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6-2500-15577-2
E-243,106/SA-03-896
STATE OF MINNESOTA OFFICE OF
ADMINISTRATIVE HEARINGS FOR THE
MINNESOTA PUBLIC UTILITIES
COMMISSION
In the Matter of the Application of the Grand
Rapids Public Utilities Commission to Extend its
Assigned Service Area into the Area Presently
Served by Lake Country Power
Prefiled Direct Testimony
Anthony Ward
Grand Rapids Public Utilities Commission
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EXHIBIT
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PREFILED DIRECT TESTIMONY OF ANTHONY WARD
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on behalf of the Grand Rapids Public Utilities Commission
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May 21,2004
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Q.
Please state your name and business address.
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A.
My name is Anthony T. Ward and the address of the Grand Rapids Public
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Utilities Commission is: Grand Rapids Public Utilities Commission, 500 SE
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Fourth Street Grand Rapids, MN 55744.
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Q.
What is your occupation?
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A.
I am employed as the General Manager of the Grand Rapids Public Utilities
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Commission.
I serve as the chief administrative officer of the Utility with
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authority and responsibility to plan, control and direct the administration of Utility
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affairs.
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Q.
What is your educational background?
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A.
I have a Bachelor of Science Degree in Corporate Finance from St. Could State
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University and have completed several classes in management and electric, water
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and wastewater utility operations.
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Q.
Describe your work and professional experience.
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A.
I started employment with the GRPUC in October 1976 as the Senior Accountant.
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I was also appointed to the position of City Treasurer in 1979. In 1980,1 resigned
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my potion as City Treasurer and headed upthe first computer mstallation
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^orhoth the City and CRPUC In ^ y l 9 8 5 1 w a s appointed to the position of
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CeneralManageroftheGRPUC
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Deserihe the history oftheGRPUC.
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A.
The GRPUC was established hy Resolution ofthe Grand Rapids City Council in
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I910andwas operated asthe Watertight Power and Building Commission in
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I949thename wasehanged toPuhheUtihtiesCommission.
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operatesin accordance to Minnesota State Statue4I2B32I independent ofthe
TheGRPUC
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Grand Rapids City Council
The GRPUC is charged with operation of the
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Electric Distribution Systems Water Production, Treatment and Distribution
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Systems and Wastewater Collection System andTreatment.
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Why are you taking this action?
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A
The City of Grand Rapids entered into an orderly annexation agreement with the
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Grand RapidsTownship. Every two years, starting in the year 2000aportion of
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the Grand RapidsTownship isanne^ed into the City.
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Township will bedissolved.
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residences andbusinesses,withinthemunicipa1ityaretreated equitably in regards
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to services offered by the municipality.
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By the year 2010 the
GRPUC is taking this action to ensurethe that
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In compar^on to the Coopera^v^how^the G R P U C d i f f e r s
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A.
The GRPUC isanonprofitmnni^
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showed to own real p r o p e r nor ean it own snhsidiaryhn^^
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issue deht ^or tinaneing capital projects resides with the City Council.
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GRPUC cannot advertise or promote itself and all meetings of the GRPUC are
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open to the Public with the exception of labor contract strategy sessions,
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discipline hearings and pending legal matters.
The
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I f the City of Grand Rapids Public Utilities Commission grows along with its
City^will Lake Country Power be harmed?
A.
In my opinion no they will not be harmed financially.
LCP will receive
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reimbursement ^or its^ ^ e d costs, i.e., capital expenditures and reintegration
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costs and lost revenues. Variable costs such as power purchases will decline
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parallel to the reduction in sales. Customer costs such as meter reading, billing
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etc.will be eliminated. Shouldasurplusof the previous expenditures accrue,
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the excess costs should be resolved by management. This would be similar to the
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reduction in revenues GRPUC experienced in its wastewater operations when
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Blandin Paper shut down paper machines3and4. GRPUC found it necessary to
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resolve, through management, the cost of surplus labor.
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shutdown causeda reductioninelectricrevenues^which also had to be addressed
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by management, by reducing costs rather than raising rates.
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In addition, the
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A.
H o w d ^ ^ c ^ o f G ^ d R a p ^ ^ ^ ^ m ^ G ^ U C ?
In add-on toproviding dec^^ waterand wa^ewateru^hty services to its^
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constituents, GRPUC makespayments i n l i e n o f t a ^ e s tothe City of Grand
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Rapids. Cnrrentiy GRPUC pays^^o of its^grosseieetrie revenues to the City.
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An investor owned utility, in comparison pays 4 ^ to 4.5^ of its^ electric
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revenues intakes. GRPUC supplies technical services to the City as requested
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and also shares with the City specialized equipment. In my opinion, the City also
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hene^ts^om having local control, through the GRPUC, over the Utility and also
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benefits tromtheUtility^sahilitytopromptly respond to disturbances on any of
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its utility systems.
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Besides the contribution to the eommunity^ean you describe other attributes
ofGRPUC?
A.
The GRPUC employs 48 people who live either in or close to the service territory
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ofthe GRPUC allowingthem torespond immediately to emergencies on the
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systems. Many of our customers and employees know each other ona^irst name
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basis not only because we areasmall utility but because many of the employees
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grew up in the area.
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organizations as well as volunteer to assist local nonprofit organizations.
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Customers are also encouraged to attend GRPUC meetings and voice their
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concerns and offer their recommendations.
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specific agenda item tor public input and comment.
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Also many of our employees participate in civic
GRPUC meeting agendas containa
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Q.
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What are some of the other differences between GRPUC and the
Cooperative?
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In addition to what I have previously testified to, the most significant differences
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between the two organizations are electric rates, and I believe distribution
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emergency response times and system reliability.
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Q.
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A.
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Describe the GRPUC electric rates.
GRPUC electric rates are some of the lowest in Northern Minnesota.
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example GRPUC City and Rural residential service rates are 49% and 30%,
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respectively, less than the LCP's residential electric rates.
GRPUC City
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Commercial rates range from 17% to 28% less than LCP's commercial rates for
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similar classes of service.
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Q.
Describe the GRPUC standards of reliability.
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A. The GRPUC began to use the SAIFI (system average interruption frequency
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index), the SAIDA (system average interruption duration index), and the CAIDA
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(customer average interruption duration index), in 2003. The standard minimum
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interruption time for these standards is defined as 5 minutes.
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previous years the GRPUC has monitored every interruption, even blinks of just a
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few seconds, and therefore our past records cannot be compared directly to the
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SAIFA, SAIDA, and CAIDA standards.
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However, in
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The GRPUC ^
reeords ^
proteefive device oper^ions resuming in either
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momentary hhnks, or in 5 minnteor longer interruptions
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whether recorded f^rutihty comparisons or for GRPUC records are treated as an
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interruption to our customers when consideration is given towhat investments
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will he made in the distribution system.
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complaints about outages GRPUC staff has received upon occasion calls ^rom
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LCP customers regarding outages.
All interruptions
Itisraretbrustohaveanycustomer
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Compare the size ofthe GRPUC eleetrie system and that ofthe Cooperative.
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A.
LCP is Minnesota's largest geographic cooperatively owned electric utility with
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4 5 ^ 4 electric meters In 2003 LCP sold 604^37 MWH and paid ^07,636 in
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property,real estate and equipment taxes. GRPUC has 6,525 electric meters and
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sales ofl47,228 MWH In 2003 the GRPUC paid ^626,038 in payments in lieu
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of taxes
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Sineetheenaetmentof theservieeterritory laws in I97^haveyou had other
experience in acquiring territory from the Cooperative?
A.
No, although we have had several discussions with the cooperative on the subject.
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In 1994 the State of Minnesota Department ofTransportation rebuilt HWY 169
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Last between Grand Rapids and Coleraine and expanded the road way trom two
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to ^bur lanes.
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distribution system. SinceLCP serviced customers trom the North along HWY
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169
This necessitated relocating a stretch of GRPUC overhead
Last,GRPUCapproachedLCPandaskedifitwouldbeinterestedin
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acquiring those customers through a trade of service territories. GRPUC would
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acquire a small neighborhood adjacent to the City border. When approached LCP
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management at that time said they were not interested in a service territory
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exchange.
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In approximately 1997, LCP approached GRPUC and asked i f GRPUC
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would consider supplying electric service to a customer located in LCP's service
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territory but a considerable distance from LCP's distribution system. LCP would
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bill the customer and pay GRPUC for the power purchased. GRPUC agreed to
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the arrangement and forwarded a cost of service offer to LCP management. LCP
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management did not contact GRPUC following the offer. It was later learned that
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LCP constructed an electric distribution system extension to feed that customer. I
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was told that the cost of the extension was approximately $40,000.
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Q.
What impact has this proceeding had on the City?
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A.
Outside of the expenditures for attorneys and engineering consultants, I was
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recently contacted by the Chamber of Commerce President, Mr. Bud Stone. Mr.
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Stone informed that he was visiting with representatives of LCP, who informed
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him that GRPUC's acquisition ofthe service territory may impact LCP's decision
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to locate their service center expansion at their current location just inside Grand
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Rapids. Mr. Stone told me that the expansion would mean an addition of 21
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employees working out of the service center. I believe those 21 employees would
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be relocated from the other 2 service centers operated by LCP. Mr. Stone asked
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me to explain the service territory acquisition and the related process to him.
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which I did. Mr. Stone also told me that his interest was jobs for the area and
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thanked me for the explanation.
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Q.
Does this complete your testimony at this time?
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A.
Yes it does.
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