Attachment B
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Attachment B Exhibit No. LSPG-NY-100 UNITED `STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION LS POWER GRID NEW YORK ) Docket No. ER20-___-000 CORPORATION I ) DIRECT TESTIMONY AND EXHIBITS OF LAWRENCE WILLICK Exhibit No. LSPG-NY-100 EXHIBITS LSPG-NY-101 – LSPG-NY Organizational Chart LSPG-NY-102 – Map showing operational transmission facilities owned by LS Power affiliates of LSPG-NY LSPG-NY-103 – New York Public Service Commission Order Finding Transmission Needs Driven by Public Policy Requirements LSPG-NY-104 – NYISO AC Transmission Public Policy Transmission Needs Project Solicitation Letter LSPG-NY-105 – NYISO AC Transmission Public Policy Transmission Need Viability & Sufficiency Assessment LSPG-NY-106 – New York Public Service Commission Order Addressing Public Policy Transmission Need for AC Transmission Upgrades LSPG-NY-107 – NYISO AC Transmission Public Policy Transmission Planning Report i UNITED STATES OF AMERICA BEFORE THE FEDERAL ENERGY REGULATORY COMMISSION LS POWER GRID NEW YORK ) CORPORATION I ) Docket No. ER20-___-000 ) ) DIRECT TESTIMONY AND EXHIBITS OF LAWRENCE WILLICK 1 I. INTRODUCTION AND EXPERIENCE 2 Q. PLEASE STATE YOUR NAME AND BUSINESS ADDRESS. 3 A. My name is Lawrence Willick. My business address is 16150 Main Circle Drive, Suite 4 310, St. Louis, Missouri 63017. 5 Q. WITH WHAT ENTITY ARE YOU EMPLOYED? 6 A. I am employed as Senior Vice President with LS Power Development, LLC (“LSP 7 Development”), the general partner and manager of LS Power Associates, L.P. (“LS 8 Power”), which is an indirect owner of LS Power Grid New York Corporation I (“LSPG- 9 NY” or “Company”). 10 Q. ON WHOSE BEHALF ARE YOU TESTIFYING IN THIS PROCEEDING? 11 A. I am testifying on behalf of LSPG-NY. 12 Q. PLEASE SUMMARIZE YOUR EDUCATIONAL BACKGROUND, 13 PROFESSIONAL QUALIFICATIONS, AND BUSINESS EXPERIENCE. 14 A. I earned a Bachelor of Science in Engineering, summa cum laude, and a Masters in 15 Business Administration, with honors, both from Tulane University. Since 1996, I have 16 been employed within the LS Power organization in various positions. I have over 25 Exhibit No. LSPG-NY-100 Page 2 of 33 1 years of experience in the electric power industry, much of which has been dedicated to 2 the green-field development of electric power transmission infrastructure. I have been 3 involved in the project financing of four generation facilities representing over 2,500 4 MW and over $1 billion in capital investment and five transmission facilities representing 5 over $1 billion in capital investment. 6 Q. WHAT ARE YOUR PRINCIPAL AREAS OF RESPONSIBILITY? 7 A. I provide management supervision of LS Power’s transmission development efforts, 8 which includes oversight of operating transmission facilities and other facilities in 9 various stages of implementation. 10 I participate in management of two LS Power transmission companies that have 11 facilities in operation, Cross Texas Transmission, LLC (“Cross Texas”) and One Nevada 12 Transmission Line (“ON Line”). Cross Texas is a fully operational utility within ERCOT 13 with a primary and back-up control center in Austin, Texas, and rates approved by the 14 Public Utility Commission of Texas. Cross Texas’ system consists of 290 miles of 345 15 kilovolt transmission lines in Texas, including associated substations and related 16 facilities. Great Basin Transmission South, LLC owns 75% of ON Line, a 235-mile 500 17 kilovolt transmission line in operation in Nevada. 18 I also have oversight responsibilities within three companies, Silver Run Electric, 19 LLC, DesertLink, LLC, and Republic Transmission, LLC, which have been designated to 20 develop, construct, operate and maintain high-voltage facilities by various Independent 21 System Operators/Regional Transmission Operators (“RTOs”) which I will discuss later. 22 Finally, I support several other LS Power transmission companies which are 23 pursuing early stage transmission project proposals in other parts of the United States. Exhibit No. LSPG-NY-100 Page 3 of 33 1 Q. HAVE YOU PREVIOUSLY FILED TESTIMONY BEFORE A REGULATORY 2 BODY? 3 A. Yes. I have filed testimony before state regulatory commissions in Colorado, Georgia, 4 Indiana, North Carolina, South Carolina, Texas, Utah, and Wisconsin and before the 5 Federal Energy Regulatory Commission (“FERC” or “Commission”). 6 II. PURPOSE OF TESTIMONY 7 Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY? 8 A. The purpose of my testimony is to provide an overview of LSPG-NY’s filing for 9 approval of a transmission formula rate and formula rate protocols as well as certain 10 incentive rate treatment. 11 My testimony (i) describes LSPG-NY and its affiliates; (ii) describes the 12 background related to a variety of New York state initiatives, as developed through 13 several New York Public Service Commission (“NYPSC”) dockets, which led the 14 NYISO to seek proposals for development of projects to address identified public policy 15 needs; and (iii) NYISO’s selection of LSPG-NY and the New York Power Authority to 16 construct, finance, own, and maintain the Project (the “Project” is described in the 17 testimony of Casey Carroll, exhibit LSPG-NY-200). In addition, my testimony addresses 18 LSPG-NY’s request for: a) an RTO participation incentive as an Independent 19 Transmission Company (“ITC”); b) a 50 basis point return on equity addition based upon 20 the risks and challenges of the Project; and c) a performance based rate to implement the Exhibit No. LSPG-NY-100 Page 4 of 33 1 80/20 Cost Containment; all subject to the overall return on equity being within the zone 2 of reasonableness. 3 Q. OTHER THAN YOUR DIRECT TESTIMONY, ARE YOU SPONSORING ANY 4 EXHIBITS? 5 6 A. Yes. I am including as exhibits to my testimony the following: 7 • LSPG-NY-101 – LSPG-NY Organizational Chart; 8 • LSPG-NY-102 – a map showing operational transmission facilities owned by LS 9 Power affiliates of LSPG-NY; 10 • LSPG-NY-103 – New York Public Service Commission Order Finding 11 Transmission Needs Driven by Public Policy Requirements; 12 • LSPG-NY-104 – NYISO AC Transmission Public Policy Transmission Needs 13 Project Solicitation Letter; 14 • LSPG-NY-105 – NYISO AC Transmission Public Policy Transmission Need 15 Viability & Sufficiency Assessment; 16 • LSPG-NY-106 - New York Public Service Commission Order Addressing Public 17 Policy Transmission Need for AC Transmission Upgrades; 18 • LSPG-NY-107 - NYISO AC Transmission PPTP Report. 19 Q. WHAT IS THE PURPOSE OF THIS FILING? 20 A. In this proceeding, LSPG-NY is seeking Commission approval of a transmission formula 21 rate and formula rate protocols. In addition LSPG-NY seeks Commission approval of 22 transmission incentive rate treatment for: (1) capitalization of certain costs that would not 23 otherwise be capitalized; (2) use of a hypothetical capital structure consisting of 47% 24 debt and 53% equity until the Project achieves full commercial operation; (3) a 50 basis 25 point adder to LSPG-NY’s return on equity (“ROE”) for participating in a Regional Exhibit No. LSPG-NY-100 Page 5 of 33 1 Transmission Organization (“RTO”) as an ITC, subject to the resulting ROE being within 2 the zone of reasonableness; (4) a 50 basis point adder to LSPG-NY’s ROE for the risks 3 and challenges of the Project, subject to the resulting ROE being within the zone of 4 reasonableness; and (5) a performance based rate adder to implement the 80/20 Cost 5 Containment. 6 Q. ARE OTHER WITNESSES SUBMITTING TESTIMONY IN SUPPORT OF THIS 7 APPLICATION? 8 A. Yes: 9 • Mr. Casey Carroll describes the Project and the process for development and 10 construction of the Project including the permitting and construction risks and 11 challenges. 12 • Mr. Cameron Tajvar (i) explains how LSPG-NY is currently funded and will be 13 funded in the future, including LSPG-NY’s targeted credit profile; (ii) describes 14 the financial risks facing LSPG-NY as a non-incumbent transmission owner; (iii) 15 explains why LSPG-NY qualifies for the Hypothetical Capital Structure 16 Incentive; and (iv) supports the cost of debt and incentive ROE adder that are 17 included in the proposed Formula Rate Template. 18 • Mr. Joseph L. Myers describes the accounting matters related to LSPG-NY, 19 including the treatment of affiliate costs, and the basis for the incentive rate 20 request for regulatory asset treatment of prudently incurred costs not capitalized. 21 • Mr. Chris Nagle with MCR Performance Solutions describes the features of 22 LSPG-NY’s proposed formula rate template and protocols. 23 • Mr. Dane Watson with Alliance Consulting Group supports the proposed 24 depreciation rates. Exhibit No. LSPG-NY-100 Page 6 of 33 1 • Mr. Robert B. Hevert with Navigant establishes the appropriate base rate of return 2 on equity for LSPG-NY. 3 III. DESCRIPTION OF THE COMPANY 4 Q. PLEASE DESCRIBE LSPG-NY. 5 A. LS Power Grid New York Corporation I (f/k/a North America Transmission Corporation) 6 is a transmission-only company whose business is to develop, own, and operate 7 transmission facilities in the NYISO region. LSPG-NY is a corporation organized under 8 the law of the State of New York. 9 Q. PLEASE DESCRIBE LSPG-NY’S RELATIONSHIP TO LS POWER. 10 A. Exhibit No. LSPG-NY-101 is an organizational chart showing how LS Power is 11 organized and how LSPG-NY fits within the broader LS Power organization. LS Power 12 has subsidiaries engaged in transmission development and transmission planning to help 13 increase reliability, reduce transmission constraints, and/or deliver renewable resources. 14 Other indirect subsidiaries of LS Power have developed over 600 miles of high voltage 15 transmission facilities. In addition, affiliates of LS Power have been involved in the 16 development, construction, or operation of over 39,000 MW of generation resources in 17 the United States.