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HomeMy WebLinkAbout20241003Compliance Filing 2023.pdf —�IQAHO Ro RECEIVED MATTHEW T. LARKIN Thursday, October 03, 2024 Revenue Requirement Senior Manager IDAHO PUBLIC miarkin@idahopower.com UTILITIES COMMISSION October 3, 2024 VIA ELECTRONIC FILING Commission Secretary Idaho Public Utilities Commission 11331 W. Chinden Blvd., Bldg 8, Suite 201-A (83714) PO Box 83720 Boise, Idaho 83720-0074 Re: Case No. IPC-E-12-09 Compliance Filing — Boardman Power Plant Annual Review (2023) Dear Commission Secretary: Pursuant to Idaho Public Utilities Commission ("Commission") Order Nos. 32457 (Case No. IPC-E-11-18) and 32549 (Case No. IPC-E-12-09), attached for electronic filing is Idaho Power Company's Boardman Power Plant Annual Review report for the year ending 2023. If you have any questions regarding this filing, please contact Regulatory Consultant Courtney Waites at (208) 388-5612 or cwaitesC@-idahopower.com. Sincerely, Matthew T. Larkin MTL:sg cc: Dayn Hardie a_10AW POWER. BOARDMAN POWER PLANT ANNUAL REVIEW FOR THE YEAR ENDING 2023 October 3, 2024 Pursuant to Idaho Public Utilities Commission ("Commission") Order Nos. 32457 (Case No. IPC- E-11-18)and 32549 (Case No. IPC-E-12-09), Idaho Power Company("Idaho Power"or"Company") has completed its review of the Boardman power plant ("Boardman") balancing account for 2023. The purpose of this report is to provide the Commission with(1)an update of the Boardman balancing account levelized revenue requirement and (2) a summary of activities that occurred at Boardman in 2023. The Company is not recommending a rate change as part of this report. L BACKGROUND In February 2012, the Commission issued Order No. 32457 in Case No. IPC-E-11-18: (1) accepting the Company's accounting and cost recovery plan for the early shutdown of Boardman and (2) allowing the Company to establish a balancing account to track shutdown-related costs and benefits. Following the Commission's order, on February 15, 2012, Idaho Power requested authority to increase rates to begin recovery of the levelized revenue requirement associated with Boardman beginning June 1, 2012 (Case No. IPC-E-12-09). The Company proposed to replace the then current non-levelized base rate revenue recovery associated with Idaho Power's existing investment in Boardman with a levelized revenue requirement that was tracked in the Boardman balancing account, smoothing the revenue requirement impacts of the early Boardman retirement over the remaining years of the plant's life and providing for full recovery of Boardman-related costs by Boardman life end. The levelized revenue requirement calculation included three components: (1) the revenue requirement on existing investments as of May 31, 2012, prior to when the Boardman balancing account was established; (2) the revenue requirement on incremental investments after May 31, 2012, after the Boardman balancing account was established; and (3) the revenue requirement associated with future decommissioning and offsetting salvage costs. The Commission issued Order No. 32549 on May 17, 2012, authorizing implementation of the cost recovery approach approved in Order No. 32457 and increasing the Company's annual revenue requirement by $1,525,501 effective June 1, 2012, to reflect in customer rates the new levelized Boardman revenue requirement of$5,174,794. In accordance with Order Nos. 32457 and 32549, Idaho Power filed its Boardman Power Plant Annual Review each year from 2012 through year-end 2018 without requesting to adjust rates. Then, on October 17, 2019, Idaho Power filed an application in Case No. IPC-E-19-32 requesting to decrease customer rates$1,058,225 effective January 1, 2020, to reflect the updated Boardman levelized revenue requirement amount of$5,135,872. On December 26, 2019, the Commission issued Order No. 34519 in Case No. IPC-E-19-32 approving the requested rate change. Because full depreciation of all Boardman investments was to occur December 31, 2020, Idaho Power filed a request with the Commission to remove the $5,135,872 in Boardman levelized revenue requirement amounts, less an adjustment of $213,918 to reflect benefits of the U.S. Tax Cuts and Jobs Act of 2017 associated with Boardman that will no longer exist, effective January 1, 2021. The Commission approved the Company's request with Order No. 34885. Boardman Power Plant 2023 Annual Review 1 Case No. IPC-E-12-09 II. SUMMARY OF ACTIVITIES IN 2023 Boardman produced its last megawatt of energy on October 15, 2020, at 12:56 PM. In the Company's Boardman Power Plant Annual Review for the Year Ending 2020, Idaho Power provided the updated quantification of the levelized revenue requirement based on actuals through the plant's end-of- life. Therefore, no update to the levelized revenue requirement is necessary. The following summarizes the activities related to cessation of coal-fired operations at Boardman that occurred in the year 2023: Decommissioning and Salvage Costs Idaho Power's initial estimate of the decommissioning and salvage costs was determined by applying the Company's 10 percent ownership percentage to the decommissioning study performed by Black & Veatch for Portland General Electric ("PGE") and completed in 2011. In 2018, PGE issued a request for proposal seeking an Owner's Engineer to complete design and permitting work in preparation for decommissioning activities, including capping the ash disposal area, demolishing structures at Boardman (i.e., coal handling systems), remediating the coal yard, and other selective demolition work across the site (i.e., support buildings, features supporting coal, coal handling, and coal ash handling). The cost study prepared by AECOM Technical Services, the Updated Boardman Coal Plant Decommissioning and Demolition Plan dated October 16, 2019, indicates a slightly higher decommissioning cost forecast than the estimate prepared in 2011, however no changes were made to the$5.4 million of decommissioning and salvage costs included in the levelized revenue requirement and collected from customers. Decommissioning and Demolition Activities Decommissioning of the Boardman plant and separating of the facilities shared with PGE's Carty generating station began on October 16, 2020. At this time the plant was taken to a cold, dark and dry state in preparation for demolition until the first quarter of 2021 when decommissioning activities began. In 2023, all remaining demolition across the site was completed,which included demolition of the crusher building, turbine hall, ash handling systems, and peripheral warehouse buildings, as well as removal of materials from the imploded boiler and stack. Coal accumulations in the coal yard that had been inaccessible during coal reclamation were removed for disposal; 11,550 tons of coal were removed from the coal yard.All the remaining fly ash that was still in the storage dome, 8,030 tons, was removed from the dome for disposal. A total of 46,460 tons of scrap was recycled, 21,100 tons of that scrap material having been removed in 2023. In addition, the sewage lagoons were removed, graded and reseeded. A total of 2,106 tons of sediment from the settling ponds was excavated for disposal, and the ponds were backfilled and surfaced with crushed concrete. Disposal of coal, settling pond sediment, and fly ash exceeded initial estimates. Site restoration was completed in December 2023. Demolition disturbance areas in the coal yard and at the backfill source were graded and reseeded. All unpainted concrete from site structures, an estimated total of 24,350 tons, was crushed on site and used to fill and surface the plant site. In all, the total project recycling and reuse rate was 72.7 percent. Boardman Power Plant 2023 Annual Review 2 Case No. IPC-E-12-09 Asset Purchase Agreement Under the terms of the 1976 Agreement for Construction, Ownership and Operation of the Number One Boardman Station on Carty Reservoir ("Ownership Agreement"), Boardman's end-of-life requires the parties to enter into good faith negotiations on a decommissioning agreement and requires the real property(e.g., land and water rights)to revert to PGE while crediting Idaho Power for its share of the value associated with the real property. Consistent with these requirements, PGE and Idaho Power have undertaken good faith negotiations and reached an agreement for the remaining Boardman assets to be conveyed and assigned between PGE and Idaho Power, and as a result, on April 29, 2022, entered into an Asset Purchase Agreement ("APA"). Under the APA, the following will occur: (1) Idaho Power agrees to convey and assign to PGE 100 percent of Idaho Power's ownership interests in and obligations of the Shared Facilities, the Boardman real property (inclusive of water rights), and transmission lines in accordance with the Bill of Sale, (2) PGE agrees to convey and assign to Idaho Power 100 percent of PGE's ownership interest in and obligations under the Idaho Power tangible property, and (3) Idaho Power agrees to convey and assign to PGE 100 percent of Idaho Power's ownership interest in and obligations under the PGE tangible and intangible property. Payment to be made by PGE to Idaho Power for the conveyance and assignment of these assets is summarized in Table 1 below. Note,the final total payment will be determined at closing to reflect the then-current net book value of the transmission lines. Table 1. PGE Payment to Idaho Power for the Conveyance and Assignment of Certain Boardman Project Assets Between the Owners Asset Description Agreed Purchase Price Shared Facilities: Carty Reservoir $0 Cohunbia River Intake $0 Existing Water Intake Structure $0 Potable Water System $0 Tower Road Rights $0 Wastewater Ponds $0 Coiunninications Equipment and Housing $0 Boardman Real Property: $70,000 Boardman Project site Ash landfill site Intangible Property -Water Rights $2,300,000 Transmission Lines: Boardman-Slatt Line Facilities * Prices will be adjusted to the $247,280.36 Dalreed Line Facilities then current net book value at time $55,135.10 Tangible Property IPC Tangible Pro ei $0 PGE Tangible Property $0 Total TBD1 Boardman Power Plant 2023 Annual Review 3 Case No. IPC-E-12-09 Under Oregon statute,' PGE and Idaho Power must obtain approval from the Public Utility Commission of Oregon for the conveyance of assets defined in the APA. Therefore, on June 30, 2022, the parties filed a Joint Application for the sale and purchase of certain Boardman assets.2 The case is currently pending. Boardman Balancing Account The following summarizes Idaho Power's share of the decommissioning expenditures recorded to the balancing account on a system basis as of December 31, 2023: Decommissioning Costs $4,226,719 Materials and Supplies Write-off $ 967,717 Actual Decommissioning Expenditures $5,194,436 Remaining Forecast $ 156,892 Current Decommissioning Estimate $5,351,328 Decommissioning Costs Collected ($5,381,547) Estimated Under(Over) Collection $ (30,219) Collection of estimated levelized revenue requirement amounts ceased in 2020 and decommissioning activities were nearly complete as of December 31, 2023. If the Joint Application is approved, Idaho Power will record the gain associated with the disposition of the Boardman assets under the APA in the Boardman balancing account. III. CONCLUSION The levelized revenue requirement following the 2020 annual review, when full collection of Boardman levelized revenue requirement amounts occurred, demonstrated that there was a difference in the annual revenue requirement which, along with the sum of the associated true ups, was negative $40,669--a benefit to customers. Decommissioning activities have been completed and nearly all of the decommissioning expenses have been paid. However, the anticipated gain associated with the APA is yet to be recorded, therefore the revenue requirement true-up has remained in the balancing account. Variations between actual and forecasted decommissioning expenses are being tracked in the Boardman Balancing Account, which will be combined with the true-up and the gain associated with the APA, to determine the final balancing account value once complete. The Company will continue to report the balancing account activities to the Commission annually until all expenses have been paid and the disposition of the Boardman assets has been completed, and will adjust customer rates in a future proceeding, if necessary, ensuring customers pay no more or no less than actual Boardman-related costs. ' Oregon Revised Statute ("ORS") 757.480 and ORS 757.485. 2 Docket UP 419 (filed June 30, 2022, and supplemented October 15, 2023). Boardman Power Plant 2023 Annual Review 4 Case No. IPC-E-12-09