108 1 AFTERNOON SESSION (1:20 p.m.) 2 CHAIRPERSON NORRIS: All right. We are back 3 in session. 4 Before we broke we had the motion from 5 Interstate Power and Light to strike the additional 6 testimony provided by the Consumer Advocate and the 7 Coalition on the grounds that it falls outside of 8 Iowa Administrative Code rule 7.10, which provides 9 that any additional testimony be to correct or update 10 prefiled testimony. 11 It is the Board's opinion that in fact the 12 additional testimony does fall outside of that rule, 13 and hence we will not allow it as a part of the 14 record. 15 There has to be some process by which people 16 are accorded adequate time, and I also think just as 17 a matter on its face it falls outside of the rule, 18 7.10, so that testimony will be not allowed into the 19 record. 20 There was another, I believe, preliminary 21 issue that you raised, Mr. Stead. 22 MR. STEAD: Thank you, Your Honor. 23 Some individual IPL witnesses testify on 24 numerous subject matters. Ms. Easler and I have 25 specific and distinct subject matter responsibilities PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 109 1 in this proceeding. Consequently, we would request 2 the opportunity to cross-examine several of the IPL 3 witnesses first on my subject matters, followed by 4 Ms. Easler cross-examining on her subject matters. 5 We have advised counsel for IPL of this situation, 6 and I don't believe they had any objection to that 7 arrangement. 8 MS. JOHNSON: IPL had no objection. 9 CHAIRPERSON NORRIS: All right. 10 MR. STEAD: Secondly, IPL advised at the 11 Thursday prehearing conference, I believe, that all 12 of its witnesses would be present throughout the 13 entire hearing. We would request the opportunity to 14 recall any IPL witness that has already appeared if a 15 subsequent witness defers a question or questions to 16 an earlier witness. 17 MS. JOHNSON: IPL would only object to that 18 if our witness had another commitment and was not 19 able to be here scheduling-wise. 20 CHAIRPERSON NORRIS: All right. I think 21 you've all done a good job of working together to get 22 this witness schedule figured out, and I appreciate 23 everyone's cooperation to make that work. 24 MR. STEAD: The last area we have, 25 Your Honor, was the area of confidentiality. As the PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 110 1 Board knows, some of IPL's original filing was marked 2 confidential. In a substantial amount of discovery 3 that was part of the Office of Consumer Advocate's 4 case in data responses, a lot of that material was 5 marked confidential. As the Board will find out as 6 this hearing progresses, a lot of the other 7 cross-examination discovery from IPL has been marked 8 confidential. 9 Our office would like to keep the hearing 10 open to the public as much as possibly feasible, but 11 we understand that IPL has the right to seek the 12 closure of the hearing if it deems that appropriate. 13 A lot of this information is aged now and 14 dated, so IPL may not claim confidentiality on it any 15 further, but that is their decision to make. 16 CHAIRPERSON NORRIS: Anything else to come 17 before us before we have our first witness? 18 Let me just--a couple more housekeeping 19 items. Again, the exits are in the rear and up here. 20 I've been informed by the groundskeeper that 21 they are going to blade off some additional parking 22 to the west and then just north of the parking lot, 23 so tomorrow, if you can, because employees here, 24 obviously, have to park as well, and so they're being 25 gracious to let us be a part of their community this PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 111 1 week, if you would try and park either in the new 2 bladed area to the west or the north of the employee 3 parking lot for the rest of the week, that would be 4 helpful. 5 Secondly, some people have inquired about 6 when we will open and close the proceeding this week. 7 We intend to go up until 5 o'clock each day 8 this week, and starting tomorrow we would begin the 9 proceeding at 9 o'clock every morning, so those of 10 you who want to endure this all week long, you'll 11 know when to come and leave. 12 All right. With that, and no other 13 preliminary matters, IPL, you may call your first 14 witness. 15 MS. JOHNSON: IPL calls Jeff Beer. 16 CHAIRPERSON NORRIS: Hello, Mr. Beer. If 17 you would stand and raise your right hand, please. 18 JEFFERY J. BEER, 19 called as a witness by Interstate Power and Light 20 Company, being first duly sworn by Chairperson Norris, 21 was examined and testified as follows: 22 CHAIRPERSON NORRIS: Thank you. You may be 23 seated. 24 25 PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 112 1 DIRECT EXAMINATION 2 BY MS. JOHNSON: 3 Q. Could you please state your full name and 4 address for the record, please? 5 A. Jeffery J. Beer, 200 First Street Southeast, 6 Cedar Rapids, Iowa. 7 Q. And did you cause to be filed in this docket 8 on July 2nd, 2007, direct testimony consisting of 13 9 pages of questions and answers, as well as exhibits 10 labeled Exhibit 1 for the record, or Exhibit JJB-1, 11 Schedules A through C? 12 A. Yes, I did. 13 Q. And did you also cause to be filed in this 14 docket on December 10th, 2007, rebuttal testimony 15 consisting of 14 pages of questions and answers, as 16 well as exhibits labeled Exhibit 2, or JJB-2, 17 Schedule A? 18 A. Yes, I did. 19 Q. Do you have any changes or corrections to 20 make to that testimony? 21 A. Yes, I do have one change, specifically to 22 my rebuttal testimony, page 7, lines 2 through 4, 23 specifically addressing the status of our 24 negotiations on the engineer, procure, and construct 25 contract. PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 113 1 In August of 2007, Alliant Energy selected 2 an EPC contractor to start negotiations with. During 3 that period of time, we signed a memorandum of 4 understanding with a December 14th termination date, 5 while at the same time signing an interim technical 6 services agreement to begin working on the project in 7 the preliminary design stages. 8 On December 14th a decision was made to 9 allow that agreement to lapse and terminate, and on 10 December 20th Alliant Energy and Interstate Power and 11 Light went back out into the market with an engineer, 12 procure, and construction management RFP with a 13 termination bid due date of January 4th, Friday the 14 4th. 15 That RFP was responded to, and we are in the 16 process today of evaluating those bids in 17 anticipation of making a decision in the coming 18 month. 19 That would conclude my addition to the 20 record. 21 Q. So given that clarification, if I asked you 22 these questions today, would your answers remain the 23 same? 24 A. Yes, they would, with the exception of the 25 modifications put forth. PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 114 1 MS. JOHNSON: And I would ask that 2 Mr. Beer's testimony and exhibits be spread upon the 3 record. 4 MS. EASLER: No objection. 5 CHAIRPERSON NORRIS: No objection. I 6 believe have you all stipulated at the pretrial 7 prehearing that all of the prefiled testimony and 8 prefiled exhibits will be spread upon the record? 9 MS. JOHNSON: Okay. 10 CHAIRPERSON NORRIS: Thanks to the motion, 11 we will consider it all spread upon the record. 12 MS. JOHNSON: Old habits die hard. 13 (IPL Exhibits 1 and 2 were 14 received in evidence.) 15 (The prepared testimony follows.) 16 17 18 19 20 21 22 23 24 25 PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 142 1 MS. JOHNSON: I tender the witness for 2 cross-examination. 3 MR. STEAD: Thank you. 4 CROSS-EXAMINATION 5 BY MR. STEAD: 6 Q. Mr. Beer, I'm just going to have introduced 7 some discovery, but I won't ask any questions about 8 it. 9 If you would acknowledge--this has been 10 marked OCA Exhibit 115. 11 I'm handing you what has been marked OCA 12 Exhibit 116. 13 I'm handing you what's been marked 14 Exhibit 117. 15 Mr. Beer, I'm very disappointed. I had a 16 lot of cross, but your update eliminated it, so why 17 don't we ask a little bit about the new RFP, if that 18 would be all right, if it's not confidential. 19 A. No, it is not confidential. 20 Q. Okay. What was the old RFP like in terms of 21 its structure? 22 A. The original RFP, recognizing the 23 marketplace that we were in, was a--it's a target 24 price cost reimbursable structure, common to a market 25 that we're finding throughout the United States and PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 143 1 the world where increasing costs of construction have 2 resulted in most EPC contractors, in an effort to 3 reduce the amount of risk and liability they have, 4 they have basically tailored what was previously 5 called a full wrap or a fixed price contract, they've 6 started to lean towards taking that risk inherent to 7 contractors and putting it upon the customer or the 8 one who is pursuing the development of the project. 9 In our specific case, our contract RFP was 10 for a target price cost reimbursable structure, and 11 at the end of December, a decision was made, due to 12 the profile of our responses, that the EPC market is 13 shedding more and more risk in favor of putting it 14 upon the customer. 15 With that said, a decision was made to go to 16 the engineer, procure, construction management route, 17 which allows Alliant Energy and Interstate Power and 18 Light to work with the EPC contractor in a 19 construction management program where we work with 20 them to identify the construction companies that will 21 work on the facilities, and then work with their 22 engineer on procuring sites to develop the contract. 23 Q. Is it a fair statement to say that the new 24 RFP shifts substantially more risk to Interstate with 25 respect to the Sutherland plant? PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 144 1 A. No. There's very little difference between 2 the engineer, procure, and construct target price 3 cost reimbursable and the engineer, procure, and 4 construct management, very little difference. 5 Q. What are those differences? 6 A. I couldn't speak at length. I don't have 7 that information in front of me right now. 8 MR. STEAD: If I could have a moment, I 9 could shorten this up. 10 CHAIRPERSON NORRIS: I'm sorry? 11 MR. STEAD: If I could have a moment, I 12 could shorten this up. 13 CHAIRPERSON NORRIS: Certainly. 14 (Pause.) 15 MR. STEAD: That's all we have. Thank you. 16 We would move the admission of Exhibits 115 to 117. 17 CHAIRPERSON NORRIS: Without objection 115, 18 '16, and '17 are admitted. 19 (OCA Exhibits 115, 116, and 117 20 were received in evidence.) 21 CROSS-EXAMINATION 22 BY MS. LA SEUR: 23 Q. Mr. Beer, I'm Carrie La Seur, attorney for 24 the Coalition. 25 I'm interested first of all in the updates PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 145 1 to the size of the plants. 2 We had an initial press announcement of the 3 size of the plant of 600 megawatts. In Docket 4 SPU-07-11, John Larsen of IPL testified to this Board 5 about a 660-megawatt plant. At page 4 of your direct 6 testimony you refer to a 630-megawatt plant. 7 In November of 2007 Alliant Energy referred 8 to an SGS Unit 4 with a 649 megawatt capacity. 9 Do you have any update today on the size 10 projected? 11 A. Yes. I believe I state in my rebuttal 12 testimony that the facility is a 630-megawatt net 13 pulverized coal plant with an additional 190,000 pounds 14 of CMNR to be provided for economic development, so 15 if the plant will be, by definition, designed at a 16 649, taking 190,000 pounds of steam generation for 17 local business development will result in a 18 630-megawatt net facility. 19 Q. And is that a final number or would it be 20 subject to design modifications? 21 A. Well, during the detailed design engineering 22 phases, it might vary by a few percentage points due 23 to a design variation, but there is no intent on that 24 number being modified at this point in time. 25 Q. And is the design likely to change at this PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 146 1 point? 2 A. No, it is not. 3 Q. Are there any elements of the design that 4 remain subject to change as the bidding process goes 5 forward? 6 A. Could you state the question again, please? 7 Q. Are there any elements of the design that 8 may be subject to change as the bidding process goes 9 forward? 10 A. We do not anticipate at this point in time 11 that it would be changed, but as we continue 12 responses to our request for proposals for our major 13 three pieces of equipment, there may be modifications 14 that result in the detailed engineering phase, but at 15 this point in time there is not anticipated to be any 16 changes. 17 Q. And is the share that IPL will own in the 18 final generating station based on a percentage or a 19 megawatt number? 20 A. As published, it's a megawatt number, 21 correct. 22 Q. The final amount as stated in your testimony 23 of 350 megawatts is a firm share? 24 A. Correct. 25 Q. And so the undeclared future partners would PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 147 1 not affect that final number? 2 A. Not to my knowledge. 3 Q. And you state that IPL--at page 5 of your 4 direct testimony that IPL is still finalizing the 5 details of the joint ownership agreement with CIPCO 6 and Corn Belt. Have those details been finalized? 7 A. Yes. Yes, they have. 8 Q. And so the shares represented by CIPCO and 9 Corn Belt will be as represented in your testimony? 10 A. If that representation is 100 megawatts for 11 CIPCO and Corn Belt respectively, yes. 12 Q. Okay. So if IPL is going to own 350 megawatts, 13 CIPCO and Corn Belt will own 100, who will own the 14 additional capacity? 15 A. I believe, as I replied in my rebuttal 16 testimony, that additional approximately-- Well, 17 first and foremost, we are in the process, as 18 publicly announced, of working with NIMECA in pursuit 19 of approximately 20 megawatts of that balance. The 20 remaining balance of approximately 70 to 75 megawatts, 21 per my testimony, will be either put into a purchase 22 power agreement with a third party or it will be--we 23 will continue to identify additional partners to take 24 on that energy and capacity need. 25 Q. So would it be fair to say at this point you PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 148 1 are not sure? 2 A. Yes. 3 Q. And in the event that the rural utility 4 service does not provide financing for this plant, 5 will the Corn Belt and CIPCO agreements remain part 6 of the final ownership arrangement? 7 A. Yes, it will. 8 Q. Are you aware that there is currently 9 federal litigation pending over RUS financing of coal 10 plants? 11 A. No, I am not. 12 Q. There are some technical terms that we would 13 like to ask about in the response to an OCA data 14 request. I believe this is your response to OCA 15 Witness Fagan's testimony. OCA--this would have been 16 data response 21 to OCA RMF-1 at Schedule A. It's a 17 new generation support strategy update from IPL. 18 Let's see. I'm referring to IPL response to OCA data 19 response 21, Attachment A. 20 MS. JOHNSON: I have to interject here. We 21 don't have a copy of that, and I'm not entirely sure 22 if that's in the record, without being able to see it. 23 CHAIRPERSON NORRIS: This is an IPL data 24 response? 25 MS. LA SEUR: And these, I believe, had been PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 149 1 part of the exhibits to be offered by OCA, but are 2 those--maybe this is my procedural question. Are 3 those accepted as already entered into the record at 4 the beginning of the hearing if we are accepting 5 exhibits that have already been offered into the 6 record? This would have been under Fagan's 7 testimony. 8 CHAIRPERSON NORRIS: If they've been spread 9 upon the record, I think you need to produce it-- 10 MR. STEAD: Right. 11 CHAIRPERSON NORRIS: --or refer to it. You 12 should have it. 13 MR. RAGSDALE: So it's-- 14 MR. STEAD: We'll produce it. 15 MS. JOHNSON: Thank you. I just wanted that 16 clarification so that we could find it and reference 17 it. 18 CHAIRPERSON NORRIS: Is it your anticipation 19 that the witness will need to see it to be able to 20 respond to your question? 21 MS. LA SEUR: I do have several questions 22 regarding some terminology used in that document, 23 yes. 24 CHAIRPERSON NORRIS: Okay. Let's take a 25 moment to find it. PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 150 1 (Pause.) 2 BY MS. LA SEUR: 3 Q. Mr. Beer, do you have that response? 4 A. I'm awaiting the receipt of the data request 5 response to be able to verify it. 6 MS. JOHNSON: I would also like to quickly 7 note that this data request response was provided 8 confidentially, so the questions, if we aren't going 9 into closed session, will have to be limited, please. 10 MS. LA SEUR: We're not going into the 11 content. 12 MS. JOHNSON: Thank you. 13 BY MS. LA SEUR: 14 Q. There's multiple references at pages 48 15 through 69 to a litigation privilege. 16 A. This is 48 of 212? 17 Q. Yes, this is 48 through 69 within 18 Attachment A. 19 A. And your question is? 20 Q. Our question is to what litigation the 21 privilege attaches. 22 MS. JOHNSON: I would object. I don't 23 think--these were not prepared under the direction of 24 Mr. Beer. The DR was submitted and is information 25 gathering, and I don't think he is personally PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 151 1 knowledgeable of what is contained in there, what was 2 redacted. 3 BY MS. LA SEUR: 4 Q. Then I would ask to be directed to a witness 5 that would be able to respond to the nature of the 6 litigation privilege claims. 7 A. I do not know who that witness would be. I 8 was not privy to the original discussions. 9 Q. And your name is in fact on the response to 10 the data request, is it not? 11 A. It is. Which number are we speaking to? 12 Q. This would be IPL's response to OCA data 13 request 21. 14 A. Wait one moment while I find the header 15 sheet. 16 Yes, I am listed, but the question states, 17 "Provide the materials used in any presentations to 18 senior management," and I satisfied the data request 19 by procuring those materials and providing what was 20 requested. 21 Q. And is this your presentation? 22 A. No, it's not. 23 Q. In your rebuttal testimony at page 3-- 24 A. Yes. 25 Q. --you state that IPL will require additional PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 152 1 capital in providing bio-mass handling and storage, 2 dry electro-static precipitator for fly ash 3 collection and potentially a wet electro-static 4 precipitator for sulfuric acid mist collection. Can 5 you give a cost estimate for these additional 6 systems? 7 A. Not at this time, no. 8 Q. And is the cost of these additional systems 9 included in the cost estimates that are part of the 10 prefiled testimony? 11 A. They are included in the most recent updated 12 figures reflected in the data request, yes. 13 Q. At page 8-- 14 A. Let me qualify that. What is in that 15 response is specific to biomass handling. It's 16 specific to the dry electro-static precip as well and 17 the wet scrubber, per se, but it is not specific to 18 the electrostatic precip related to H2SO4. That is not 19 in the numbers. 20 Q. Okay. And at page 8 of your rebuttal, when 21 you updated your discussion of the RFP, you mentioned 22 new bids that have come in. Is that process 23 complete? Has IPL received all of the bids it 24 anticipates? 25 A. Which lines specifically on page 8 are you PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 153 1 referencing? 2 Q. Well, first I'm asking you about the 3 amendment that you made to your testimony when you 4 first took the stand, and I think you referred to 5 page 7, and I think that may walk over onto page 8. 6 A. Yes. 7 Q. You referred to new bids that have been 8 received in response to the RFP. 9 A. There are two different significant RFPs 10 related to the Sutherland Unit 4 project. The first 11 one is the engineer, procure, and construction 12 management RFP, and the second is specifically on the 13 procurement side related to the major three pieces of 14 equipment. Those RFPs, which include RFPs related to 15 the boiler, the turbine, and the air quality control 16 systems, continue to be outstanding. 17 Q. So the former, EPC? 18 A. The EPCM we have received and we are in the 19 process now of evaluating the responses. 20 Q. And with these new bids, has the projected 21 cost of construction increased or decreased? 22 A. It is too early to tell. We're still 23 looking at the evaluation phase of the respective 24 bids, and then the following process would be working 25 on the terms and conditions and what to use in PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 154 1 pricing. 2 Q. So after you've reviewed the bids, you are 3 unable to say whether they're higher or lower than 4 previous bids? 5 A. The engineer, procure, construction, whether 6 it be a target price cost reimbursable or a design 7 bid billable does not start out with the price, but 8 starts out with capabilities, skills in that arena. 9 Pricing follows that underneath the approach you have 10 to design your detailed engineering before you can 11 land on and identify specific pricing elements. 12 Q. So is your choice among the bids made 13 without any regard to price? 14 A. Within the structure of a target price cost 15 reimbursable, the word "target price" comes into 16 play, but price is not just specific dollar amounts. 17 It's terms and conditions, it's liquidated damages, 18 and it's performance guarantees, so one must 19 negotiate over a period of time and clarify each one 20 of those issues in order to recognize the true value 21 or the true cost of the facility. 22 So the answer is upon receipt, we do not 23 receive pricing. 24 Q. And at what point would that comparative 25 true cost become apparent? PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 155 1 A. We anticipate, with our ratemaking 2 principles filing at the end of the first quarter 3 2008, that we will have those numbers. 4 Q. And will those numbers then be filed with 5 this Board? 6 A. Yes; per the ratemaking procedures, yes. 7 Q. Do these new RFP responses include the 8 installation of the additional technologies I recited 9 earlier in reference to page 3 of your rebuttal? 10 A. Yes; with the exception of the one that I 11 noted, yes. 12 Q. Okay. In your rebuttal at page 10, you 13 discuss the prospect of burning biomass at 14 Sutherland 4. What is the combustion efficiency of a 15 boiler like Sutherland 4 for the type of biomass that 16 IPL proposes to burn? 17 A. The combined combustion efficiency? 18 Q. If you have one. 19 A. I don't have one. Are you talking heat 20 rate? 21 Q. I'm talking about--well, heat rate would be 22 one way to express it. 23 A. I don't believe I'm qualified to answer that 24 in its entirety. The appropriate witness per the 25 design would likely be Larry Harder. PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 156 1 Q. The IPL budget for total capital cost was 2 submitted in October 2007 for 1.587 billion. You 3 have identified at least three design additions, the 4 likelihood that prices would be updated on the 5 turbine and boiler in response to bids, new 6 engineering analyses, further negotiations on 7 contracting model. Does IPL have a new capital 8 budget at this point for the Marshalltown plant? 9 A. No, we do not. 10 Q. Do you expect the capital costs for the 11 plant to be higher than the estimate submitted in 12 October? 13 A. I believe the revised numbers that we 14 provided, I believe, in the last couple of weeks 15 would indicate the price will be higher, yes. 16 Q. And can you give us a range of that 17 increase? 18 A. Not off the top of my head, no. 19 Q. You testify that the current uncertainty of 20 power plant permitting in the United States, combined 21 with the global sellers market, has resulted in major 22 vendors declining to submit a bid for coal-fired 23 generation in the United States in favor of 24 constructing power plants in Europe and Asia. 25 My question is, has IPL been rejected by PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 157 1 major vendors? 2 A. Yes, we have. 3 Q. And who are they? 4 A. I do not know at this point in time, but we 5 have. 6 Q. Would you be able to name large vendors who 7 have forgone work in the United States? 8 A. Not as I'm sitting here, no. 9 Q. How does IPL procure materials and equipment 10 from China? 11 A. IPL does not procure materials and equipment 12 from China. 13 IPL, through our engineer, procure, 14 construction management relationship will identify 15 the appropriate responses to the RFP, as I referenced 16 earlier, for their analysis of plant equipment, and 17 those contractors, in their responsibility for the 18 project, will have responsibility for going out into 19 the marketplace. 20 Q. So it would be done through agents? 21 A. I don't believe the fair word would be 22 "agents." I believe it will be done through 23 construction contractors who provide specific 24 services, whether it be boilers, boiler erection, air 25 quality control systems, the specific equipment, and, PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 158 1 of course, the construction labor that's required in 2 erecting those pieces of equipment, so they are not 3 agents; they are contractors. 4 Q. And so those contractors would be authorized 5 to negotiate on behalf of IPL for the materials and 6 equipment necessary from foreign markets? 7 A. Within their respective bid responsibility, 8 which would include their prearranged ability to 9 provide those products per the contractual 10 obligations with Interstate Power and Light. 11 Q. And would those materials and equipment then 12 have a price set on them as part of the contracting 13 process? 14 A. I really can't answer that question because 15 we're not at that point in the negotiations with 16 those respective contractors to understand their 17 terms and conditions. 18 Q. So it remains to be negotiated whether there 19 would be a fixed price for those commodities? 20 A. Correct. 21 Q. Would the same apply for procurement of 22 materials and equipment from any other foreign market 23 for construction of this plant? 24 A. The same would apply for all procurement of 25 all materials needed for construction of this PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 159 1 facility, whether domestic or not. 2 Q. When IPL used multiple prime contracts to 3 build the Emery plants, did it go through the same 4 kind of contractual arrangement for procurement of 5 materials and equipment or did it do the acquisition 6 itself? 7 A. I do not know. I was not involved in the 8 Emery project. 9 Q. And in the-- You testified that there is a 10 new capital budget at this time. 11 A. No, I did not. 12 Q. There is not a capital budget? 13 A. No. 14 Q. Okay. Has IPL settled on a contractor model 15 for this project? 16 A. As I alluded to earlier, we just closed out, 17 on January 4th, with an engineer, procure, and 18 construction management process. We are in the 19 process of evaluating those responses, and subject to 20 the acceptance of the appropriate terms and 21 conditions in the contracting relationship, that will 22 be the model we will go with, but in short, the 23 answer is no, we have not settled. 24 Q. In the event IPL adopts something other than 25 an EPC model, who bears the risk regarding product PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 160 1 testing when the component parts are combined? 2 A. That is also subject to the negotiations of 3 the respective contracts, whether it be the boiler, 4 turbine, UCS, but traditionally, the respective major 5 equipment manufacturers take responsibilities for 6 particular performance guarantees as part of the 7 negotiating process. 8 Q. If there are cost overruns in some other 9 model, is IPL or Alliant committed to funding them? 10 A. I believe I addressed this in my direct 11 testimony and my rebuttal testimony relative to the 12 current condition of the market, and the market is-- 13 under target price cost reimbursable or a design-bid- 14 build format, both of those leave the cost exposure 15 with the customer. 16 Q. And would that customer in this scenario 17 include Corn Belt and CIPCO, or would it be only IPL? 18 A. It would be all people who have a 19 partnership interest in the facility. 20 Q. Have CIPCO and Corn Belt given IPL any 21 upper-level cost ceilings given the rapidly rising 22 cost of construction? 23 A. No, they have not. 24 Q. Is there any scenario that IPL could foresee 25 with regard to rising capital costs where it would no PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 161 1 longer view the Marshalltown plant as economically 2 viable? 3 A. I'm not aware of any scenarios that Alliant 4 Energy has put forth to evaluate that. 5 Q. And I have a few questions about fuel prices 6 and fuel diversity. 7 You have testified about the amount of coal 8 needed for this plant on an annual basis. Would you 9 be able to break out what types of coal are part of 10 this calculation? 11 A. No, I would not. 12 Q. Is it a general assumption that this will be 13 all Powder River Basin coal? 14 A. Yeah, the plant as--I shouldn't say-- Could 15 you phrase the question again or-- 16 Q. Is it your general assumption that, in 17 giving us numbers about coal consumption, that this 18 will be all Powder River Basin coal? 19 A. No, that is not the assumption. The 20 assumption is the primary fuel would be a low sulfur 21 Powder River Basin coal, with the ability to burn a 22 bituminous coal. 23 Q. But you're not making any projections of the 24 projected mix in giving us your capacity? 25 A. No. It is premature to do that. PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 162 1 Q. And what prices are you using for this coal 2 in your planning stages? 3 A. In regards to evaluating the cost of the 4 plant or-- 5 Q. The cost of operation, yes. 6 A. I don't--I probably am not the qualified 7 person to speak to that. I believe Brent Kitchen 8 would be the individual that would give you the 9 appropriate information on fuel pricing. 10 Q. And would you be able to speak to the 11 sources of IPL's current coal purchases? 12 A. Our current coal purchases? 13 Q. Yes. 14 A. No, I wouldn't be able to speak to that. 15 Q. Would that be a question again for 16 Mr. Kitchen? 17 A. No. I don't believe so, no. 18 Q. Is there a witness who would be present in 19 this proceeding who is familiar with the current 20 coal-sourcing practices for IPL? 21 A. Not that I'm aware of. 22 Q. In your direct testimony you state that PRB 23 coal will be the primary coal used for Marshalltown. 24 Are you aware of how much of IPL's current coal 25 supply comes from PRB mines? PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 163 1 A. No, I am not aware. 2 Q. And we've seen testimony from several 3 witnesses about projected increases in the price of 4 coal for the foreseeable future. How would IPL look 5 to manage annual increases over the course of the 6 next three, five, 10 years? 7 A. I believe that would be a question that 8 Brent Kitchen would be more qualified to respond to. 9 Q. Your rebuttal testimony speaks to conducting 10 analyses that would provide IPL with various 11 scenarios for concluding the most or the more 12 efficient and economic fuel mix. Has IPL arrived at 13 those figures yet? 14 A. Could you say that question again? 15 Q. I'm asking if IPL has arrived at a 16 conclusion as to the most efficient and economic fuel 17 mix for this plant. 18 A. At Alliant Energy, we've gone through what 19 is a normal process in the engineer, procure, and 20 construct or the phases of plant construction. We 21 went through a value engineering process in the last 22 month to month and a half. I don't have the specific 23 date offhand. Through that process, you're trying 24 to--your goal is to get the appropriate return or 25 understand those incremental costs with differing PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 164 1 fuel mixes relative to the capital required in order 2 to allow those different fuels to be included. 3 A result of that is we're looking at 4 reducing the amount of bituminous emphasis we have in 5 our facility to be able to reduce the CAPX of the 6 facility due to the lack of justifiable return. 7 Q. You're looking at reducing the bituminous 8 mix, meaning reducing the eastern coal? 9 A. Yes, reducing. 10 Q. And what would be the impact of that on 11 capital expenditures? 12 A. I don't have the numbers offhand, but as you 13 burn more higher sulfur coal, you increase the amount 14 of capital required for boiler installation, and your 15 scrubber requirements get larger. 16 Q. And so you're talking about putting an 17 infrastructure in place that would be unable to burn 18 more than a certain proportion of eastern high sulfur 19 coal? 20 A. Correct, yes. 21 Q. You state in your rebuttal testimony that 22 IPL ran a successful burn at the Ottumwa coal plant 23 in 2006. Can you share with us the elements of that 24 success? 25 A. No, I cannot. PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 165 1 Q. Are you able to summarize the emissions data 2 from that burn? 3 A. I am not the appropriate witness for that, 4 but Larry Harder would be the appropriate witness to 5 speak to regarding that topic. 6 Q. And has there been any economic analysis of 7 that Ottumwa burn that would be used by IPL when 8 considering the cost of the Marshalltown plant? 9 A. Not that I'm aware of, no. 10 Q. Your testimony and rebuttal speak to IPL's 11 current and future rail transport needs. Who are the 12 current rail transporters for IPL? 13 A. As outlined in my direct testimony, 14 Union Pacific will be the primary coal transportation 15 company. 16 Q. And are there other prospective transport 17 companies that may be available depending on varying 18 transport scenarios? 19 A. As stated in my direct testimony, there are 20 a couple of scenarios available, but none of which we 21 have invested time evaluating. 22 Q. And are you able to speak to the prices IPL 23 is being charged for its current transport services? 24 A. No; similar to fuel, no. The answer is no. 25 Q. Are you able to say whether those prices are PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 166 1 under contract? 2 A. No, I am not. 3 Q. Will IPL need new or additional rail 4 transport for either PRB delivery or delivery of any 5 eastern coals? 6 A. Depending upon reliance on the 7 Union Pacific, the answer is no. 8 MS. LA SEUR: I have nothing further. Thank 9 you. 10 CHAIRPERSON NORRIS: Mr. Puckett? 11 MR. PUCKETT: I have no questions for 12 Mr. Beer. 13 BOARD MEMBER HANSON: I'm not quite-- I 14 don't know if this is loud enough or not. It is? 15 Okay. 16 I'm not quite sure if this was directly 17 addressed in the questions that you already answered 18 about the 70 or so, 75 megawatts of currently 19 unassigned power from the plant, but what's the 20 impact of that unassigned capacity on IPL's share of 21 the overall financing of the project? 22 THE WITNESS: I believe the answer to that 23 is there will be no impact, with the understanding 24 Alliant intends on following two different paths, 25 both of which will be resolved in the coming months: PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 167 1 One is either to use a purchase power 2 agreement route where we could identify and select 3 somebody who would participate in the energy and 4 capacity of the plant, thus providing a degree of 5 financing certainty, or the other route would be to 6 go out and identify and select another partner or 7 partners to be able to take advantage of those 8 additional megawatts. 9 BOARD MEMBER HANSON: Okay. And then on-- 10 Let's see if I can show you the page right here. At 11 the beginning of your testimony, you stated that when 12 this plant was completed, it would require 13 approximately 85 employees to operate the unit. 14 THE WITNESS: Yes. 15 BOARD MEMBER HANSON: Are those 85 positions 16 all--the estimated 85 positions all new positions 17 with the company, or are some of those--would some of 18 those be people who are required for the operation of 19 the plant, but currently have other duties with the 20 company, like working at one of the other plants or 21 someplace else? 22 THE WITNESS: Some may be current employees 23 due to the bidding process that's required underneath 24 the bargaining unit relationship. 25 BOARD MEMBER HANSON: I'm sorry. I should PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 168 1 have phrased that differently. I'm talking about the 2 positions rather than the humans that occupy them. 3 THE WITNESS: They're absolutely new 4 positions. 5 BOARD MEMBER HANSON: New positions. 6 THE WITNESS: There is no overlap in any 7 other role or responsibility currently at Interstate 8 Power. 9 BOARD MEMBER HANSON: Okay. Thank you. 10 BOARD MEMBER. TANNER: Good afternoon. Can 11 you hear me okay? 12 THE WITNESS: Yes, I can. 13 BOARD MEMBER TANNER: I have got a question 14 here. I'm going to reference some confidential 15 information, but I think you can answer without going 16 into confidential information. If you can't, let us 17 know. 18 Witness Vesperman's Exhibit KDV-1, 19 confidential Schedule B lists additional costs for 20 transmission companies--I'm sorry--for transmission 21 rebuilds, and then in your--those costs don't appear 22 to--do not appear in your confidential Figure 1.9-1. 23 Can you explain why these costs are not 24 included in the construction cost estimates? 25 THE WITNESS: Yes. Is that our most recent PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 169 1 transmittal to you updating the costs when you 2 referenced-- 3 BOARD MEMBER TANNER: I believe so. 4 THE WITNESS: Okay. Those costs are in the 5 numbers. They're incorporated in the owner's cost 6 section at the bottom. They fall outside of the 7 purview of the engineer, procure, and construction 8 relationship, and they fall into the transmission 9 outlet facilities responsibilities, so those numbers 10 for the specific transmission outlet are included in 11 the owner's cost section. 12 BOARD MEMBER TANNER: Okay. And how is IPL 13 addressing its customers' exposure to the risk of 14 coal and coal transportation cost increases with your 15 plans for SGS Unit 4? 16 THE WITNESS: I'm probably not qualified to 17 speak to specific strategies Alliant's employed 18 regarding coal management. 19 BOARD MEMBER TANNER: That's all I have. 20 Thank you. 21 THE WITNESS: Thank you. 22 CHAIRPERSON NORRIS: Good afternoon, Mr. Beer. 23 THE WITNESS: Good afternoon. 24 CHAIRPERSON NORRIS: A couple of questions. 25 I'll turn first to rebuttal, your rebuttal page 3. I PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 170 1 think Ms. La Seur was questioning on nearly the same 2 language in that same area there. 3 In response to the question, "Are there any 4 items in the current design that were not included in 5 the original estimate?", you stated that the original 6 estimate was based on a standard, basic design power 7 plant. 8 THE WITNESS: Correct. 9 CHAIRPERSON NORRIS: So the additional 10 capacity to treat this as a biomass handling 11 facility, when was that change made? 12 THE WITNESS: Well, the intention or the 13 expectation from the outset was that we would have 14 biomass in this facility. 15 The early stages of the pricing were to 16 use--the common approach in the early stages, because 17 you're not through the detailed engineering, is to 18 use reference plants. Because there are no reference 19 plants throughout the United States, one of the 20 oversights--and the amount of money involved is 21 several million dollars. It's not tens of millions, 22 for clarity, so we understand the relative impact of 23 biomass fuel handling. 24 In the early stages, you utilize reference 25 plants because of the fact you don't have your PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 171 1 detailed engineering, you don't have your product 2 specs down in order to get your early numbers, so, in 3 effect, those unique characteristics were not 4 included as an oversight, and the specific to biomass 5 stand-alone, we had knowledge, per se, of successes. 6 It was not a material impact to the total cost of the 7 facility so it was not included in the earlier 8 stages. 9 CHAIRPERSON NORRIS: Okay. And then on 10, 10 and a follow-up, I think, which you were alluding to 11 there, the final sentence, your answer to the first 12 question on page 10 of your reply, lines 13 and 14, 13 you said IPL is leveraging on its OGS experience by 14 designing biomass capability into this Sutherland 15 Unit 4. What is that experience that you're 16 leveraging? 17 THE WITNESS: Oh, the experience for 18 switchgrass, specifically the switchgrass experience 19 with Chariton Valley Cooperative and 20 Alliant Energy is how you handle and how you manage 21 it, since it's along this product, to get the same 22 amount of BTUs out of a ton of switchgrass relative 23 to coal. 24 The fuel handling is your major problem, not 25 only to bring it to the facility and handle it PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 172 1 precombustion, but how do you introduce it into the 2 boiler. They're pulverized coal so how is it--in 3 this case it's pneumatically introduced. You put it 4 into boiler that way. 5 You need to have an understanding of how do 6 I move it from a--it's not an off-site facility, but 7 how do I move it from the facility that's detached 8 from the main plant, how do I move it efficiently 9 into the plant and then introduce it into the boiler. 10 That experience was not an easy thing to acquire. We 11 have it now. That will make it easier in the design 12 of this facility. 13 CHAIRPERSON NORRIS: So that's the physical 14 experience. Let me ask you a little bit about the 15 economic experience. 16 We now seem to be in a competitive 17 environment for biomass fuels, with biodiesel and 18 ethanol, you name it where the biomass industry is 19 going. How reasonable and economic is it still to 20 plan a plant for burning biomass in a coal plant when 21 you have a competitive atmosphere out there for other 22 biomass needs? 23 THE WITNESS: That's a fair question. We're 24 not hunting for the primary--with regards to the 25 agricultural commodity, we're not hunting for the PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 173 1 value added of taking the corn. We want to take the 2 scraps and not the value-added part of the cornstalk. 3 CHAIRPERSON NORRIS: And is that a more 4 valuable use of that stalk, you say, in a--as a 5 supplement to a coal-fired facility or is it more 6 valuable as an additive for ethanol? 7 THE WITNESS: Right now the ethanol, subject 8 to cellulosic ethanol development and technology 9 improvement, right now there's a tremendous amount of 10 by-product or waste within the ethanol process. The 11 cellulosic is trying to capture more of the energy 12 from the cornstalk, as well the corn kernel, so over 13 time, one would imagine that the more appropriate 14 value would be to the ethanol market, which would be 15 a fair assessment, but recognizing the tremendous 16 amount of volume, cornstalks, corn stover, and 17 agricultural by-products, there is plenty out there 18 per our assessment, our early preliminary assessment. 19 CHAIRPERSON NORRIS: So you think it's 20 realistic to plan this plant to burn biomass given 21 the current climate and the market for biomass? 22 THE WITNESS: Absolutely, relative to the 23 value required, yes. 24 BOARD MEMBER TANNER: I have a follow-up. 25 In reference to some comments you made PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 174 1 earlier, I want to make sure we understand you 2 correctly. 3 Do you now think that the capital expense of 4 a wet scrubber to provide fuel flexibility is not 5 cost effective? 6 THE WITNESS: Best available control 7 technology, you know, let's say three or four years 8 ago back for Powder River Basin coal was a dry 9 scrubber, but as we continue to develop technology, 10 directionally going toward the wet scrubber's 11 requirements, wet scrubbers have incremental costs to 12 them, but it's also the sophistication of that wet 13 scrubber. They're not all the same subject to your 14 fuel mix, so your collection rate--on a wet scrubber 15 for a Powder River Basin and a low bituminous input, 16 your collection rate is in the mid--I've got to be 17 careful--would probably be in the 90 percentile range. 18 The second issue with the wet scrubber that 19 we've identified that we feel is responsible is that 20 the preliminary data that we're capturing relative to 21 carbon capture sequestration is that per that model, 22 there's a high likelihood that it's going to require 23 a wet scrubber on the back side in order to 24 facilitate that. 25 Does that answer your question? PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 175 1 BOARD MEMBER TANNER: Yes, I think so. 2 Thank you. 3 CHAIRPERSON NORRIS: Ms. Johnson? 4 MS. JOHNSON: I believe we have nothing. 5 CHAIRPERSON NORRIS: Mr. Stead? 6 FURTHER CROSS-EXAMINATION 7 BY MR. STEAD: 8 Q. During your discussion with Ms. La Seur, you 9 mentioned-- 10 CHAIRPERSON NORRIS: Mr. Stead, you might 11 want to grab the microphone. 12 MR. STEAD: I'm sorry. 13 CHAIRPERSON NORRIS: It's your soft-spoken 14 nature. 15 BY MR. STEAD: 16 Q. During your discussion with Ms. La Seur, you 17 mentioned two types of RFPs, one was the EPC and the 18 other one was for equipment vendors, I believe. 19 A. Yes. Major equipment vendors would be 20 appropriate, yes. 21 (OCA Exhibit 118 was marked 22 for identification.) 23 BY MR. STEAD: 24 Q. I'm handing you what has been marked 25 confidential exhibit OCA 118, and I would ask you, is PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 176 1 that the EPC RFP that currently you receive bids on? 2 A. Yes. This is the EPC RFP that was let out 3 in December, correct. 4 MR. STEAD: We would move the admission of 5 Exhibit 118. 6 MR. PUCKETT: Just a clarifying question. 7 It is marked confidential. Is it being offered as a 8 confidential exhibit? 9 MR. STEAD: Yes, we said confidential 10 exhibit, OCA Exhibit 118. 11 CHAIRPERSON NORRIS: Without objection, OCA 12 Exhibit 118 is accepted as a confidential exhibit. 13 (OCA Exhibit 118 was. 14 received in evidence.) 15 MR. STEAD: That's all we have, Your Honor. 16 Thank you. 17 CHAIRPERSON NORRIS: Ms. La Seur. 18 MS. LA SEUR: I have nothing further. 19 CHAIRPERSON NORRIS: Mr. Puckett? 20 MR. PUCKETT: Nothing. 21 MS. JOHNSON: I just have one quick 22 follow-up question for Mr. Beer. 23 REDIRECT EXAMINATION 24 BY MS. JOHNSON: 25 Q. I just want to clarify, do you believe that PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 177 1 IPL is going to have any problem finding a PPA or 2 partner for the remaining megawatts? 3 A. No, we will not. 4 MS. JOHNSON: Thank you. 5 CHAIRPERSON NORRIS: Anybody else? 6 (No response.) 7 CHAIRPERSON NORRIS: Thank you, Mr. Beer. 8 THE WITNESS: Thank you. 9 (Witness excused.) 10 MS. JOHNSON: IPL now calls Dan Otto. 11 CHAIRPERSON NORRIS: Hello, Mr. Otto. 12 THE WITNESS: Hello. 13 CHAIRPERSON NORRIS: Raise your right hand, 14 please. 15 DANIEL MARK OTTO, 16 called as a witness Interstate Power and Light 17 Company, being first duly sworn by Chairperson Norris, 18 was examined and testified as follows: 19 CHAIRPERSON NORRIS: Thank you. You may be 20 seated. 21 DIRECT EXAMINATION 22 BY MS. JOHNSON: 23 Q. Can you please state your full name and 24 business address for the record? 25 A. Daniel Mark Otto, and my address is PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 178 1 1225 Orchard Drive, Ames, Iowa. 2 Q. And did you on December 10th, 2007, file 3 five pages of rebuttal testimony, as well as 4 exhibits, which would be Exhibit 3 in this 5 proceeding, also labeled Exhibit DMO-1, Schedules A 6 through D? 7 A. I did. 8 Q. And do you have any changes or corrections 9 to make to that testimony? 10 A. No, I don't. 11 (IPL Exhibit 3 was 12 received in evidence.) 13 (The prepared testimony follows.) 14 15 16 17 18 19 20 21 22 23 24 25 PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 184 1 MS. JOHNSON: Then I tender the witness for 2 cross-examination. 3 CROSS-EXAMINATION 4 BY MS. EASLER: 5 Q. Good afternoon, Mr. Otto. 6 A. Yes. 7 Q. Your Schedule B, paragraph 1, indicates that 8 currently Iowa's energy consumption is expected to 9 continue increasing at a rate of 1.4 percent 10 annually. 11 A. Yes. 12 Q. You also have some discussion in your 13 Schedule B about the energy intensive nature of the 14 biodiesel and ethanol industries, is that correct? 15 A. That's correct. 16 Q. Is it reasonable to expect that these 17 industries will also evaluate the economics of 18 meeting their electric energy needs independent of a 19 utility? 20 A. The energy--or the electric energy is an 21 important part of their production process, along 22 with the availability of the fuel-bearing stock, so 23 in combination, they are, I guess, a very important 24 part of the decision process of where they locate 25 their business activity. PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 185 1 Q. Are you aware that some ethanol plants 2 generate coal themselves, generate coal production 3 themselves? 4 A. Yes, I am aware some of the newer or more 5 recent facilities are experimenting with alternative 6 sources of energy, on-site and different generation 7 processes. 8 Q. And do you think it's reasonable to expect 9 that others would consider that possibility as well? 10 A. If it is economically feasible or looking 11 for the least-cost method of producing their end 12 product, the ethanol. 13 Q. You indicate that to avoid constraining 14 future economic growth in Iowa, that baseload 15 capacity needs to expand at least at the rate of 16 growth that we're seeing in the Iowa economy. Is 17 that accurate? 18 A. That is the assumption of the method of 19 projection that I'm using, yes. 20 Q. Are you saying that future electric load 21 growth in Iowa should be met solely by baseload 22 capacity? 23 A. Well, the baseload is an important part for, 24 like I said, kind of the production processes that 25 require a steady stream of baseload inputs to their PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 186 1 production process, so it's an important part, I 2 guess, that would be for the expansion to be 3 consistent--that the growth be consistent with 4 capacity. 5 Q. So you would advocate having enough baseload 6 to meet all new growth? 7 A. The baseload to grow consistent with the 8 future growth expectations, yes. 9 Q. Would you acknowledge that some part of new 10 load growth in Iowa can and will be met by resource 11 alternatives other than baseload capacity? 12 A. My understanding of the electric industry is 13 that there are different categories: The baseload 14 that is the constant online component, the peak load 15 during the peak demand season, and then a component 16 that the alternative energy sources are providing a 17 lot of the nondispatchable-type vintages; but the 18 baseload is kind of the important part that needs to 19 be consistent and reliable to sustain some of the 20 around-the-clock industries. 21 Q. Do you understand that IPL is obliged to 22 meet the electric service requirements of the 23 customers locating in its service territory? 24 A. That's my understanding, yes. 25 Q. When you speak of the proposed SGS Unit 4 PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 187 1 meeting load that would otherwise potentially be 2 displaced to other geographic regions, does this load 3 consider utility rates available from IPL in deciding 4 whether or not to locate in their service territory? 5 A. As I understand your question, the economic 6 growth that Iowa is pursuing needs to have, I guess, 7 a consistent and reliable source of energy to foster 8 that growth. The targets are down the road, kind of 9 the growth--the new economic development, so it's 10 kind of a projected path that it's on, so... 11 Q. But proposed economic development will 12 evaluate IPL's rates in deciding whether or not to 13 locate? 14 A. Yes. My understanding is that the reliable 15 low-cost energy is a very important ingredient in 16 many of the types of economic development strategies 17 that states like Iowa pursue; so, yes, it is 18 important. 19 Q. All other things being equal, would you 20 agree that potential new load would prefer lower 21 utility rates? 22 A. Yes. That's an economic assumption that 23 least-cost alternatives are the preferred profit- 24 maximizing strategy. 25 Q. So would you also agree that utilities with PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 188 1 lower rates compared to their neighbors are in a 2 better competitive advantage to attract new 3 commercial or economic development? 4 A. As part of the overall package that is 5 available to be offered to prospective industries, 6 there are other things besides electricity, location, 7 other inputs that are part of their overall package 8 that are important as well. I guess the point would 9 be that they need to be competitive and not with 10 terms at a disadvantage. 11 Q. Have you examined the rate impacts of the 12 proposed SGS Unit 4? 13 A. No, I have not. 14 MS. EASLER: That's all I have. Thank you. 15 CROSS-EXAMINATION 16 BY MS. LA SEUR: 17 Q. Hello, Mr. Otto. 18 A. Hello. 19 Q. In framing your testimony, you predict 20 steady growth in electricity consumption into the 21 future. Can you be more specific? Is there any 22 period of time for which you are predicting steady 23 electricity consumption growth? 24 A. Well, I based it on the past most recent 25 periods, from 2000 to present, and then also rely on PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 189 1 the Iowa economic forecast going out for the next two 2 years that just show economic growth consistent with 3 the experiences that we've had, so the forecasting 4 beyond that is very difficult. We kind of just rely 5 on projected trends, assuming the projections assume 6 that things will stay--the relationship will stay 7 constant. 8 Q. And when you predict this steady consistent 9 growth in electricity consumption, is that based on 10 population growth in Iowa over the next few decades? 11 A. It's based on a combination of the 12 employment growth, personal income growth, and 13 population growth, so all of these factors are 14 drivers for demand for electricity. 15 Q. And on what data do you base your 16 projections of population growth? 17 A. Population growth, I am using the Woods & Poole 18 data series for the projection of the population 19 growth in Iowa. 20 Q. And why do you prefer to rely on Woods & Poole 21 rather than U.S. Census Bureau projections? 22 A. Well, there are two different Census Bureau 23 estimates and the Woods & Poole, and my feeling--I'm 24 not a demographer to do the projections, but my 25 feeling is that the Census growth rates are not--the PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 190 1 rate of growth in Iowa will be higher than that. I 2 don't think they're taking into account the migration 3 change sufficiently, but I have not developed my own 4 models to come to that. 5 Q. As you say, you are not a demographer? 6 A. Yes, that's correct. 7 Q. And the data you provide for predicting 8 economic growth and growth in income provides 9 projections only through 2008. How is the data 10 relevant to predicting growth in income over the next 11 few decades? 12 A. Well, it's just demonstrating that the-- 13 Well, it's consistent with the growth we've had since 14 2000 or 1990, and it's just sort of a way of 15 demonstrating that we expect it to continue. 16 Q. Do you predict employment growth in the next 17 few decades in Iowa? 18 A. I think--I don't have any forecasting models 19 that would go out that far, so, no, I don't. 20 Q. You testify that increased manufacturing of 21 wind energy components will drive electricity 22 consumption in Iowa in the future. 23 Has overall manufacturing been declining in 24 Iowa in recent years? 25 A. The manufacturing sector in Iowa has PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 191 1 remained fairly steady in contrast to the rest of the 2 country, which has seen declines in manufacturing, 3 but while the employment rate is declining, we're 4 actually seeing an increase in the value of 5 production, the value of manufacturing products, so 6 it's a result, really, in efficiencies in sectors 7 that it's still a very important component. It's 8 increasing because of greater output with fewer 9 workers, so it is still increasing. 10 Q. And, let's see, you attach a report from the 11 Renewable Energy Policy Project to support your claim 12 that the availability of baseload electricity is a 13 critical factor in siting of wind energy component 14 manufacturers. 15 Does this study address the role baseload 16 electricity plays in the siting of this kind of 17 manufacturing operation? 18 A. No, it doesn't. It's just demonstrating the 19 potential for growth in that industry as--wind 20 industry as a potential growth industry and as a 21 manufacturing process that would require significant 22 electricity. 23 Q. And so what is the basis for your claim that 24 availability of baseload electricity is critical in 25 the siting of wind energy manufacturers? PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 192 1 A. That it's--I guess there's no specific, 2 other than it's a manufacturing-based industry that 3 would require electricity, reliable electricity, as 4 an important part of its production process, and 5 there's potentially rapid expansion in that industry. 6 Q. And if we go with your interpretation, that 7 the availability of cheap baseload electricity is a 8 critical factor in the siting of wind energy 9 component manufacturers and other forms of industry, 10 why does the REPP report conclude that California, a 11 state that has the highest electricity prices in the 12 country, has the greatest potential for economic 13 expansion? 14 A. The expansion potential, I think, I base it 15 on the fact that we have a--we are the third largest 16 wind generating state, and so the opportunity to 17 expand the component parts, manufacturing parts here, 18 so I see it as a combination of the electricity, as 19 well as the industry that's taking off in the state. 20 Q. You note that increased biofuels production 21 in Iowa has been a driver for higher demand for 22 electricity. 23 Would you acknowledge that many biofuels 24 refineries are looking toward powering the refining 25 process with the biofuel feedstock itself or other PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 193 1 agricultural waste? 2 A. That's my understanding, yes. There are 3 places that are exploring alternative fuel sources 4 for the refining process, yes. 5 Q. And doesn't that constitute an economic 6 advantage for biofuel feedstock? 7 A. Not necessarily. It depends on the ultimate 8 cost, economic cost of that. There's the assembly 9 and logistics of getting together, so currently I 10 believe the electric--baseload electricity is the 11 least cost approach to it. 12 Q. And if this trend toward use of biofuel 13 feedstocks or other wastes for powering the refining 14 process of biofuels does indeed turn out to be a 15 positive trend, how would this affect your 16 predictions for increased electricity demand in the 17 biofuels sector? 18 A. To the extent that it can be used, it's 19 still a very energy-intensive sector, so it depends 20 on the--if there are subsidies to encourage that 21 versus looking for the least-cost approach to it, so 22 it kind of depends on the relative economics. 23 Q. And you point out that biofuels production 24 is likely to level off over the next decade. How is 25 this observation consistent with your claim that the PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 194 1 biofuels industry in Iowa will drive electricity 2 demand higher? 3 A. In the short term, the ethanol, corn 4 ethanol-based ethanol, will be a growth up to that 5 plateau of about 14 to 15 billion gallons per year, 6 but the state is also very involved in exploring 7 alternative energy sources, biomass sources, as well, 8 so it's kind of a two-tiered approach to looking at 9 the larger market and energy sufficiency. 10 Q. You note in the past increased income has 11 tracked with increased electricity consumption. How 12 will any carbon reduction program affect that 13 historic correlation? 14 A. I haven't--I don't feel qualified to address 15 that question. 16 Q. And you also testify that expanded 17 electricity capacity will draw in population that 18 would otherwise go to other regions. Can you cite 19 any historical evidence in rural America for this 20 claim? 21 A. No, I can't. 22 Q. Do you frequently work with electricity load 23 growth productions in your academic work? 24 A. No, I don't. 25 Q. In your Exhibit DMO-1, Schedule C referred PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 195 1 to emerging biofuels, how it affects U.S. grain, oil 2 seed, and livestock markets. 3 The report projects average corn prices to 4 increase to approximately 3.40 per bushel to support 5 projected expansion of corn acreage and ethanol 6 production. 7 Would you agree that the price of corn right 8 now is around 4.50 a bushel? 9 A. Yes. This report is fairly dated given the 10 dynamics in the market right now. 11 Q. And would you--could you concur with 12 Dr. Harl's observation that ethanol production will 13 expand only until the price of corn becomes too high 14 and drives investment margins to zero? 15 A. Well, not completely. The corn price is 16 just one part of the set of prices that are important 17 here. The price of oil at the time of this 18 projection was $65 a barrel. It's over a hundred 19 dollars a barrel now, and also the price of ethanol 20 has gone up considerably. So the price 21 relationships, corn, the price of corn, along with 22 the price of oil and the price of ethanol are going 23 to be important determinants. Yes, the economics 24 will be important. 25 Q. This is in fact a conclusion from the CARG PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 196 1 report, is it not, that the price of corn will 2 eventually seal off the potential for growth in the 3 ethanol industry? 4 A. Yes. There is a cap or limit. There is an 5 equilibrium at which it will be too expensive to use 6 it for the ethanol process relative to other demands, 7 other needs, but the ethanol and oil prices are also 8 parts of that equation. 9 Q. Just a question about the Woods & Poole 10 projections for growth. You refer to a one-- Sorry. 11 I think I have the question figured out now. 12 You refer to a 1.4 percent growth rate in 13 electric consumption, and I would just like to know 14 where that growth rate comes from and if it's an 15 Iowa-specific number. 16 A. It's an Iowa-specific number, and I believe 17 it's consistent with information from an IPL report 18 that I used for this report, and it's also 19 historically information from the DNR energy page, 20 the historic record. 21 Q. So DNR historic records and IPL report, and 22 it was also a Woods & Poole projection? 23 A. On energy. Woods & Poole is the population 24 component. 25 MS. LA SEUR: Okay. Thank you. Nothing PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 197 1 further. 2 CHAIRPERSON NORRIS: Mr. Puckett? 3 MR. PUCKETT: No questions for Mr. Otto. No 4 questions. 5 BOARD MEMBER TANNER: Good afternoon, Dr. Otto. 6 I just--there's been some testimony 7 throughout filed already about the future of the 8 biofuels industry in Iowa. 9 Does the recent enactment of the energy bill 10 on the federal level have any effect on your analysis 11 of the future of the biofuels industry? 12 THE WITNESS: The levels that their mandates 13 have are consistent with past projections, but I 14 think it maybe adds some increased confidence that 15 those targets will be achieved. They have a 14- 16 billion--well, a 15-billion gallon carve-out for 17 corn-based ethanol by the year 2012, so that it just 18 sort of adds extra incentives to achieve that. 19 BOARD MEMBER TANNER: Thank you. That's all 20 I have. 21 CHAIRPERSON NORRIS: Hi, Mr. Otto. Just a 22 couple of questions. 23 In your rebuttal testimony, you refer to the 24 aggregate electric consumption in Iowa increasing at 25 about 1.4 percent per year. Is that a result of your PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 198 1 analysis or is that a number you received from IPL? 2 THE WITNESS: A number I received from IPL, 3 but also it's the Iowa energy component in the DNR. 4 CHAIRPERSON NORRIS: Okay. You did an 5 extensive analysis of the economic impact or benefit 6 from this Sutherland plant here in Iowa. 7 Have you done any research on the impact of 8 global climate change on the Iowa economy? 9 THE WITNESS: No, I have not. 10 CHAIRPERSON NORRIS: So you have no way to 11 contrast if that is a real impact on our economy 12 versus the impact on this plant? 13 THE WITNESS: No. 14 CHAIRPERSON NORRIS: Ms. Johnson? 15 MS. JOHNSON: I do have some redirect, 16 please. 17 REDIRECT EXAMINATION 18 BY MS. JOHNSON: 19 Q. Just very quickly, following up on 20 Ms. Tanner's question, you had referenced recent 21 legislation that contained a carve-out for corn-based 22 ethanol. Do you recall what that legislation was? 23 A. It's the 2007 energy act that was just 24 signed this year. 25 Q. And what do you think the impact of that PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 199 1 legislation is going to be on the ethanol industry? 2 A. As I mentioned, I believe it just--it will 3 add, I guess, more incentives to achieve that 15 4 billion gallons of ethanol, corn-based ethanol. 5 It also provides incentives to encourage 6 other alternative energy research. 7 MS. JOHNSON: May I? 8 CHAIRPERSON NORRIS: You may. 9 MS. JOHNSON: Thank you. 10 (IPL Exhibit 21 was marked 11 for identification.) 12 BY MS. JOHNSON: 13 Q. Could you please identify for me what I've 14 handed out as IPL Exhibit No. 21, please? 15 A. This is another outlook for the ethanol and 16 coal product industry which was completed at the end 17 of August of 2007, so it's still--the change is 18 dated. 19 Q. Okay. And what kind of influence does this 20 outlook have on some of your projections regarding 21 the ethanol industry as compared to other sources in 22 pricing? 23 A. Well, the projections here are based on, 24 again, conditions in August, and since then, although 25 the corn prices have increased, the oil prices and PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 200 1 ethanol prices have also increased, so it just, I 2 guess, provides an indication on track to achieve 3 these projected levels. 4 Q. So does this help demonstrate in any way 5 that the corn price is not the only driver? 6 A. Yes. It indicates that the oil prices and 7 ethanol prices are important to achieving those 8 levels of supply of ethanol. 9 MS. JOHNSON: I would like to offer the 10 exhibit into the record at this time. 11 CHAIRPERSON NORRIS: No. 21, is that 12 correct? 13 MS. JOHNSON: No. 21, yes. Thank you. 14 CHAIRPERSON NORRIS: Without objection, 21 15 is admitted. 16 (IPL Exhibit 21 was 17 received in evidence.) 18 MS. JOHNSON: And if I may, I have two more. 19 (IPL Exhibits 22 and 23 were 20 marked for identification.) 21 BY MS. JOHNSON: 22 Q. Could you please identify for me what's been 23 marked as IPL Exhibit 22? 24 A. Is that the estimates or the Woods & Poole? 25 Q. That would be the 1900 to 2007. PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 201 1 A. Okay. This was just released December 27th 2 of 2007. It's the estimate for the population in 3 Iowa for 2007. 4 Q. And was this, in part, what you were 5 referencing earlier when you were talking about prior 6 population growth? 7 A. Well, this estimate here is most recent 8 information on the population growth in Iowa, and it 9 indicates that since 2000, we've gained 60,000 10 population. It's lower than the U.S. growth rate, 11 but it indicates a steady increase during this time 12 period. 13 MS. JOHNSON: I would like to move for the 14 entry of Exhibit 22, please. 15 CHAIRPERSON NORRIS: Without objection, 22 16 is admitted. 17 (IPL Exhibit 22 was 18 received in evidence.) 19 BY MS. JOHNSON: 20 Q. Would you also please look at what's been 21 marked as IPL Exhibit 23? 22 A. (Witness complies.) 23 Q. And is this the Woods & Poole population 24 projections that you were referencing earlier in 25 cross-examination? PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 202 1 A. Yes. 2 Q. And what does this indicate to you? How did 3 this aid-- I guess maybe I should back up. 4 MS. JOHNSON: May I go ahead and move for 5 entry of this into the record since it's already been 6 discussed fairly thoroughly? 7 CHAIRPERSON NORRIS: Without objection, 23 8 is admitted. 9 (IPL Exhibit 23 was 10 received in evidence.) 11 MS. JOHNSON: Thank you. 12 BY MS. JOHNSON: 13 Q. So did this also aid in your evaluation of 14 the growth in this proceeding? 15 A. Yes. It indicates an alternative projection 16 of the population, alternative to the Census Bureau 17 estimates. 18 MS. JOHNSON: All right. I have nothing 19 further at this time. 20 CHAIRPERSON NORRIS: Ms. Easler. 21 RECROSS-EXAMINATION 22 BY MS. EASLER: 23 Q. If ethanol and biodiesel industries are 24 exploring meeting their energy needs with the corn 25 residue, will IPL then also potentially be competing PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 203 1 with these industries for this alternative fuel 2 source for SGS Unit 4? 3 A. Potentially. The corn stover or biomass is 4 also one of the fuel sources for cellulosic ethanol 5 down the road too, so it's kind of the same feedstock, 6 potentially. 7 Q. Is it--would you think it would be more cost 8 effective to use the corn by-products on site, at an 9 alternative fuel producer site, versus transporting 10 to a coal plant? 11 A. Right now while the--there's progress in the 12 technical research to get ethanol from the biomass, 13 there are still major logistical problems given the 14 bulk and size of these to make it economically 15 feasible, so there are--it's down the road, but 16 there's a potential source, yes. 17 Q. Should IPL be seeking out co-generation 18 opportunities with these alternative fuel industries? 19 A. I think that's beyond my scope here today. 20 Q. Would those type of partnership 21 opportunities expand agricultural economy here in 22 Iowa? 23 A. It has the potential to be--to add 24 additional value to the crops, and the base 25 potentially would be an economic opportunity for the PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 204 1 farm sector. 2 Q. Do you have any opinion on whether on-site 3 co-generation, using the biomass feed stocks, would 4 have a lower CO2 emissions impact than a baseload coal 5 plant? 6 A. I have not studied that. 7 MS. EASLER: Okay. That's all I have. 8 Thank you. 9 MS. LA SEUR: I don't have anything. 10 CHAIRPERSON NORRIS: Nothing further, 11 Mr. Puckett? 12 MR. PUCKETT: Nothing. 13 BOARD MEMBER HANSON: Dr. Otto, it appears 14 from your testimony that you looked at, statewide, 15 your estimate of statewide growth rates in 16 population, income, et cetera, for the future, 17 correct? 18 THE WITNESS: Yes. 19 BOARD MEMBER HANSON: Do you know of any 20 reason that--or any reason why those growth rates, 21 specifically in the IPL service territory, might be 22 either higher or lower than the statewide average? 23 THE WITNESS: No. Some of these growth 24 rates will depend on, you know, the economic 25 development successes that happen, and so replacing PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 205 1 jobs, generating the next round of jobs in the state, 2 but there's no reason that there's a competitive 3 advantage in one region versus another within Iowa. 4 BOARD MEMBER HANSON: Okay. Thank you. 5 CHAIRPERSON NORRIS: Ms. Johnson? 6 MS. JOHNSON: I have nothing further. 7 CHAIRPERSON NORRIS: Anyone else? 8 (No response.) 9 CHAIRPERSON NORRIS: Thank you, Dr. Otto. 10 THE WITNESS: Thank you. 11 (Witness excused.) 12 CHAIRPERSON NORRIS: All right. I think we 13 will take a break and come back at 15 past the hour. 14 Before we leave, just because I realize 15 probably some of you this is the first time sitting 16 through a Utilities Board proceeding, and you may 17 find it shocking, we find this fascinating and 18 interesting, but I'm guessing some of you won't be 19 back tomorrow, so just for your own edification, the 20 process here is we'll complete the hearing and the 21 cross-examination of all the witnesses this week. 22 The parties will all have time to file reply 23 comments, which, as you can see from the volume of 24 stuff up here, they will like lots of time to write 25 lots of stuff to reply to all that, and then the PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 206 1 Board will analyze that and make a decision, so you 2 can kind of understand the flow here. You won't see 3 any benchmarks as to when the decision will be made, 4 but it will be within the next few months, so just so 5 you know how this process all works. 6 Let's come back at 15 past the hour, and 7 we'll go until about 5 o'clock today. 8 (Short recess.) 9 CHAIRPERSON NORRIS: All right. We are 10 back in session, and we are ready for IPL's next 11 witness. 12 Perhaps, if you could, Ms. Johnson, let us 13 know who your next four or five witnesses are so we 14 have some sense of what's coming up today, and then 15 after we conclude here today, we'll have some sense 16 of who will be here tomorrow.. 17 MS. JOHNSON: Okay. After I provide that, 18 if I could just make one quick clarification for the 19 record. 20 CHAIRPERSON NORRIS: Certainly. 21 MS. JOHNSON: Today we're anticipating 22 calling Larry Harder and Andy Byers. If that's all 23 we can fit in today, then tomorrow we'll pick up with 24 Tim Bennington and Randy Bauer, then Alan Arnold. 25 If by chance we get through Andy Byers today PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 207 1 and we're ready for the next witness, we will bypass 2 Tim Bennington and go straight to Andy Byers, and 3 then from tomorrow we should have a lot better set 4 idea of who will be here when. 5 CHAIRPERSON NORRIS: Okay. 6 MS. JOHNSON: I also had a quick 7 clarification. We will need to work with the court 8 reporter. There was a number related to the 9 construction cost of the coal plant that came out 10 earlier on cross-examination. We do consider that 11 number confidential, so we would like to be able to 12 work with the court reporter to have that appear in 13 the confidential portion of the record rather than 14 the public. 15 CHAIRPERSON NORRIS: Absolutely, yes. I 16 meant to call you up here after that witness, and I 17 forgot, to make sure we note that. Make sure you 18 follow up and get that marked confidential. 19 MS. JOHNSON: Thank you. 20 MR. PUCKETT: Mr. Chairman. 21 CHAIRPERSON NORRIS: Yes, Mr. Puckett. 22 MR. PUCKETT: I don't know that it's 23 necessary, but for clarification, Mr. Ward and 24 Mr. Joynt had some commitments in Des Moines that 25 they had to get back to, so they will not be here for PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 208 1 the rest of the day. 2 CHAIRPERSON NORRIS: Okay. Call your next 3 witness. 4 MS. JOHNSON: IPL calls Larry Harder to the 5 stand, please. 6 CHAIRPERSON NORRIS: Hello, Mr. Harder. 7 Please raise your right hand, please. 8 LARRY C. HARDER, 9 called as a witness by Interstate Power and Light 10 Company, being first duly sworn by Chairperson Norris, 11 was examined and testified as follows: 12 CHAIRPERSON NORRIS: Thank you. You may be 13 seated. 14 DIRECT EXAMINATION 15 BY MS. JOHNSON: 16 Q. Could you please state your full name and 17 business address for the record, please? 18 A. Larry C. Harder, 200 First Street Southeast, 19 Cedar Rapids, Iowa. 20 Q. And did you file in this docket on July 2nd, 21 2007, 13 pages of direct testimony, with an Exhibit 4, 22 labeled in your testimony as LCH-1, Schedules A 23 through C, and did you also file on December 10th, 24 2007, three pages of rebuttal testimony? 25 A. I did. PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 209 1 Q. And do you have any changes or corrections 2 to make to that testimony? 3 A. No, I do not. 4 (IPL Exhibit 4 was 5 received in evidence.) 6 (The prepared testimony follows.) 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 226 1 MS. JOHNSON: Then I would tender the 2 witness for cross-examination. 3 MS. EASLER: No questions. 4 MS. LA SEUR: Ms. Linderman will pose 5 questions for this witness. 6 MS. LINDERMAN: Thank you. 7 CROSS-EXAMINATION 8 BY MS. LINDERMAN: 9 Q. I would like to follow up with some 10 questions that were asked earlier of Jeffrey Beer 11 regarding the coal-fired and biomass Unit 4. 12 What is the potential terms of percentage of 13 your fuel source that you intend to rely on for 14 biomass? 15 A. The facility will be designed for 16 accommodating up to 10 percent, meaning the boiler, 17 the back-end equipment, everything, will be designed 18 to handle 10 percent maximum. Original design coming 19 out of the chute will be a 5 percent capability. 20 Q. And can you give us any idea of--I mean when 21 you say up to 5 percent, then up to 10 percent, how 22 much of that do you anticipate actually being 23 realized or what standards are you going to use to 24 determine what the actual amount of co-generation 25 from biomass is going to be? PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 227 1 A. It's really kind of outside of my expertise. 2 I'm responsible for making sure that it's capable for 3 doing up to 10 percent--or up to 10 percent meaning 4 as little as 0, 1 percent, all the way up to 10, so 5 it needs to be able to reliably operate in that full 6 operating range. 7 Q. And what is the purpose of having the co- 8 generation capability? 9 A. I'm sorry. Co-generation or biomass? 10 Q. What is the purpose of being able to use 11 biomass as a fuel source? 12 A. An alternative fuel source. 13 Q. Is it because the coal isn't reliable, 14 because of price considerations? Why do you need to 15 have 10 percent capability for biomass? 16 A. That's more of a corporate policy decision. 17 It wasn't necessarily really an engineering decision. 18 Q. Do you have any idea what the policy is 19 based on? 20 A. I think that would probably be better 21 addressed by another witness. 22 Q. Could you give me an idea of what witness 23 would be better able to answer that question? 24 A. No. 25 Q. Okay. What is the relative efficiency rate PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 228 1 of using biomass for this purpose as opposed to 2 gasification biomass as a power source? 3 A. Gasification technology was not evaluated as 4 a part of this process. 5 Q. So you don't know what the comparative 6 efficiency rates would be? 7 A. No. 8 Q. Could you speak to the comparative 9 efficiency of doing biomass as a source of co- 10 generation at the site of a biofuels facility as 11 opposed to sending electricity from SGS Unit 4 to a 12 biofuels facility? 13 A. In generalities, but specifics, no. 14 Q. Could you give me some generality? 15 MS. JOHNSON: I object. This is beyond the 16 scope of the witness's testimony. 17 MS. LINDERMAN: I believe we were directed 18 to this witness as the one who is able to testify 19 about the relative efficiency of this use of biomass 20 at the facility. If there's somebody else I should 21 direct the questions to, I certainly can. 22 A. I think the original question that I 23 remember a redirect from testimony from Mr. Beer was 24 what was the change in boiler efficiency by biomass 25 with coal, and the answer to that question would be PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 229 1 very likely a very immeasurable difference in 2 efficiency. 3 BY MS. LINDERMAN: 4 Q. Could you be a little more quantitative? I 5 mean when you say "immeasurable," is there an 6 approximate percent range you could give me? 7 A. Very small, less than a percent, extremely 8 small. It would depend on a lot of factors such as 9 exactly what biomass, what coals you're combusting, 10 relative moisture values in the coals, moisture 11 values in the biomass, a lot of factors figuring into 12 the efficiency of a boiler. 13 Q. I think I have one more follow-up question. 14 One moment. 15 A. Okay. 16 Q. Could you give me some kind of estimate of 17 the rate of energy return from combustion of a unit 18 of biomass? 19 A. Can you repeat the question? 20 Q. Could you give me, whether it's a range or 21 estimate, your estimate of the rate of energy return 22 from a combustion of a unit of biomass under the 23 current proposed design of SGS Unit 4? 24 A. In a specific term? 25 Q. Whatever specific terms you have available PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 230 1 to you. 2 A. Like as in a boiler efficiency or thermal 3 output? 4 Q. Could you give me an idea of what 5 information you have available? I mean I'm looking 6 for any kind of specific number that you are capable 7 of giving in your analysis. 8 A. It would be really specific to the biofuel, 9 I would imagine. 10 Q. So are you able to provide any specific set 11 of numbers? 12 A. Right here, no. 13 MS. LINDERMAN: I think that's it for right 14 now. Thank you very much. 15 CHAIRPERSON NORRIS: Mr. Puckett? 16 MR. PUCKETT: No questions. 17 BOARD MEMBER HANSON: On page 9 of your 18 testimony, in--it's lines 19 through 21, you talk 19 about the selection of the type of boiler. Sorry. 20 On page 9 of the testimony, lines 19 through 21, in 21 discussing the choice of boiler technology, you say 22 that the amount of coal consumed per unit of 23 electricity generated would be substantially 24 decreased, which in turn decreases emissions. 25 Can you give us a rough--an estimate, say, PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 231 1 in percentage terms, how much reduction are we 2 talking about here? 3 THE WITNESS: A reduction over a typical 4 thermal cycle efficiency? 5 MR. HANSON: Right. 6 THE WITNESS: Two to four percent. 7 BOARD MEMBER HANSON: Okay. Then getting 8 back to the subject of biomass, in your air permit 9 applications with DNR, are you including biomass as 10 part of the fuel in your permit applications? 11 THE WITNESS: I believe we are, yes. 12 BOARD MEMBER HANSON: Okay. And are--I 13 think you might have already answered this, but I'll 14 ask it anyway. 15 Are you aware of any target date by which 16 IPL intends to begin coal firing biomass at that 17 facility? 18 THE WITNESS: No, I'm not. 19 BOARD MEMBER HANSON: I want to back up and 20 get back to the hard question, and I'm sorry I forgot 21 to ask the follow-up question, which is in that 22 permit with DNR, are you aware of what the particular 23 types and amounts of fuel for biomass will be 24 included in that permit? 25 THE WITNESS: I believe it is at--requested PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 232 1 at 5 percent biomass, and I believe we've listed a 2 couple of biofuels, but it would probably be better 3 directed to another one of our witnesses. 4 BOARD MEMBER HANSON: Do you know who that 5 would be? 6 THE WITNESS: Alan Arnold. 7 BOARD MEMBER HANSON: Okay. Thank you. 8 BOARD MEMBER TANNER: Good afternoon. 9 In your direct testimony on pages 8 and 9 10 and also in Witness Arnold's direct testimony on 11 page 12, you discuss IPL's choice of wet flue gas 12 desulfurization. What analysis was performed to 13 justify the cost of upgrading the scrubber to wet 14 flue gas desulfurization at the plant? 15 THE WITNESS: Again, I believe that's 16 probably best answered by Alan Arnold. I believe 17 that the BACT analysis speaks to that analysis, but I 18 believe he would be able to--better prepared to 19 answer that question from a permitting standpoint. 20 BOARD MEMBER TANNER: And if this next 21 question is better suited for him, let me know-- 22 THE WITNESS: Okay. 23 BOARD MEMBER TANNER: --but since I've got 24 you here, I'll ask you. 25 THE WITNESS: Okay. PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 233 1 BOARD MEMBER TANNER: Do you have any 2 supporting documentation or can you quantify the 3 additional benefit that the wet flue gas 4 desulfurization will provide to the proposed plant? 5 THE WITNESS: I do believe that that is-- 6 information alluding to that is presented in the BACT 7 analysis, which is filed as part of the air permit, 8 and again Alan could probably confirm or correct me 9 on that. 10 BOARD MEMBER TANNER: Okay. That's all I 11 have. Thank you. 12 CHAIRPERSON NORRIS: Hi, Mr. Harder. 13 THE WITNESS: Hi. 14 CHAIRPERSON NORRIS: I'm not quite sure 15 where to go with this question. Maybe you need to 16 tell me who can answer this question. I think you've 17 been over this a little bit with counsel. 18 Page 8 of your direct testimony discusses 19 leveraging experience to coal-fired switchgrass and 20 corn stover. I'm just trying to get at--and I think 21 your response, was it not, that this was a corporate 22 policy decision to make this plant capable of burning 23 biomass? Can you shed any more light on that for us, 24 how that decision was made to make this a biomass 25 burning facility? PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 234 1 THE WITNESS: I understand that we wanted to 2 draw on our experience that we had from the Ottumwa 3 Generating Station experience and build that 4 flexibility into this facility. 5 CHAIRPERSON NORRIS: And pardon me if I 6 haven't found this in any of the exhibits or 7 testimony in this case. Has there been an economic 8 case made for making this a bio facility? 9 THE WITNESS: I'm probably not prepared to 10 answer that question. 11 CHAIRPERSON NORRIS: And who might know the 12 details of that decision, why it was made? 13 THE WITNESS: To the best of my knowledge, 14 the overall guiding principle for including biomass 15 in the mix is the ability to reduce CO2 emissions 16 associated with the facility. 17 CHAIRPERSON NORRIS: Okay. Ms. Johnson. 18 REDIRECT EXAMINATION 19 BY MS. JOHNSON: 20 Q. Mr. Harder, earlier you were asked a 21 question by counsel for Plains Justice where you 22 responded to use co-gen or biomass. Can you clarify 23 for us whether there is a difference between the two? 24 A. Absolutely. The biomass is just simply the 25 fuel that is utilized in the boiler, or at least in PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 235 1 the context that we have it in our--in my testimony. 2 Co-generation is just that, it's the ability 3 to have an industry collocate next to a facility such 4 as this where we would send them thermal energy or 5 some other type of energy that they would be able to 6 get some value out of, so it's--they can be related. 7 They're very different things, though. 8 MS. JOHNSON: Thank you. I believe that's 9 all I have. 10 CHAIRPERSON NORRIS: Ms. Easler. 11 MS. EASLER: Yes. 12 RECROSS-EXAMINATION 13 BY MS. EASLER: 14 Q. Mr. Harder, what percentage of the energy in 15 coal gets converted to electricity for a plant of the 16 design like SGS Unit 4? 17 A. I think we're looking at a heat rate of 18 around 90 to a hundred, ballpark, 90 to a hundred 19 Btu's per kilowatt-hour. 20 Q. Would the same percentage apply to the 21 biomass coal-fired incident to the plant? 22 A. It should be very similar. 23 Q. And how would this compare to the energy 24 that gets converted to electricity and useful heat in 25 CHP application? PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 236 1 A. Typically, CHP can have a lower heat rate. 2 Q. Of? 3 A. It all depends on how much steam you're 4 going to export from the generating facility, so you 5 would have to know specifics about the host, who was 6 going to take the steam and how much steam they were 7 going to take in their process. The more steam they 8 take, the lower your fuel charge for the power, so 9 the lower the heat rate would be. 10 Q. Is there a range that is more commonly seen 11 for that? 12 A. In some of our existing facilities, you can 13 reduce your heat rate significantly, a thousand Btu's 14 per kilowatt-hour or more. 15 MS. EASLER: Thank you. 16 RECROSS-EXAMINATION 17 BY MS. LINDERMAN: 18 Q. I just have a couple of follow-up questions. 19 I didn't realize until counsel for IPL asked 20 you a question on redirect that I probably misspoke 21 and that might have been some of the confusion 22 between us. 23 I was meaning to ask you if you can give us 24 any information about the relative efficiency of 25 coal-firing biomass at SGS Unit 4 compared to using PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 237 1 the same biomass for co-generation at a biofuels 2 facility, which I understand would otherwise 3 typically be using electricity from IPL. That's what 4 I was trying to get at with that question, and if I 5 used the wrong terminology to state that, that may 6 have confused you. 7 A. I'm fairly familiar with the ethanol plants. 8 I'm not prepared really to state how ethanol plants 9 operate, first, internally, if they would use their 10 own biomass by-product to generate their own steam. 11 Q. So you don't have any information available 12 to you or that you're able to speak authoritatively 13 on about the relative efficiency of using the biomass 14 by-product? 15 A. No. 16 Q. I also wanted to follow up on your statement 17 that coal-firing biomass at this facility is going to 18 decrease CO2 emissions. Could you tell me how much 19 CO2 is released by burning a ton of biomass? 20 A. It would depend on the fixed carbon in the 21 fuel itself. 22 Q. Does it depend on the kind of biomass that's 23 used? 24 A. Only in the sense that it's the amount of 25 carbon that gets converted to carbon dioxide. PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 238 1 Q. Could you give me some kind of comparison to 2 the amount of CO2 that would be produced for the same 3 amount of coal being combusted? 4 A. Those are numbers that I don't have off the 5 top of my head, no. 6 Q. Do you have a relative ratio? 7 A. No. 8 MS. LINDERMAN: Okay. Those are all the 9 questions I have. Thank you. 10 MR. PUCKETT: Nothing. 11 MS. JOHNSON: I have nothing further. 12 CHAIRPERSON NORRIS: Anybody else? 13 (No response.) 14 CHAIRPERSON NORRIS: Thank you, Mr. Harder. 15 (Witness excused.) 16 MS. JOHNSON: IPL calls Andy Byers to the 17 stand. 18 CHAIRPERSON NORRIS: Hello, Mr. Byers. 19 Raise your right hand, please. 20 ANDREW BYERS, 21 called as a witness by Interstate Power and Light 22 Company, being first duly sworn by Chairperson Norris, 23 was examined and testified as follows: 24 CHAIRPERSON NORRIS: Thank you. You may be 25 seated. PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 239 1 DIRECT EXAMINATION 2 BY MS. JOHNSON: 3 Q. Could you please state your full name and 4 business address for the record, please? 5 A. My name is Andrew Byers. My business 6 address is 11401 Lamar Avenue in Overland Park, 7 Kansas. 8 Q. And did you file in this docket on July 2nd, 9 2007, direct testimony of about 13 pages and exhibits 10 which for this proceeding are labeled Exhibit 6, and 11 in that testimony were labeled ACB-1, Schedules A, B, 12 and C, and did you also file on December 10th, 2007, 13 three pages of rebuttal testimony, as well as 14 exhibits labeled Exhibit 7, or labeled ABC-2, 15 Schedule A? 16 A. Yes, I did. 17 Q. And do you have any changes or corrections 18 to make to that testimony? 19 A. No, I do not. 20 (IPL Exhibits 6 and 7 were 21 received in evidence.) 22 (The prepared testimony follows.) 23 24 25 PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 257 1 MS. JOHNSON: I will tender the witness for 2 cross-examination. 3 MS. EASLER: No questions. 4 CROSS-EXAMINATION 5 BY MS. LA SEUR: 6 Q. Good afternoon, Mr. Byers. 7 I would like you to refer to your direct 8 testimony at page 4, lines 1 through 3. It refers to 9 the existing 141 megawatts of capacity at the 10 existing three SGS boilers, and your testimony is 11 that the existing units mean somehow that negative 12 impacts of construction will be temporary. 13 My question is, is the potential adverse 14 impact of the new unit more than four times the size 15 of the existing three units put together really a 16 matter to be dismissed in five lines of testimony? 17 You really perceive no adverse impacts? 18 A. The response that I provided was to the 19 question with regard to whether there would be any 20 permanent impacts to the community from operation of 21 the facility; and, yes, even though it is a larger 22 facility physically, as far as the number of 23 employees and the number of traffic and things that 24 go into direct impacts to the community is very--only 25 slightly larger with regard to what similar PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 258 1 activities go on with the existing unit currently. 2 Q. And how is the existing unit relevant to 3 that analysis of the potential adverse impact of the 4 new unit? 5 A. There is an existing facility in the 6 community here now. Because the land use is still 7 industrial and it is the same land use to the area, 8 it has been in the same area in the community for 9 over 65 years, it has established current impacts, if 10 you will, that will only be slightly increased, if at 11 all, by the addition of one more unit. 12 Q. And then I would like to refer you to 13 page 12 of your direct testimony, at lines 8 through 21. 14 A. (Witness complies.) 15 Q. You refer to an attempt to contact 16 representatives of the Meskawkie tribe. My question 17 is, has IPL attempted to contact any of the other 17 18 tribes with prehistoric links to Iowa with regard to 19 the prehistoric archeological sites identified within 20 a mile of the plant site? 21 A. To directly contact those tribes? 22 Q. Yes. 23 A. Not to my knowledge. 24 MS. LA SEUR: Nothing further. 25 MR. PUCKETT: Nothing. PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 259 1 BOARD MEMBER TANNER: Good afternoon, Mr. 2 Byers. Can you hear me? 3 THE WITNESS: I can hear you now, yes. 4 BOARD MEMBER TANNER: Just as a matter of 5 housekeeping, would you be able to submit a 6 late-filed exhibit that lists, in table format, that 7 includes all the permits, application requests for 8 approval filed by IPL in relation to this case and 9 their status as far as the siting requirements go? 10 THE WITNESS: I believe that there is a 11 table that's already filed under another person's 12 testimony. 13 BOARD MEMBER TANNER: Okay. Do you know, 14 who is that? 15 THE WITNESS: I believe it is Alan Arnold's 16 testimony. 17 BOARD MEMBER TANNER: Do you know if that's 18 up to date? 19 THE WITNESS: To my knowledge, it is. 20 BOARD MEMBER TANNER: Okay. Then I can ask 21 Mr. Arnold that as well. 22 To follow up on a question from Ms. La Seur, 23 in your direct testimony on page 12, you stated that 24 IPL had not received a response yet from the 25 Meskawkie tribe. Does IPL have to receive a response PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 260 1 before proceeding with the project? 2 THE WITNESS: Not with regard to any permits 3 that I'm aware of or with regard to determining 4 community impacts. 5 BOARD MEMBER TANNER: Okay. And is that 6 still the case, have you received anything since you 7 have filed your testimony? 8 THE WITNESS: I have not seen any formal 9 written response from the Meskwakie tribe. 10 BOARD MEMBER TANNER: That is all I have. 11 Thank you. 12 BOARD MEMBER HANSON: On page 7 of your 13 direct testimony, you make a reference to cooling tower 14 water usage, and you state that the plant's processed 15 water will come from the Marshalltown Water Works. 16 Witness Harder in direct testimony states 17 that 85 percent of the total water supply will go to 18 something that was referred to as the mechanical 19 draft evaporative cooling system. I just want to 20 make sure we're clear. That is the wet cooling tower 21 system? 22 THE WITNESS: Yes. I use a more colloquial 23 term for that. 24 BOARD MEMBER HANSON: Okay. 25 CHAIRPERSON NORRIS: And I think one more PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 261 1 question here, Mr. Byers, from the Board. 2 In Witness Vesperman's exhibit, which is a 3 confidential exhibit, he lists estimated cooling 4 tower usage and the Marshalltown Water Works capacity 5 and potential upgrades, if required. 6 OCA Witness Power, on page 5 of his direct 7 testimony, states that the Iowa River nearly runs dry 8 during certain seasonal conditions. 9 What is the estimated impact of the wet 10 cooling tower system on the Iowa River and on 11 competing agricultural and potable water demands? 12 THE WITNESS: My understanding is the water 13 supply to be provided from the Marshalltown Water 14 Works is from the groundwater aquifer, so there is no 15 withdrawal from the Iowa River, and therefore, any 16 further impacts from water supply or consumption from 17 the Iowa River is not impacted at all. 18 CHAIRPERSON NORRIS: Not impacting the 19 river? 20 THE WITNESS: Not impacted because there are 21 no withdrawals from the river for water supply to the 22 new Unit 4. 23 CHAIRPERSON NORRIS: Sorry, Mr. Byers. We 24 had a potential follow-up that might involve 25 confidential information. We are going to--I assume PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 262 1 you're staying around until the end of today's 2 proceeding? 3 THE WITNESS: Absolutely. 4 CHAIRPERSON NORRIS: Okay. We may decide to 5 bring him back up at the end if we have to go into a 6 very short confidential session or we may just ask 7 for a late-filed exhibit confidentially from IPL. 8 MS. JOHNSON: Okay. 9 CHAIRPERSON NORRIS: Ms. Johnson? 10 MS. JOHNSON: We have no redirect. 11 CHAIRPERSON NORRIS: Anybody else? 12 (No response.) 13 CHAIRPERSON NORRIS: Thank you, Mr. Byers. 14 (Witness excused.) 15 MS. JOHNSON: IPL calls Randy Bauer to the 16 stand. 17 CHAIRPERSON NORRIS: Hello, Mr. Bauer. 18 THE WITNESS: Good afternoon. 19 CHAIRPERSON NORRIS: Raise your right hand. 20 RANDY D. BAUER, 21 called as a witness by Interstate Power and Light 22 Company, being first duly sworn by Chairperson Norris, 23 was examined and testified as follows: 24 CHAIRPERSON NORRIS: Thank you. You may be 25 seated. PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 263 1 DIRECT EXAMINATION 2 BY MS. JOHNSON: 3 Q. Would you please state your full name and 4 business address for the record, please? 5 A. Randy D. Bauer, B-a-u-e-r, 200 First Street 6 Southeast, Cedar Rapids, Iowa. 7 Q. And did you file in this docket on July 2nd, 8 direct testimony of nine pages with exhibits, which 9 are Exhibit 8 for this proceeding, that were labeled 10 at that time RDB-1, Schedules A through E, as well as 11 rebuttal testimony on December 10th, 2007, consisting 12 of 26 pages, as well as Exhibit 9, also known as 13 RDB-2, Schedules A through I? 14 A. I did. 15 Q. Do you have any changes or corrections to 16 make to that testimony? 17 A. I do have an update to my rebuttal 18 testimony. 19 On page 3, lines 5 through 13, we talk a 20 little bit about the MISO studies and where we are. 21 At that point we did not have any updated studies 22 from MISO. We now have a draft study that we will be 23 filing as a late-filed exhibit. 24 MS. JOHNSON: May I approach? I have a copy 25 of the MISO study. I would like to note it is a PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 264 1 draft copy. We have not had sufficient time to label 2 it confidential, but since it is a draft, we do 3 consider it to be in confidential form. 4 Would you prefer we go ahead and distribute 5 that at this time as Exhibit No. 24, I believe, and 6 note for the record that it's confidential even 7 though it's not properly marked, or do you prefer 8 that be supplemented and replaced or just wait until 9 later so we can get a proper late-filed exhibit? 10 CHAIRPERSON NORRIS: Are we going to utilize 11 it in questioning here today? 12 MS. JOHNSON: We won't have any questions 13 from IPL's perspective, aside from how does that 14 update the status of the application. 15 CHAIRPERSON NORRIS: Well, why don't we-- 16 let's go ahead and admit it today just in case we 17 need it to keep the proceeding moving forward, and 18 then make sure everyone makes note of that, that what 19 you receive today is confidential. I guess that's 20 probably the best we can do. 21 (IPL Exhibit 24 was 22 received in evidence.) 23 CHAIRPERSON NORRIS: Yes, go ahead and 24 distribute it. 25 MS. JOHNSON: Yes. I apologize. If it PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 265 1 weren't for the late nature, we would have had it 2 done properly. 3 CHAIRPERSON NORRIS: Again, everyone, please 4 take a moment to write "confidential" on the front of 5 that. You're duly warned. 6 BY MS. JOHNSON: 7 Q. Mr. Bauer, is this the draft report you 8 mentioned a moment ago in your clarification? 9 A. Yes, it is. 10 Q. And how does this report update your 11 testimony on the transmission? 12 A. In my testimony we had talked about the 13 results of some internal study work that we had done 14 recognizing that MISO was the final authority on 15 transmission, and so this is the draft results of the 16 MISO study, which generally reaffirm what our 17 internal studies suggested on transmission, with one 18 exception. 19 Q. And could you clarify, just for those 20 present, what the one exception is? 21 A. Yes. In our initial filing, we had laid out 22 the rebuilds, voltage upgrades, and so on. The MISO 23 study recognized the Marshalltown to Jasper line had 24 an overload that we had not found in our internal 25 studies, and so that is the difference, and it would PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 266 1 be a relatively minor fix to upgrade that line. It's 2 station equipment. 3 (IPL Exhibits 8 and 9 were 4 received in evidence.) 5 (The prepared testimony follows.) 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 302 1 MS. JOHNSON: Thank you. With that, I would 2 tender the witness for cross-examination. 3 MR. STEAD: Your Honor, could I confer with 4 counsel for IPL about whether something needs to be 5 confidential or not? 6 CHAIRPERSON NORRIS: Certainly. 7 MR. STEAD: Thank you. 8 (Pause.) 9 MR. STEAD: We can stay in open session, 10 Your Honor. Thank you. 11 CROSS-EXAMINATION 12 BY MR. STEAD: 13 Q. Mr. Bauer, I would like to refer you to 14 IPL's response to OCA data request No. 21, Attachment A, 15 page 1 of 212. This has previously been marked and 16 provided as an exhibit in OCA Witness Fagan's 17 prefiled confidential exhibit attachment Schedule A, 18 and I've got that here for you. 19 A. Okay. 20 Q. Now, this is an updated presentation to IPL 21 management as part of the 2007-2011 strategic 22 planning process, is that correct? 23 A. Yes, it is. 24 Q. And subject to check, IPL's response to OCA 25 data request No. 71 states the date of this PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 303 1 presentation was April 4, 2006. Would you accept 2 that, subject to check? 3 A. Subject to check, yes. 4 Q. Under the list of key assumptions on the 5 second page of that, IPL lists reserve margin, is 6 that correct? 7 A. Yes, it does. 8 Q. And for the record, would you indicate what 9 the page number of that second sheet is? 10 A. That is page 86 of 212. 11 Q. Thank you. 12 The IPL reserve margin figure is 15 percent, 13 is that correct? 14 A. No. The copy I'm looking at says the IPL 15 reserve margin is 18 percent. 16 Q. Oh, I'm sorry. The sensitivity analysis is 17 15 percent, is that correct? 18 A. That is correct. 19 Q. And also the sensitivity analysis can go 20 down to 12 percent, is that correct? 21 A. That is correct. 22 Q. Now, is there a footnote on page--on that 23 page? 24 A. Yes. 25 Q. Would you please read that footnote into the PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 304 1 record? 2 A. I believe the one you're referring to says, 3 "Legend: New sensitivity analysis, no change/minimal 4 change," and then in a lighter color, "Change to 5 occur under review." 6 Q. Thank you. 7 Now, if you would look at the second 8 document I gave you-- 9 A. Yes, I have it. 10 Q. --and that was IPL's response to OCA data 11 request No. 21, Attachment A, page 83 of 212; is that 12 correct? 13 A. No. The one I have says page 2 of 212. 14 Q. I apologize. I was on the earlier one. 15 A. Oh, I'm sorry. 16 Q. I apologize. 17 A. Yes. Yes, page 86 of 212. 18 Q. Right, right. And this was also part of 19 Mr. Fagan's prefiled testimony, Attachment A, subject 20 to check? 21 A. Subject to check, yes. 22 Q. Now, if we could go back to page 2 of 212 of 23 Attachment A of Mr. Fagan's prefiled exhibit-- 24 A. Yes, I have that. 25 Q. --what's the reserve margin there stated to PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 305 1 be? 2 A. Fifteen percent, with a double asterisk. 3 Q. And the double asterisk is a footnote? 4 A. That is correct. 5 Q. Would you please read into the record that 6 footnote? 7 A. "The currently filed IPL resource plan 8 (filed 12/05) assumes an 18 percent planning reserve 9 margin. However, for internal planning, 15 percent 10 is assumed." 11 Q. Now, you discuss the planning reserve 12 sharing group at page 16, lines 5 to 8, of your 13 rebuttal, is that correct? 14 A. Would you give me that citation again? 15 Q. Certainly. You refer to at page--I 16 apologize. At page 16, lines 5 to 8, of your 17 rebuttal. 18 A. Yes, I do. 19 Q. And what's the nature of this group? 20 A. The nature of this group is a fairly large 21 group of utilities doing just what the name suggests, 22 a study of potential planning reserve margins across 23 the footprint. 24 Q. Have any conclusions been reached by that 25 group to date? PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 306 1 A. They have not. 2 Q. At pages 18 and 19 of your rebuttal 3 testimony, you discuss the Mid-Continent Area Power 4 Pool, is that correct? 5 A. Yes, I do. 6 Q. And the Mid-Continent Area Power Pool, also 7 known as MAPP, uses a 15 percent reserve margin, is 8 that correct? 9 A. That is correct. 10 (OCA Exhibit 119 was marked 11 for identification.) 12 BY MR. STEAD: 13 Q. I would like you to show--or I would like to 14 show you what's now been marked OCA Exhibit 119. 15 What's the title of that document? 16 A. "MAPP Reserve Capacity Obligation Review". 17 Q. And is it a final report prepared for 18 MAPPCOR? 19 A. That's what it says. 20 Q. Are you familiar with or do you know what 21 MAPPCOR is? 22 A. Somewhat. I'm not as familiar with it as I 23 used to be since Alliant Energy Company does now 24 belong to MAIN, but essentially MAPPCOR, I believe, 25 is the old Mid-Continent Area Power Pool, I believe, PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 307 1 with some exception. 2 Q. And you did testify on MAPP in your rebuttal 3 testimony? 4 A. Yes, I did. 5 Q. And you did testify that in prior periods of 6 your career you had extensive knowledge of MAPP, 7 correct? 8 A. Yes. That's been several years ago. 9 Q. Please turn to page DS-1, which is about the 10 third page in. 11 A. (Witness complies.) 12 Q. I'm looking at the top two paragraphs, if 13 you would. 14 A. Is that the ones that start, "The study 15 focused primarily on"? 16 Q. Right. 17 A. Okay. I have it. 18 Q. Does it appear to you that--or do you need a 19 little more time to review that? Take all the time 20 you need. 21 A. I've reviewed the top two paragraphs. 22 Q. Does it appear that this analysis was 23 conducted to examine what reserve margin was needed 24 in MAPP by MAPP to ensure system reliability? 25 A. I will give that a qualified yes because I PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 308 1 have not had the opportunity to review the entire 2 document and it's hard to draw a conclusion based 3 upon two paragraphs of a very large document, but I 4 would give that it would seem on the surface that 5 that would be a reasonable conclusion, subject to 6 more review. 7 Q. Now, if you could turn to page ES-3. 8 A. I have that page. 9 Q. And the full paragraph second from the 10 bottom. 11 A. Yes. That begins, "The results of the study 12 indicate"? 13 Q. Yes. 14 A. Okay. 15 Q. Would you please read that paragraph into 16 the record? 17 A. "The results of this study indicate the need 18 for installed reserves in the range of 9.96 (no 19 internal transmission limitations) to 12.75 percent. 20 (Load forecast uncertainty) in the MAPP-U.S. thermal 21 portion of the system in order to maintain a 22 reliability level of 0.1 day per year. The results 23 suggest that a reserve level of 10 to 13 percent may 24 be justifiable for the MAPP-U.S. thermal system 25 considering load forecast uncertainty, and forced PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 309 1 outage rate increases for generating units. However, 2 because deliverability, integrated hydro with thermal 3 and hydro-dominant issues were not specifically or 4 adequately addressed, the present 15 percent thermal 5 RCO and 10 percent hydro RCO values are still 6 considered valid and no changes are being 7 recommended. Specific recommendations to address 8 these issues, and more, in subsequent RCO studies are 9 made in the Recommendations section of this report." 10 Q. Thank you. 11 And "RCO" means reserve capacity obligation? 12 A. I believe so, subject to check, not having 13 reviewed this document. 14 Q. Okay. And looking at the cover of the 15 document again, as of November 2003, do you have any 16 reason to dispute that this was MAPP's position? 17 A. I have no basis to dispute that. 18 MR. STEAD: Okay. Thank you. 19 We would move the admission of Exhibit 119, 20 and if the witness or counsel is uncomfortable with 21 the entire exhibit, we would just cite the quoted 22 language as part of that exhibit. 23 MS. JOHNSON: I think we're fine with 24 admission of the entire exhibit. 25 MR. STEAD: Thank you. PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 310 1 We would move to admit Exhibit 119. 2 CHAIRPERSON NORRIS: 119 is admitted. 3 (OCA Exhibit 119 was 4 received in evidence.) 5 MR. STEAD: Thank you. That's all I have. 6 CROSS-EXAMINATION 7 BY MS. EASLER: 8 Q. Good afternoon, Mr. Bauer. 9 A. Good afternoon. 10 Q. When IPL's generating plants are dispatched, 11 they are dispatched into the Midwest ISO marketplace, 12 is that correct? 13 A. Yes, it is. 14 Q. So generation output of the proposed SGS 15 Unit 4 would be available to supply the Midwest 16 market and is not necessarily limited to serving 17 IPL's Iowa customers? 18 A. The MISO market works in the way that IPL 19 sells all of its generation into the MISO market and 20 buys all of its load back, so I guess technically 21 that is a correct statement, but it is sold into the 22 marketplace and is purchased back. 23 MS. EASLER: I am going to distribute a 24 document that should be marked Exhibit 120, and this 25 is just IPL's response to data request Nos. 222, 223, PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 311 1 224, and 225, and I believe these are from you, 2 Mr. Bauer. 3 (OCA Exhibit 120 was marked 4 for identification.) 5 BY MS. EASLER: 6 Q. Do these appear to be true and accurate 7 copies of your response to OCA data requests 222 8 through 225? 9 A. Yes. 10 MS. EASLER: I would move the admission of 11 Exhibit 120. 12 MS. JOHNSON: No objection. 13 CHAIRPERSON NORRIS: They are admitted. 14 (OCA Exhibit 120 was 15 received in evidence.) 16 BY MS. EASLER: 17 Q. Then I would like to direct you to your 18 rebuttal testimony at page 23. 19 At this point in your testimony you are 20 responding to OCA Witness Schlissel's testimony 21 concerning coal-fired power plants that have been 22 either delayed or canceled, and your testimony 23 discusses plants that are moving forward. 24 A. Yes. 25 Q. Am I correct in understanding that IPL does PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 312 1 track these plant proposals and does keep track of 2 plants that are canceled or not approved? 3 A. Not in a formal--anecdotally, we do some of 4 that, but if you're looking for some kind of an 5 ongoing database, or whatever, I'm not aware of one. 6 Q. But more in a general sense, you do stay 7 apprised of those type of developments? 8 A. That's a fair assessment. 9 MS. EASLER: I am distributing a document 10 that should be marked OCA Exhibit 121. 11 (OCA Exhibit 121 was 12 marked for identification.) 13 BY MS. EASLER: 14 Q. Now, looking at the cover sheet, this 15 appears to be a filing by Rocky Mountain Power with 16 the Oregon Public Utility Commission in 17 Docket No. UM 1208. Do you see that? 18 A. Yes, I do. 19 Q. And this is dated November 28th, 2007? 20 A. Yes, it is. 21 Q. If you would, I would ask that you turn to 22 page 3 of the filing, and read paragraphs 6 and 7, 23 please. 24 A. "Furthermore, due to the current uncertainty 25 in the ability to quantity in any meaningful way the PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 313 1 cost of compliance with potential federal CO2 2 legislation, Bridger 5 as a supercritical unit is no 3 longer a viable option. Within the last few months, 4 it has become apparent that Congress will enact some 5 restriction on carbon emissions, but the projected 6 cost impact upon new coal generation is currently 7 within such a wide range as to make meaningful risk 8 assessment futile. On November 13th, 2007, the 9 National Association of Regulatory Utility 10 Commissioners adopted its first resolution 11 acknowledging that climate change legislation 12 addressing carbon emissions will occur. Within the 13 last few months, most of the planned coal plants in 14 the United States have been canceled, denied permits, 15 or been involved in protracted litigation. 16 Accordingly, the company submits that IPP3, Bridger 5, 17 and the IGCC option at Jim Bridger are no longer 18 viable options for the 2012 RFP for the 2012 and 2014 19 time frame, respectively." 20 Paragraph 7 says, "While the company is not 21 excluding new coal generation ownership in its 20- 22 year options, absent some change in conditions it 23 cannot be determined at this time whether new coal 24 generation ownership will satisfy the least cost, 25 least risk standards that will enable us to consider PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 314 1 it as a viable option within our 10-year plans." 2 MS. EASLER: Thank you. 3 I would move the admission of Exhibit 121. 4 MS. JOHNSON: No objection. 5 CHAIRPERSON NORRIS: 121 is admitted. 6 (OCA Exhibit 121 was 7 received in evidence.) 8 MS. EASLER: Thank you. That's all I have. 9 CROSS-EXAMINATION 10 BY MS. LA SEUR: 11 Q. Good afternoon, Mr. Bauer. 12 A. Good afternoon. 13 Q. I direct you first to your rebuttal testimony 14 at page 3 where you refer to modeling being done on 15 MISO system impact studies, and you say at lines 8 16 through 10 that models are being updated to allow the 17 short-circuit and stability analysis to begin. You 18 estimate that it will be the end of December before 19 meaningful results are available to supplement the 20 record. Has the record been supplemented with those 21 studies? 22 A. Partially. What counsel distributed to you 23 a little earlier when I began testifying here was the 24 single contingency portion of that. As you will go 25 through that, in the latter pages of that, the double PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 315 1 circuit and short circuit has been completed. 2 Q. And so the missing portion would be--you say 3 part of it has been completed. That means part of it 4 has not? 5 A. That is correct. 6 Q. And what has not been completed? 7 A. The double contingency--I'm sorry. I'm 8 sorry. Let me look. 9 Q. Okay. 10 A. Page 18, select a double-contingency 11 stability analysis, short-circuit analysis, 12 deliverability analysis. Facility impacts and 13 upgrades are all yet to come. Those are not 14 completed yet. 15 Q. And do you have an estimated date of 16 completion for those studies? 17 A. I would like to hope they would be 18 forthcoming in the next month or so, but when you 19 work with a large ad hoc group of utilities, progress 20 sometimes is not as fast as what you would like, so I 21 would hope to be done maybe by the end of February 22 with that. 23 Q. End of February? 24 A. Yes. 25 Q. Thank you. PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 316 1 A. But MISO--that's at MISO's schedule, not my 2 schedule. 3 Q. Okay. I would refer you next to your 4 rebuttal testimony at page 26, lines 13 and 14. 5 A. Yes. 6 Q. And you say that Mr. Sanzillo appears to 7 recommend a 14 percent reserve margin for long-term 8 planning. 9 Would you please indicate the portion of 10 Mr. Sanzillo's testimony that leads you to think that 11 he is recommending a 14 percent reserve margin? 12 A. I would need to see Mr. Sanzillo's 13 testimony, as well as the response to data request-- 14 IPL data request 1. 15 On page 6 of Mr. Sanzillo's testimony, 16 lines 127 to 129, Mr. Sanzillo states, "IPL uses an 17 18 percent reserve margin. An 18 percent reserve 18 margin for 3,104 megawatts adds 558 megawatts to the 19 net projected load estimate (IPL's reserve 20 requirements are conservative compared to the 21 industry standard of 14 percent, or 435 megawatts.)" 22 The other citation is page 14, and that's 23 confidential lines 296 to 302, where Mr. Sanzillo 24 goes through a calculation comparing an 18 percent 25 reserve to a 14 percent reserve margin. PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 317 1 Q. Okay. And my question is about that, that 2 testimony from Mr. Sanzillo. Wouldn't it be a fair 3 interpretation of Mr. Sanzillo's testimony to say 4 that he is pointing out that even with an 18 percent 5 reserve margin, IPL will have 193 megawatts surplus 6 capacity in 2013, and with a 14 percent reserve 7 margin, there would be a 305 megawatt surplus 8 capacity? 9 A. I've not done the math. That's a simple 10 math calculation. Subject to check, I would presume 11 so. 12 Q. Well, it's in the table that Mr. Sanzillo 13 has laid out, which you probably just referred to the 14 number cited by Mr. Sanzillo, the confidential 15 material. I apologize. 16 A. Yes, there would be a difference of--my math 17 is not real great--a little over a hundred megawatts 18 in the reserve margin, 18 versus 14. 19 Q. And so would you agree that it's a fair 20 interpretation of Mr. Sanzillo's testimony that he is 21 making a comparative analysis of what the different 22 reserve assumptions would be for the ultimate surplus 23 capacity available? 24 A. The purpose of the data request that we 25 asked Mr. Sanzillo was to define where he got his PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 318 1 information, where he drew his conclusion that a 2 reserve margin of 14 percent was industry standard, 3 so, yes, he did a mathematical calculation, that is 4 true. 5 Mr. Sanzillo's testimony also appeared to 6 advocate for a 14 percent reserve margin based upon 7 what he referred to as an industry standard. 8 Q. Okay. But you would not be able to point to 9 a recommendation of a 14 percent reserve planning 10 margin in Mr. Sanzillo's testimony? 11 A. I can't find in his testimony where he makes 12 that recommendation. 13 Q. Okay. Thank you. 14 Again at page 26 of your own rebuttal 15 testimony, at line 19--18, 19, 20, Mr. Sanzillo--your 16 testimony is Mr. Sanzillo offers absolutely no 17 evidence in the record and has grossly misinterpreted 18 IPL's load capability as explained in the rebuttal 19 testimony of Mr. Kitchen. 20 With reference to that line 19, absolutely 21 no evidence in the record, my question is just to 22 what evidence you're referring. 23 A. My exhibit RDB-2, Schedule I, asked 24 Mr. Sanzillo for his data source for his claim of the 25 conservative industry standard of 14 percent. PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 319 1 If you look at that data request, he directs 2 us to Mr. Kitchen's testimony, and my point was 3 Mr.--he took Mr. Kitchen's testimony on what I would 4 characterize out of context a little bit. Fourteen 5 percent is a short-term, less than one-year reserve 6 margin. If you look at the MAIN reserve planning 7 document that we used for reserve requirements, it 8 acknowledges 14 percent is a short-term up to 9 one-year reserve margin, with a long-term recommended 10 reserve margin range of 15 to 18 percent. 11 My point was Mr. Sanzillo offered absolutely 12 no evidence on his own that 14 percent was an 13 industry standard. He offered no supporting 14 evidence, and I believe misinterpreted Mr. Kitchen's 15 testimony on that issue. 16 Q. Thank you. 17 Still on page 26, in reference to the 18 analysis you're making here, what justification do 19 you offer for the large amount of surplus capacity, 20 far beyond even the maximum recommended 18 percent 21 reserve margin proposed by IPL? 22 A. I don't understand the question. 23 Q. Well, let's start with this: Do you 24 acknowledge that there is surplus capacity proposed 25 in the current application? PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 320 1 A. In what year? In other words, surplus and 2 deficit, the reserve margin is an annual calculation, 3 so when we look at the study period or when we look 4 at the period of from now through 2020, whatever time 5 period it is, in normal resource planning, there are 6 going to be surpluses and deficits, and that's just 7 the lumpiness of capacity additions, so I'm back to 8 my question of what year are you looking at surplus. 9 Q. Let's begin with the initial year of 10 operation of the plant, 2013. 11 A. Do you have a document that I can look at? 12 Q. I'm referring to Mr. Sanzillo's 13 calculations, in the first instance. 14 A. Okay. Okay. I have that here. 15 Q. So my question is, do you accept that there 16 will be surplus capacity in 2013? 17 A. Yes. That would be expected with the ebb 18 and flow of resource issues. 19 Q. And are you willing to estimate how much 20 surplus capacity will exist in 2013? 21 A. I don't have that document in front of me, 22 so it's not--if I accept, subject to check, 23 Mr. Sanzillo's numbers, with an 18 percent reserve 24 margin it would be 193 megawatts. I will accept 25 that, subject to check. PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 321 1 Q. Okay. And if you accept that subject to 2 check, what justification do you offer for this 3 large amount of surplus capacity in excess of the 4 18 percent reserve margin? 5 A. First of all, I don't define that as very 6 large on a 3,000-megawatt system. It's, what would 7 it be, 6 or 7 percent, I guess, on a 3,000-megawatt 8 system. 9 I don't think you can take a surplus and 10 draw a conclusion in a single year of a resource 11 addition simply because it is part of a normal 12 resource planning process. 13 If you looked at the year 2012, the year 14 before Sutherland 4 came online, what you would see 15 is that IPL would be in a deficit situation. 16 So normal ebb and flow of resource planning 17 is you typically go deficit to some level, make a 18 resource addition, you go surplus, load growth will 19 work that surplus off, you'll go deficit again, and 20 you'll start the process all over again, generally. 21 Q. And is it then IPL's position that it should 22 receive certification to construct up to a few 23 hundred megawatts of surplus capacity without 24 demonstrating the need for that capacity if 25 Sutherland comes online? PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 322 1 A. IPL has demonstrated need through its 2 resource planning. EGEAS, as Mr. Kitchen discussed 3 in his testimony, is a resource planning tool that 4 does deal with net present value revenue requirements 5 in an economic fashion. 6 Q. So would you acknowledge that a utility, IPL 7 in this instance, should have to demonstrate need to 8 receive authorization to construct an electrical 9 generating station? 10 A. Yes. 11 Q. I would like to refer you to your own 12 Exhibit 2, Schedule D, page 12 of Schedule D, the 13 Strategic Energy Assessment, Energy 2012, from the 14 Public Service Commission of Wisconsin. 15 A. Yes, I have that. 16 Q. And you submitted this full final report 17 from the Wisconsin PSC in support of your rebuttal 18 testimony, correct? 19 A. Yes, I did. 20 Q. I direct you to page 12 and to the 21 definition of clean coal technology in the lower 22 right-hand corner. 23 A. Yes, I see that. 24 Q. And would you please read this definition 25 for the record? PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 323 1 A. "IGCC uses high pressure and temperature to 2 transform coal into a gas prior to combustion. The 3 resultant gas can be cleaned of pollutants prior to 4 firing in a turbine. Conventional coal technology 5 burns coal in a boiler, and pollutants must be 6 stripped out after combustion in the exhaust, which 7 is both a more difficult and expensive process. IGCC 8 also has lower emissions of sulfur dioxide, which 9 contributes to haze, acid rain, and the formation of 10 fine particulate pollution." 11 Q. And since this is your exhibit, would it be 12 fair to say that you endorse this definition of clean 13 coal technology? 14 A. No, I do not. I included this exhibit 15 primarily for rebuttal to Mr. Fagan's claim that 16 Wisconsin Power and Light uses a 15 percent reserve 17 margin. In fact, specifically in my testimony, I 18 directed you to pages, I believe, 51 and 52, which 19 discuss the reserve margin. I am not a scientist on 20 IGCC or coal combustion, so I have no basis of 21 knowledge to accept this statement. 22 Q. Okay. Would you agree, though, generally 23 that this technology is not proposed for Sutherland 4? 24 A. Yes. 25 Q. Is there any form of coal combustion that PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 324 1 you would not term "clean coal"? 2 A. I have no basis of knowledge to answer that 3 question. 4 Q. I refer you to page 61 of Schedule D of the 5 same exhibit, and the first paragraph. 6 A. Is that the one that starts, "The commission 7 has recently approved CPCNs"? 8 Q. The one that is cut off at the top of the 9 page. 10 A. Okay. 11 Q. It says that power markets are inadequate to 12 protect the public from pollutants and externalities 13 that are under public policy supervision. 14 Would you--just so we have this in the 15 record so it's clear what I'm asking you about, would 16 you please read the last two sentences of that 17 paragraph? 18 A. "On the other hand, competitive power 19 markets may not be contributing to an environmentally 20 sound source in the cases of pollutants and 21 legitimate externalities that are not under 22 appropriate or adequate public policy supervision. 23 Examples might include mercury deposition, permanent 24 nuclear waste disposal, and greenhouse gases." 25 Q. And would it be fair to say that you agree PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 325 1 with this statement? 2 A. I have no basis of knowledge to agree with 3 that statement. 4 Q. And then also on the same exhibit, page 83, 5 the second and third paragraphs under "planning 6 reserve margin"-- 7 A. That was page 83? 8 Q. Page 83, right. 9 A. Okay. I have the page here. 10 Q. Okay. And I would generally characterize 11 this as statements by Madison Gas and Electric and 12 nearly all stakeholders supporting analysis of 13 reducing the planning reserve margin from 18 percent. 14 If I give you a moment to look at that, I just want 15 to ask you if you would agree with that 16 characterization of the text. 17 A. I've read it. 18 Q. And would you agree that it generally refers 19 to that recommended course of action by MGE and 20 stakeholders? 21 A. I believe the gist of the statement is that 22 it should be considered. I don't see anything in 23 there that advocates for a reserve requirement 24 change. I see advocacy for at least studying that 25 possibility. PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 326 1 Q. Right, and that would be my characterization 2 again, supporting the analysis of that course of 3 action. 4 A. Yes. 5 Q. Would it be within your field of expertise 6 to state agreement or disagreement with this 7 recommendation? 8 A. I think that is a reasonable point to 9 consider. 10 Q. Okay. That's all in that schedule. 11 I would like to refer you to Schedule G at 12 page 15. It's the NETL PowerPoint. 13 A. What page again? 14 Q. Page 15 of Schedule G. 15 A. Okay. I have it. 16 Q. And you had referred earlier to the number 17 of new plants going up. The proportion of IGCC to 18 pulverized coal supercritical is roughly three to one 19 at this time, is it not, for proposed new plants? 20 A. I don't see that on page 15. Are you 21 looking at a different page? 22 Q. You're right. I am. I've gone to my next 23 question already. Page 15. Here we go. You refer 24 to this page at page 19 of your rebuttal testimony, I 25 believe just for your claim that new coal-fired PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 327 1 generation is increasingly required for maintaining 2 minimum regional electricity capacity margins. 3 A. Yes. 4 Q. And it is your testimony, correct, that new 5 coal-fired generation is necessary to maintain 6 minimum regional electricity capacity margins? 7 A. I'm citing this report, so, yes. 8 Q. So your testimony is based entirely on this 9 report, or is it based on some expertise of your own? 10 A. Well, it's based on both. 11 Q. And when you say regional electricity 12 capacity margins, what region do you refer to? 13 A. We belong to the Midwest Reliability 14 Organization region. Region can be characterized in 15 a number of ways, but we belong to Midwest--MRO, 16 Midwest Reliability Organization region. 17 Q. And the NETL study in making these--reaching 18 these conclusions regarding the need for new 19 coal-fired generation, did the study consider gains 20 by efficiency and demand-side management? 21 A. I don't recall seeing that in the report. 22 Q. So is that a no? 23 A. Give me a minute, if you would. 24 Q. Okay. 25 A. I don't see any mention of energy PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 328 1 efficiency. 2 Q. Thank you. 3 And the next question, does the same study 4 conclude that all currently proposed coal-fired power 5 plants must be constructed to meet regional capacity 6 needs. 7 A. Would you restate that question? 8 Q. The question is, does this NETL study 9 conclude that all currently proposed coal-fired power 10 plants must be constructed to meet regional capacity 11 needs? 12 A. I don't believe it either affirms or does 13 not affirm that all of them meet, so I don't think I 14 can answer that because I can't seem to draw a 15 conclusion on whether. It talks about some 16 historical perspective in terms of completion of 17 plants relative to announcements, and those types of 18 things, but I don't believe it draws that conclusion 19 one way or the other. 20 Q. And what historic trends does the study 21 describe with reference to plants completed versus 22 plants announced? 23 A. Well, as an example, if I look at page 516, 24 actual plant capacity commissioned since 2000 has 25 been far less than new capacity announced. 2002 PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 329 1 reflected a schedule of nearly 12,000 megawatts to be 2 installed by 2005, whereas under 329 megawatts have 3 been installed. 4 I believe on page 9 as well it talks about 5 2400 megawatts of new added capacity is only about 6 16 percent of the 15,000 megawatts proposed to be 7 operational in the next three years. 8 MS. LA SEUR: Okay. Thank you. 9 CHAIRPERSON NORRIS: Ms. La Seur, if you can 10 look for a convenient place to wrap up today's line 11 of questions, that would be good. 12 MS. LA SEUR: I have just a few more. I'm 13 just about ready. 14 CHAIRPERSON NORRIS: We are going to go into 15 closed session, I think, very briefly for a couple of 16 questions for Mr. Byers so we can wrap that portion 17 up today, so go ahead. 18 MS. LA SEUR: I'll try to get through. 19 Thank you. 20 BY MS. LA SEUR: 21 Q. The last schedule I want to refer to, unless 22 I come up with something unusual in our discussion 23 here, is Schedule H at page 32. It's the NETL study. 24 A. What page again? 25 Q. Page 32. PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 330 1 My initial question is, your testimony is 2 that Iowa needs to build new coal-fired power plants 3 to support electricity demand and economic growth, 4 correct? 5 A. Yes. 6 Q. I would refer you to the discussion on 7 page 32 at Schedule H--page 32, Schedule H--of the 8 policy on coal-fired power plants of the Province of 9 Ontario. 10 A. Yes, I see that. 11 Q. And would you describe the Ontario policy, 12 please? 13 MS. JOHNSON: I think I'm going to have to 14 object and ask what the relevance of a Canadian MRO 15 has to an Iowa situation. 16 CHAIRPERSON NORRIS: Could you restate the 17 question, Ms. La Seur? 18 MS. LA SEUR: The question is directly 19 relevant to the witness's contention that there is a 20 need for new coal-fired power plants to support 21 electricity demand and economic growth, while the 22 Province of Ontario has enacted a policy of shutting 23 down all its coal-fired power plants, so my question 24 is, first of all, if the witness would characterize 25 this policy as I would characterize it, as a shutdown PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 331 1 of the Province's coal-fired generation by 2014. 2 CHAIRPERSON NORRIS: And is it in his 3 testimony that you're referring to? 4 MS. LA SEUR: It's his own exhibit. 5 CHAIRPERSON NORRIS: All right. You may go 6 ahead and answer the question, Mr. Bauer. 7 A. What this appears to suggest is that Ontario 8 is going to shut down their coal-fired power plants, 9 and I believe that's by 2014. 10 Q. And moving down page 32 to the second-to-the- 11 last paragraph, it's the last paragraph in reference 12 to Ontario before the next section which begins with 13 Quebec, there is a statement about what resources 14 available within Ontario are, and it goes on to 15 characterize the resources expected to be available 16 in Ontario under this new policy. 17 Would it be fair to say that NETL is not 18 predicting that there will be a failure of 19 electricity demand and economic growth in Ontario, a 20 failure of supported electricity demand? 21 A. I don't know that NETL talked about 22 Ontario. 23 CHAIRPERSON NORRIS: Mr. Bauer, I need you 24 to speak up into your microphone. 25 THE WITNESS: I'm sorry. PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 332 1 A. I say I don't believe--this particular 2 assessment is from NERC. It's not from NETL, and I 3 don't think we can draw any conclusion from this that 4 the situation in Ontario is the same as what it is in 5 Iowa, simply because I don't know what their load 6 growth is, I don't know whether they're replacing 7 coal-fired resources with other types of resources, 8 so I don't think you can draw any kind of a 9 comparison that what transpires in Ontario is in any 10 shape or form relative to what goes on in Iowa, 11 simply because we have an absence of information. 12 Any conclusion would be pure speculation, not the 13 ground of any fact in this proceeding. 14 MS. LA SEUR: Very well. Nothing further. 15 Thank you. 16 CHAIRPERSON NORRIS: All right. Mr. Bauer, 17 we'll give you a break until the morning. 18 THE WITNESS: Okay. 19 CHAIRPERSON NORRIS: We'll follow up with 20 anything from Mr. Puckett in the morning, and I think 21 we want to bring Mr. Byers back up for just a couple 22 of questions, but that will be a confidential 23 session, so if you're not party to the confidential 24 agreement, we're going to ask you to leave the room. 25 We will be back in session tomorrow morning at PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 333 1 9 o'clock, and we'll also ask at the conclusion of 2 that confidential session if anybody has any input 3 about how we can modify any setup for anybody that is 4 having difficulty, please let us know. 5 Let's take a five-minute break while those 6 not a party to the confidential agreement can clear 7 the hearing room. 8 (Short recess.) 9 CHAIRPERSON NORRIS: Again, if you are not a 10 party to the confidential agreement, I ask that you 11 please leave the room at this time. Thank you. 12 (Pages 334 through 339 are contained in the 13 confidential portion of the transcript.) 14 15 16 17 18 19 20 21 22 23 24 25 PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 334 1 (The following proceedings were held in 2 closed session.) 3 CHAIRPERSON NORRIS: Raise your right hand, 4 please. 5 ANDREW BYERS, 6 recalled as a witness by Interstate Power and Light 7 Company, being first duly sworn by Chairperson Norris, 8 was examined and testified as follows: 9 CHAIRPERSON NORRIS: Thank you. You may be 10 seated. I'll wait for a signal from the back of the 11 room when we're cleared. Okay. All right. 12 Thanks for coming back, Mr. Byers. 13 I asked you that question about the 14 Marshalltown Water Works and the capacity and 15 potential upgrades, and there was some confidential 16 information that we just had to follow up briefly 17 with you. 18 In Witness Vesperman's Exhibit KBV-1, 19 confidential Schedule B, Black and Veatch estimated 20 cooling tower water usage. It also listed 21 Marshalltown Water Works' capacity and potential 22 upgrades required. 23 Is Marshalltown Water Works the majority 24 source planned for SGS Unit 4? Will most of the 25 water come from this source? PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 335 1 THE WITNESS: Yes, it is my understanding 2 that most of the water supply for the new unit will 3 come from the Marshalltown Water Works. 4 CHAIRPERSON NORRIS: That's what appears in 5 the Black and Veatch report. 6 The SGS Unit 4 will take Marshalltown Water 7 Works up to or very near its water treatment limit. 8 However, Black and Veatch also states that upgrades 9 of basically up to double the SGS Unit 4 requirement 10 are possible. Is that correct? 11 Do you want me to restate that? Upgrades of 12 basically up to double the water treatment limit for 13 SGS Unit 4 are possible. 14 THE WITNESS: That is my understanding, yes. 15 CHAIRPERSON NORRIS: Excuse me. I'm trying 16 to read some writing here. 17 Are upgrades to Marshalltown Water Works 18 water treatment system required for the SGS Unit 4? 19 THE WITNESS: I believe that is beyond my 20 expertise. While I am aware that Black and Veatch 21 did prepare this report, I was not directly involved 22 in that particular report. 23 CHAIRPERSON NORRIS: So who might be able to 24 let the Board know if this SGS Unit 4 will require 25 upgrades to Marshalltown Water Works water treatment PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 336 1 system? 2 THE WITNESS: I don't know. 3 CHAIRPERSON NORRIS: Okay. OCA Witness 4 Power on page 5 of his direct testimony states that 5 the Iowa River nearly runs dry during certain 6 seasonal conditions, which is what I asked you in the 7 previous question. 8 For clarification, it sounded like you said 9 Marshalltown Water Works and this increased demand 10 should have no impact on the Iowa River. Is that 11 correct? 12 THE WITNESS: That is correct. The basis of 13 what I was trying to explain was if the water-- 14 Marshalltown Water Works sources its water from an 15 underground aquifer. It doesn't directly withdraw 16 the water from the Iowa River, is my understanding, 17 and therefore I made the assumption that there would 18 be no impact on supply from Marshalltown Water Works. 19 CHAIRPERSON NORRIS: On the river. 20 THE WITNESS: On the river, yes. I'm sorry. 21 CHAIRPERSON NORRIS: You also stated the 22 water table, but is there any impact on the water 23 table or otherwise on competing agricultural or other 24 water resource demands? 25 THE WITNESS: I'm not aware of any PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 337 1 agricultural sourcing from the same aquifer. The 2 Water Works in Marshalltown represented that they 3 have all the rights to this aquifer. 4 CHAIRPERSON NORRIS: Okay. So let me just 5 kind of summarize here to make sure I've got this 6 right. 7 It appears from confidential information 8 that Sutherland 4 will take Marshalltown Water Works 9 to or above its water treatment limit, that 10 expansions of up to double this new demand is 11 possible, but you can't say now that--you can't tell 12 us for sure if upgrades to the Marshalltown Water 13 Works treatment system are required going forward, is 14 that correct? 15 THE WITNESS: I can say what I know. What I 16 know is that Marshalltown Water Works has represented 17 that they have 19 million gallons per day capacity 18 from their underground aquifer. The current demand 19 for the City of Marshalltown is somewhere around 6 to 20 6.5 million gallons per day, and the requirement for 21 the plant is somewhere around six, but no bigger than 22 nine million gallons per day on a worst-case 23 scenario, and therefore it seems like there would be 24 sufficient capacity--more than sufficient capacity 25 within the aquifer to account for the new unit. That PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 338 1 was the basis-- 2 BOARD MEMBER HANSON: I don't-- I'm sorry. 3 I didn't mean to interrupt. 4 THE WITNESS: That was the basis of my 5 assumption that there would be no adverse impact to 6 the water supply. 7 BOARD MEMBER HANSON: I don't know if it's a 8 question appropriate for confidential session or not. 9 Were you done? 10 CHAIRPERSON NORRIS: Yeah. 11 BOARD MEMBER HANSON: Has there been any 12 investigation, to your knowledge, as to whether 13 drawing the extra--the additional, I should say, 14 water from the aquifer through the Marshalltown 15 public water system would have any impact on any 16 other wells in the area, either residential or 17 industrial or commercial, that tap into the same 18 aquifer? 19 THE WITNESS: I have not conducted any 20 investigation with regard to that. 21 BOARD MEMBER HANSON: Thank you. 22 CHAIRPERSON NORRIS: All right. Mr. Byers, 23 I think you answered my questions. 24 If you have any follow-up information, we'll 25 let counsel know, but I think you've qualified what PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 339 1 we need to know there. 2 Anybody else, any follow-up questions? I 3 should ask that. I'm sorry. 4 MS. EASLER: No. 5 CHAIRPERSON NORRIS: Ms. La Seur? 6 MS. LA SEUR: Nothing. 7 CHAIRPERSON NORRIS: Counsel? 8 MS. JOHNSON: No. 9 (Witness excused.) 10 CHAIRPERSON NORRIS: All right. As I 11 mentioned, if you have any suggestions that you think 12 would make this work better tomorrow in terms of set 13 design, or whatever you want to call it, let me know. 14 If not, we'll see you at 9 a.m. 15 (Recess at 5:05 p.m. until 9:00 a.m., 16 Tuesday, January 15, 2008.) 17 18 19 20 21 22 23 24 25 PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596 340 1 C E R T I F I C A T E 2 I, the undersigned, a Certified Shorthand 3 Reporter of the State of Iowa, do hereby certify that 4 I acted as the official court reporter at the hearing 5 in the above-entitled matter at the time and place 6 indicated; 7 That I took in shorthand all of the 8 proceedings had at the said time and place and that 9 said shorthand notes were reduced to typewriting 10 under my direction and supervision, and that the 11 foregoing typewritten pages are a full and complete 12 transcript of the shorthand notes so taken. 13 Dated at Des Moines, Iowa, this 21st day of 14 January, 2008. 15 16 17 CERTIFIED SHORTHAND REPORTER 18 19 20 21 22 23 24 25 PETERSEN COURT REPORTERS 317 Sixth Avenue, Suite 606 Des Moines, IA 50309-4155 (515) 243-6596