parties are going to request -- one

13 or more parties wishes to request an increase in the

14 page limit, I would like to have that in a formal

15 motion by the 4th of August, which is next Wednesday, I

16 mean, given that we only have a week. I am trying to

17 be reasonable on both sides.

18 MR. SOPKIN: Sure.

19 A.L.J. JENNINGS-FADER: And I will add

20 that, if such a motion is filed, and if such a motion

21 is granted, whatever the page limit is, we'll apply it

22 across-the-board to everyone. I am not going to favor

23 the movant over the other parties.

24 MR. SOPKIN: Thank you.

25 A.L.J. JENNINGS-FADER: Actually, I'm


247
1 going to restate. Let's make that Tuesday the 3rd.

2 E-mail will suffice. Anything else? Mr. Dougherty?

3 MR. DOUGHERTY: Nothing further, Your

4 Honor.

5 A.L.J. JENNINGS-FADER: Mr. McGann/Mr.

6 Sopkin?

7 MR. SOPKIN: Nothing further.

8 MR. SANTISI: No, thank you, Your Honor.

9 A.L.J. JENNINGS-FADER: Counsel?

10 MR. SCHLESINGER: No thank you.

11 A.L.J. JENNINGS-FADER: Anybody?

12 MR. DAVIDSON: No.

13 MR. DOUGLAS: No, Your Honor.

14 A.L.J. JENNINGS-FADER: Well, you all,

15 once yet again, I wish to say that I am very

16 appreciative of the fact that each of you who has

17 participated in this proceeding has done a, in my

18 opinion, bang up job, and the record, I think, will

19 reflect excellent advocacy and good witnessing by

20 participants in this case. Thank you, each of you

21 individually. Thanks to your witnesses as well. We

22 are adjourned.

23 MR. DOUGLAS: Thank you, Your Honor.

24 MR. SOPKIN: Thank you.

25 (Whereupon these proceedings were


248
1 concluded at 3:41 p.m. on July 30, 2010.)

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249
1 CERTIFICATION

2 STATE OF COLORADO )

3 CITY AND COUNTY OF DENVER )

5 We, Harriet Weisenthal and James Midyett, do

6 hereby certify that we were present and reported in

7 stenotype the proceedings in the foregoing matter; that

8 we thereafter reduced our stenotype notes to

9 typewritten form, with the aid of a computer, composing

10 the foregoing transcript; further, that the foregoing

11 official transcript is a full and accurate record of

12 the proceedings in this matter held at Denver, Colorado

13 on July 30, 2010.

14 FILED at Denver, Colorado _________________.

15

16

17

18 ___________________________
Harriet Weisenthal
19

20

21

22

23 ___________________________
James Midyett
24

25