SIERRA PACIFIC POWER COMPANY d/b/a NV Energy ELECTRIC DEPARTMENT BEFORE THE PUBLIC UTILITIES COMMISSION OF NEVADA In the Matter of the Application by SIERRA PACIFIC ) POWER COMPANY D/B/A NV ENERGY, filed ) pursuant to NRS 704.110(3) and NRS 704.110(4), ) addressing its annual revenue requirement for ) general rates charged to all classes of electric ) customers. ) Docket No. 19-06____ __________________________________________ ) VOLUME 7 of 18 Prepared Direct Testimony of: Plant In Service John S. Gremp Danyale Howard Ricardo Becerra Victor Figueredo James DeFrates William Olsen Scott Talbot Michelle Follette Operating and Maintenance Jennifer Oswald Recorded Test Year ended December 31, 2018 Certification Period ended May 31, 2019 Index Page 2 of 250 Sierra Pacific Power Company Electric Department d/b/a NV Energy Volume 7 of 18 Index Page 1 of 1 Description Page No. Prepared Direct Testimony Of: Plant In Service: John S. Gremp 4 Danyale Howard 16 Ricardo Becerra 27 Victor Figueredo 52 James DeFrates 60 William Olsen 67 Scott Talbot 96 Michelle Follette 108 Operating and Maintenance, Administrative and General Expense: Jennifer Oswald 200 Page 3 of 250 JOHN S. GREMP Page 4 of 250 1 BEFORE THE PUBLIC UTILITIES COMMISSION OF NEVADA 2 Sierra Pacific Power Company d/b/a NV Energy 3 2019 General Rate Case Docket No. 19-06___ 4 PREPARED DIRECT TESTIMONY OF 5 John S. Gremp 6 Revenue Requirement 7 8 I. INTRODUCTION 9 1. Q. PLEASE STATE YOUR NAME, OCCUPATION, BUSINESS ADDRESS, 10 AND THE PARTY FOR WHOM YOU ARE FILING TESTIMONY. 11 A. My name is John S. Gremp. I am the Manager, Transmission Project Delivery for 12 NV Energy, Inc. (“NV Energy”), Nevada Power Company d/b/a NV Energy 13 (“Nevada Power”), and Sierra Pacific Power Company d/b/a NV Energy (“Sierra”, 14 and together with Nevada Power, the “Companies”). I work primarily out of d/b/a NV Energy Nevada Power Company Company Power Nevada 15 Sierra’s corporate office, which is located at 6100 Neil Road in Reno, Nevada. I and Sierra Pacific Power Company Pacific Power Sierra and Company 16 am filing testimony in this proceeding on behalf of Sierra. 17 18 2. Q. PLEASE DESCRIBE YOUR PROFESSIONAL BACKGROUND AND 19 EXPERIENCE. 20 A. I have a Bachelor of Science degree from the College of Business Administration 21 Fordham University Bronx, New York. I began my employment in the energy 22 industry as a financial planning and analysis intern with Nevada Power in 2006. I 23 have substantial experience in project management, financial controls and project 24 controls. In 2006, I was assigned to New Generation as a project controls engineer 25 during the development of the Ely Energy Center and was assigned to the project 26 management team for the Clark Peaker Project and the Harry Allen Combined 27 28 Gremp-DIRECT 1 Page 5 of 250 1 Cycle Project. I transferred to Generation department in 2011 as a Senior 2 Consultant. I was promoted to Project Controls Supervisor in 2014. I transferred to 3 Sierra and the Transmission Department in 2014 as a project manager, then was 4 promoted to Manager of Project Delivery in 2017. I have attached as Exhibit 5 Gremp-Direct-1 a statement of qualifications that further details my background 6 and professional experience. 7 8 3. Q. MR. GREMP, HAVE YOU PREVIOUSLY SUBMITTED TESTIMONY 9 WITH THE PUBLIC UTILITIES COMMISSION OF NEVADA 10 (“COMMISSION”)? 11 A. No, I have not. 12 13 4. Q. WHAT IS THE PURPOSE OF YOUR TESTIMONY IN THIS 14 PROCEEDING? d/b/a NV Energy Nevada Power Company Company Power Nevada 15 A. I support the prudence of several categories of investment in facilities that are and Sierra Pacific Power Company Pacific Power Sierra and Company 16 included in the calculation of Sierra’s revenue requirement. These assets are broken 17 down into two categories: compliance and transmission technology. Each of the 18 investments made by the Company in these two categories are used and useful and 19 providing benefit to customers. 20 21 5. Q. HOW IS YOUR TESTIMONY ORGANIZED? 22 A. My testimony is organized into the following sections: 23 24 Section II. Compliance Projects: In this section, I discuss Sierra’s investments in 25 facilities and equipment required to meet North American Electric Reliability 26 Corporation (“NERC”) standards. Specifically, Sierra is required by NERC to 27 28 Gremp-DIRECT 2 Page 6 of 250 1 invest in a more robust cyber security and a physical hardening of key Bulk Electric 2 Systems (“BES”) assets.1 I describe one compliance project included in this general 3 rate review, why it was necessary, previous discussion of the project with the 4 Commission, the total cost of the project, and other information to demonstrate that 5 Sierra’s investment on behalf of customers was prudent. 6 7 Section III. Transmission Technology: In this section, I discuss Sierra’s 8 investment in two Electric System Control Center (“ESCC”) technology projects 9 since the end of the certification period in Sierra’s last general rate case, June 1, 10 2016 through the end of the current certification period on May 31, 2019. I describe 11 each ESCC technology project, why it was necessary, whether it was previously 12 presented to the Commission, the total cost of the project, and other information to 13 demonstrate that Sierra’s investment on behalf of customers was prudent. 14 d/b/a NV Energy Nevada Power Company Company Power Nevada 15 6. Q. ARE YOU SPONSORING ANY EXHIBITS TO YOUR PREPARED and Sierra Pacific Power Company Pacific Power Sierra and Company 16 DIRECT TESTIMONY? 17 A. Yes. I am sponsoring one exhibit: 18 • Exhibit Gremp-Direct-1 Statement of Qualifications 19 20 7. Q. WHY ARE ONLY MAJOR PROJECTS SPECIFICALLY DISCUSSED IN 21 YOUR TESTIMONY? 22 A. Testimony-style descriptions of each and every project completed by the 23 transmission project team since June 1, 2016 would take hundreds of pages, and 24 the documentation surrounding each project is so voluminous that its value at 25 hearing would be severely diminished. As I understand it, in general rate 26 27 1 The Federal Energy Regulatory Commission (“FERC”) issued an order approving CIP-01101. 28 Gremp-DIRECT 3 Page 7 of 250 1 proceedings the Commission wants to see prepared direct testimony addressing the 2 details of and supporting expenditures on major projects. In recent general rate 3 cases, the Commission has accepted the $1.0 million demarcation as appropriate 4 for determining whether a project is “major.” While not addressed in detail in my 5 prepared direct testimony, my group has prepared project “binders” for smaller 6 projects completed since June 1, 2016. As has been the Companies’ practice for 7 many rate case cycles, those binders (now in electronic form) are available for 8 review on the day this general rate review filing is made. 9 10 II. COMPLIANCE PROJECTS 11 8. Q. DESCRIBE THE PROJECTS INCLUDED IN THIS SECTION. 12 A. This section discusses investment in one major (over $1.0 million) compliance 13 initiative as required by NERC. This project has been placed in service since the 14 end of the certification period in Sierra’s last general rate case and before the close d/b/a NV Energy Nevada Power Company Company Power Nevada 15 of the test period for this general rate review, December 31, 2018. and Sierra Pacific Power Company Pacific Power Sierra and Company 16 17 9. Q. PLEASE DESCRIBE THE PROJECT. 18 A. This project implements physical and cyber security measures for all designated 19 high-impact and medium-impact facilities across the Companies’ transmission 20 system. These Critical Infrastructure Protection (“CIP”) measures are put in place 21 to achieve a robust security posture in keeping with the enforceable requirements 22 of NERC CIP-002-5 through CIP-011-1. These ten standards are collectively 23 referred to as the “Version 5 Standards.”2 CIP facilities include four high-impact 24 25 26 2 FERC approved Version 5 of the CIP standards on November 22, 2013. See 145 FERC ¶ 61,160 (iss. Nov. 27 22, 2013). Many of the Version 5 standards became effective July 1, 2016. 28 Gremp-DIRECT 4 Page 8 of 250 1 control center facilities and 11 medium-impact substations. Full compliance with 2 the Version 5 Standards was achieved on July 1, 2016. 3 4 10. Q. WHY WAS THE PROJECT NECESSARY? 5 A. The Version 5 Standards are approved by FERC and administered by NERC. In 6 addition, the Version 5 Standards implement controls that harden the physical and 7 cyber security posture associated with Sierra’s BES assets. Failure to comply with 8 the standards results in compliance violations and potential monetary penalties. 9 10 11. Q. HAS THIS PROJECT BEEN PRESENTED TO THE COMMISSION? 11 A. Yes. This project was previously presented to the Commission in Docket No. 17- 12 06003, Nevada Power’s last electric general rate review case. Investments made to 13 comply with Version 5 Standards were discussed in the prepared direct testimony 14 of Jack M. Wickersham III, and can be found in Volume 2 of 6 of the certification d/b/a NV Energy Nevada Power Company Company Power Nevada 15 filing. and Sierra Pacific Power Company Pacific Power Sierra and Company 16 17 12. Q. WHAT WAS THE TOTAL COST OF THE PROJECT? 18 A. This project was required to support both Nevada Power and Sierra. The project 19 contains some elements that are allocated 100 percent to one or the other utility 20 based on asset location, and as well as elements that are allocated between Nevada 21 Power and Sierra using the Common Product allocation methodology.3 The 22 estimated total cost of the project for both Companies’ was $2,800,890 (without 23 AFUDC), based on an estimated in-service date of April 1, 2016.