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E 000003214
ORIGINAL

l Roi I. Lusk
Principal Assistant City Attorney
Jennifer J. Slash
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Senior Assistant City Attorney
Michael G. Rankin
3 CITY ATTORNEY
P.O. Box 27210
4 Tuc so n, AZ 8 5 7 2 6 7 2 1 0
Telephone: (520) 79 l 422 l
5 Fax: (520) 6239803
Roi.Lusk@lucsonz1z.gov
Jennifer.Stash@tucsonaz.eov
6 Attorneys for City of Tucson

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BEFORE THE ARIZONA CORPORATION COMMISSION
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COMMISSIONERS:
9
ROBERT "BOB" BURNS - CHAIRMAN
10 BOYD DUNN
SANDRA D. KENNEDY
ll JUSTIN OLSON
LEA MARQUEZ PETERSON
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13 IN THE MATTER OF THE APPLICATION Docket No. E-01933A- 19-0028

OF TUCSON ELECTRIC POWER
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COMPANY FOR THE ESTABLISHMENT CITY OF TUCSON' S NOTICE OF
15 OF JUST AND REASONABLE RATES AND FILING DIRECT TESTIMONY OF
CHARGES DESIGNED TO REALIZE A MICHAEL CATANZARO (REVENUE)
16 REASONABLE RATE OF RETURN ON
THE FAIR VALUE OF THE PROPERTIES
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OF TUCSON ELECTRIC POWER
18 COMPANY DEVOTED TO ITS
OPERATIONS THROUGHOUT THE STATE
19 OF ARIZONA AND FOR RELATED
20
APPROVALS

21 The City of Tucson ("City"), hereby provides notice of the filing of Michael Catanzaro's
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direct testimony in the above referenced matter.
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RESPECTFULLY SUBMITTED this I I(h day of October, 2019.
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MICHAEL G. RANKIN
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City tom e
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By: I IIIMO-
e er J. S t as h
Seni r Assi st ant Ci ty Attorney
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l AC C - Dock et C ontr ol - Received 10/10/2019 4:45 P M

AC C - Dock et C ontr ol - Dock eted 10/10/2019 4:51 P M
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 ORIGINAL electronically filed and 8 copies
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hand-delivered this l I'll day of October, 2019 to:
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Docket Control / ACC Portal for efiling
3 Arizona Corporation Commission
400 W. Congress, Ste. 218
4 Tucson, AZ 85701
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COPIES of the foregoing emailed/mailed
6 this ll"' day of October, 2019, to the persons
identified on the attached service list
7 consisting of two (2) pages:

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By /s/ Cindy Turner
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Adam L. Stafford
WESTERN RESOURCE ADVOCATES
P.O. Box 30497
Phoenix AZ 85046
stacy@westernresources.org
steve.michel@westernresources.org
adam.stafford@westernresources.org
Consented to Ser vice by Email
Alex Dely
Vice Chairman
8522 E. Helen Place
Tucson AZ 85715
DelyClHF@hotmail.com
Consented to Ser vice by Email
Brandon Cheshire
3810 W. Cochise Drive
Phoenix AZ 85051
brandon@sunharvest.com
Cons ented to Sewlc e b y Email
Charles Wesselhoft
Pima County
32 N Stone, 21 st Floor
Tucson AZ 85701
Charles.Wesselhoft@pcao.pima.gov
Consented to Ser vice by Email
Daniel Pozefsky
RUCO
1110 west washington, suite 220
phoenix AZ 85007
dpozefsky@azruco.gov
procedural@azruco.gov
Consented to Ser vice by Email
Eric R Hawkins
DURAZZO, ECKEL & HAWKINS, PLLC
45 N. Tucson Blvd.
Tucson AZ 85716
kcathers@trico.coop
vnitido@trico.coop
eric@durazzo-eckeI.com
Consented to Ser vice by Email
Kurt J. Boehm
Boehm. Kurtz 8» Lowry
36 E. Seventh St. Suite 1510
Cincinnati OH 45202
kboehm@bkllawfirm.com
john@mooreinjurylaw.com
n er v i c b E
DOCKET no. E01933A190028
Kyle J. Smith
United States Department of Defense
9275 Gunston Rd
Suite 1300 (JALS-RL/IP)
Fort Belvoir VA 22060
karen.white.13@us.af.miI
kyle.j.smith124.civ@mail.miI
Consented to Ser vice by Email
Lawrence v. Robertson Jr.
210 Continental Road, Suite 216A
Green Valley AZ 85622
greg.bass@calpinesolutions.com
scott.olson @ directenergy.com
george.waidelich@albertsons.com
Tubaclawyer@aol.com
Mary.Iynch@constellations.com
Consented to Service by Email
Louisa Eberle
2101 Webster Street, Suite 1300
Oakland CA 94612
Iouisa.eberle@sierraclub.org
greg.wannier@sierraclub.org
Consented t ni Em il
Melissa Kreuger
PINNACLE WEST CAPITAL CORPORATION
400 n. 5th St
MS 8695
Phoenix AZ 85004
Melissa.Krueger@pinnaclewest.com
Thomas.Mumaw@pinnaclewest.com
Theresa.Dwyer@pinnaclewest.com
Debra.Orr@aps.com
Consented to Ser vice by Email
Michael Patten
SNELL & WILLMER L.L.P.
400 East Van Buren
Phoenix AZ 85004
jthomes@swlaw.com
mdecorse@tep.com
mpatten@swlaw.com
bcarroll@tep.com
mderstine@swlaw.com
docket@swlaw.com
Consented to Ser vice by Email
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 DOCKET no. E01933A190028
Michele Van Quathem Thomas Loquvam
LAW OFFICES OF MICHELE VAN QUATHEM, PLLC The Loquvam Law Firm
7600 n. 15h St., Suite 150 2198 E. Camelback Rd., Suite 305
Phoenix AZ 85020 Phoenix AZ 85016
mvq@mvqlaw.com thomas@loquvam.com

Consented to Ser vice by Email ArizonaEnergyPolicyGroup@gmaiI.com

Nicholas J. Enoch Consented to Ser vice by Email
LUBIN & ENOCH PC
349 N. Fourth Ave. Timothy M. Hogan
Phoenix AZ 85003 ARIZONA CENTER FOR LAW IN THE PUBLIC
INTEREST
kaitlyn@lubinandenoch.com 514 W. Roosevelt St.
corey@lubinandenoch.com Phoenix AZ 85003
Nhorseherder@gmaiI.com
nick@lubinandenoch.com
sbatten@aclpi.org
cristina@ lubinandenoch.com
mark@sanjuancitizens.org
Consented to Service by E mail
czwick@wildfireaz.org
Patrick J. Black
FENNEMORE CRAIG P.C. janderson@aclpi.org
2394 E. Camelback Rd. Suite 600
Phoenix AZ 85016 mike@sanjuancitizens.org

pblack@fclaw.com robyn.jackson @dine-care.org

khiggins@energystrat.com Sandy.bahr@sierraclub.org

lferrigni@fclaw.com katie.chamberlain@sierraclub.org

Consented to Service by E mail carol.davis@dine-care.org

Robin Mitchell ezuckerman@swenergy.org

ARIZONA CORPORATION COMMISSION
Director & Chief Counsel - Legal Division schlegelj@aol.com
1200 W. Washington St. thogan@aclpi.org
Phoenix AZ 85007
legaldiv@azcc.gov lori.goodman@dine-care.org

utildivservicebyemail@azcc.gov Iouisa.eberle@sierraclub.org

briana@votesolar.org
Consented to Ser vice by Email
Roi I Lusk cmassey@swenergy.org
The City of Tucson peter.morgan@sierraclub.org
P.O. Box 27210
Tucson AZ 85726 Consented to Ser vice by Email
Jennifer.Stash@tucsonaz.gov

Roi.Lusk@tucsonaz.gov

Consented to Ser vice by Email

Scott S. Wakefield
HIENTON & CURRY, PLLC
5045 N 12th Street, Suite 110
Phoenix AZ 85014-3302
swakefield@hclawgroup.com

Stephen.Chriss@walmart.com

n ted o rv i e b Em ail

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DIRECT TESTIMONY OF MICHAEL CATANZARO
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On Behalf of the City of Tucson
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Docket E-01933A-19-0028
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October ll, 2019
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 1 T A B L E OF CONTENTS
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1. Introduc tion.............................................3
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4 11. Pur po s e o f T e s ti mo ny.....................................3

5 111. S umma r yo f R e c o mme nda t i o ns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

6 Iv. C ityU s eof E11er gy........................................4

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v. C ity Ef f or ts to R educ e Ener gy C ons umption....................4
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VI. R e c o 1 n1 1 1 e 1 1 da tio 1 1 s .........................................5
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 1. I nt r o duc t i o n
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Q. Please state your name, business address and occupation.
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A. My name is Michael Catanzaro. My business address is 4004 S. Park Ave, Tucson AS,
3 8 5 7 1 4 . I a m t he E ne r gy Ma nge r f o r t he C i t y o f Tuc s o n. I a m r e s po ns i ble f o r ut i li t y
ma na ge me nt, i nc ludi ng, c o ns umpti o n, budge ti ng, a nd e ffi c i e nc y fo r the Ci ty o f Tuc s o n
4 ("Ci ty ").

5 Q. On whose behalf are you submitting testimony for today?

6 A. l am testifying on behalf of the City.

7 Q. Please describe your education and experience.

8 A. I hold an undergraduate and master's degree from the University of San Diego. I am a
Certified Energy Manager and have worked in the energy field for over 10 years. For 9 years I
9 worked at the Univ ers ity of San Diego as the Direc tor of Sus tainability with a foc us on
distributed energy generation and energy efficiency. For the last year, I have worked at the
10 City as the Energy Manager overseeing utility consumption and efficiency efforts.

ll Q . Ha v e y o u pr e v i o us ly s ubmi t t e d t e s t i mo ny i n o t he r do c k e t s be f o r e t he Ar i zo na
Co rpo ra ti o ns Co mmi s s i o n"
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A. No .
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Q. Have you previously submitted testimony before other state regulatory commissions?
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A. No .
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II. Purpose of Testimonv
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Q. W hat is the purpose of your testimony?
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A. The purpose is to address Tucson Electric Power's (TEP) proposed rate increase associated
18 with how it will affect the City. Specifically, I will go into detail about how the City's energy
consumption is calculated and the efforts it has taken to reduce its overall energy consumption.
19 Finally, I will describe how TEP's proposed rate increases will negatively impact the City
overall.
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III. Summary of Rec ommendations
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Q . P le a s e s umma r i ze y o ur r e c o mme nda t i o ns t o t he C o mmi s s i o n o n t he pr o po s e d
22 revenue increase.

23 A. During my time working in the energy field, I have seen some substantial changes and
differences in the way energy is calculated and charged. The City operates under a large and
24 diverse plan for its energy consumption. The challenges it faces under TEP's proposed rate
increases are many. Primarily, the high escalation in each category prevents the City from
25 being able to properly budget and plan for the expected rate increases. The City previously
adjusted its budget around the loss of the TEP Municipal Discount. Specifically looking at the
26 lighting increase, this amounts to a substantial change in the expenses the City will face if this
rate is accepted. Further, the City participated in several of TEP's rebate and incentive
27 programs over the last few years and also has dedicated itself to implementing energy saving
me a s ure s a mo ng i ts ma ny de pa rtme nts . De s pi te the s e be s t e ffo rts , the Ci ty wi ll s e e a
28 significant increase if this proposed rate increase is established.
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 l The City's responsibility is to SolV€ its citizens and ensure their tax dollars are being spent
wisely. Because o f this duty, it is imperative that the City o bject to the substantial rate
2 increases proposed by TEP. The City is prepared to withstand moderate rate increases over
time, however the large percentages proposed are not reasonable in this case.
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I V. Citv Use of Enerszv
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Q. Please describe how the City's electricity use is measured by TEP.
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A. Electricity is measured on a site by site basis by TEP. The City has 2499 accounts with
6 TEP. Each account is a service point where electricity is delivered from TEP. These accounts
are made up of more than 621 locations in more than 700 buildings with over 5.8M sq. to.
7 Additionally, there are water sites with wells and boosters and traffic and streetlight accounts.
In all, the City consumption is more than l38M kwh annually at an annual cost of $ l7.7M.
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Q. How does the City formulate its budget for energy expenses?
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A. The City budgets approximately six to eight mouths out from the start of the fiscal year
10 (July-June). We look at consumption across different rate types, account for any discount
retirements, in our most recent budget, we accounted for the retirement of the TEP municipal
ll discount of 4% across qualifying accounts, and budgeted for a modest cost increase.
12 Q. How is the City's energy consumption funded?
13 A. The majority of the City's energy costs are funded through the general fund, comprised
primarily of City tax-payer dollars.
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Q. If TEP's proposed rate in creases are gran ted, h ow mu ch w ou ld th at in crease th e
15 am ount the City pays annually in energy to TEP?

16 A. There are multiple impacts across different service types. Our Small General Service
accounts will be impacted significantly. In total, the 8% increase would amount to more than
17 $500,000 in increases across nearly 600 accounts for the City. The next highest impact in
terns of dollars is the 21.8% increase in the City's 1300+ lighting accounts. This would total
18 more than $285,000 in increases. In all, the proposed increases average out to an increase of
10% in the rate classes where increases are requested.
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v. Ci Efforts to Reduc e Ener Consume son
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Q. What efforts has the City tak en to reduc e its ov erall energy c ons um ption in the las t 5
21 years?

22 A. In 2016 the City began an extensive LED streetlight retrofit program. The project was
designed to reduce energy consumption by 70% and took place over several years. In 2018 the
23 City began an Energy Performance Contract pilot that targeted efficiency investments at 3
locations at a total cost of more than $2M. The projects were recently completed and like the
24 LED Retrofit the savings were earmarked to repay the debt incurred. In September 2019 the
City Council passed an Energy Sustainability Revolving Fund to create a revolving loan fund
25 to finance efficiency projects throughout the City.
26 Q . Specifically, can you please go into more detail about the City's decision to implement
it s L ED L ig h t in g Pro jec t ?
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A. In 2016 Mayor and Council voted to enter into a long-tenn lease-purchase agreement with
28 Ameresco to retrofit streetlights across the City. The total project cost was more than $l5M
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 and avoided costs would be used to pay down the lease. There were also rebates from TEP that
I totaled more than $2M to help fund the project. In the initial year the City realized savings of
approximately $600,000 used to cover the initial payments.
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Q. What are the average monthly savings to the City using the LED traffic lights?
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A. To date, the savings have been approximately $50,000 per month.
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Q. Wh at is th e estimated impact of TEP's proposed rate in crease for ligh tin g on th e
5 City?
6 A. The proposed 21% increase would reduce the savings realized by the LED streetlight
retrofit program by approximately 33%, or $200,000 per year.
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Q. Are there any other rebate and incentive programs the City has participated in that
8 have been offered by TEP?
9 A. The City regularly participates in the rebate and incentive programs offered by TEP. All of
the projects mentioned previously have been, in part, funded through this program.
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Q. What have been the costs and savings associated with those incentive programs"
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A. The City have received more than $2M in rebates and incentives, while spending
12 approximately $l5M. The majority of the funds came during the Streetlight LED retrofit. As
discussed above, the annual savings from this program has been approximately $600,000 for
13 the first year after completion.
14 vi. Rec om m endation

15 Q. What is your recommendation for the Commission?

16 A. I recommend that the Commission reject TEP's request for a rate increase. The
Commission should further require any fixture rate increases to be in smaller, more
17 proportional amounts that can be more fully justified and planned for.
18 Q. Hav e t h er e b een c h an g es in t h e elec t r ic p o wer in d u s t r y t h at h av e b ear in g o n t h is
case?
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A. Yes. The coal industry across the country continues to face challenges. Across the country,
20 coal consumption is projected to drop in record numbers and coal plants are anticipated to
close. The national trend among other states is to set carbon reduction goals. Utilities in other
21 locations are reconsidering the economics of coal plant ownership since the fuel prices
fluctuate and impending environmental regulations.
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TEP is asking the Commission to approve a rate increase that goes against industry trends. The
23 average increase for electricity rates, according to the U.S. Energy Information Administration
(EIA) in the United States is l.1%, with several states reporting price decreases 'REP bears
24 the responsibility of justifying and explaining in detail why it continues to invest in this form
of energy generation. I do not believe this standard has been met in the current filing.
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Q. Does this conclude your direct testimony?
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A. Yes.
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I https://www.chooseenergycoiWelectricity-rates-by-state/
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