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HomeMy WebLinkAbout20140815Avista to Clearwater 1-7.pdfAvista Corp. 1411 East Mission P.O. Box3727 Spokane. Washington 99220-0500 Telephone 509-489-0500 TollFree 800-727-9170 Arutsrt Corp.RECEll./1.:i:) t8,q AUG lS Alt 9: 29 uir rl?ft'!0cci;h i s s r c, r,August 14,2014 Mr. Pete Richardson Clearwater Paper 601 W. Riverside Avenue, Suite 100 Spokane, WA 99201 Re:Production Requests of Clearwater Paper AVU-E-14-06 Dear Mr. Richardson, Enclosed are originals of Avista's responses to Clearwater Paper's production requests in the above referenced docket. Included in this mailing are Avista's responses to production requests PR 01-07. The electronic versions of the responses were emailed on 08114114 and are also being provided in electronic format on the CD included in this mailing. Also included are Avista's CONFIDENTIAL responses to PR 01C and 04C. The responses contain TRADE SECRET, PROPRIETARY or CONFIDENTIAL information and are separately filed under IDAPA 31.01.01, Rule 067 and 233, and Section 9-340D,Idaho Code, and pursuant to the Protective Agreement between Avista and Clearwater Paper dated, August 13, 2014. A CD is being provided under a sealed separate envelope, marked CONFIDENTIAL. If there are any questions regarding the enclosed information, please contact Jeanne Pluth at (509) 495-2204 or via e-mail at Jeanne.Pluth@avistacorp.com Enclosures CC: Dean J. Miller, Idaho Forest Group Larry Crorvley, Idaho Forest Group KarlKlein, IPUC Kathy Stockton,IPUC Mike Louis,IPUC Don Reading, Clearwater Marv Lewallen, Clearwater (electronic only) AYISTA CORPORATION RESPONSE TO REQUEST FOR TNFORMATION JURISDICTION: IDAHO DATE PREPARED: 0811412014 CASE NO: AVU-E-14-06 WITNESS: N/A REQUESTER: Clearwater Paper RESPONDER: Paul KimballTYPE: Production Request DEPARTMENT: State & Federal Regulation REQUESTNO.: Clearwater-0l TELEPHONE: (509) 495-4584 REQUEST: Please provide, in electronic format with all formulae intact where possible, all workpapers and other documents used in the development of Avista's Application in this matter. RESPONSE: Please see Clearwater PR 01 Affachment A (provided on CD) for the requested documents in electronic format. See also Avista's response in Clearwater_PR_0lC CONFIDENTIAL Attachment A (provided onCD). Avista's response 01C contains TRADE SECRET, PROPRIETARY or CONFIDENTIAL information and exempt from public view and is separately filed under IDAPA 31.01.01, Rule 067 ard233, and Section 9-340D,Idaho Code. AVISTA CORPORATION RESPONSE TO REQIIEST FOR TNFORMATTON JURISDICTION: CASE NO: REQUESTER: TYPE: REQUEST NO.: IDAHO AVU-E-14-06 Clearwater Paper Production Request Clearwater-02 DATE PREPARED: WITNESS: RESPONDER: DEPARTMENT: TELEPHONE: 081r412014 N/A Jeanne Pluth State & Fed. Reg. (s0e) 49s-2204 REQUEST: Please provide copies of all communications with the Idaho Public Utilities Commission and its Staff regarding Avista's Application in this matter. RESPONSE: Please see Clearwater_PR_O2 - Attachment A for communication with IPUC Staff related to the PCA filing I From: To: Subject: Date: Ehrbar. Pat Eeverly Barker RE: PCA application, notices and press release Wednesday, August 05, 2014 10:19:00 AM Bev - | apologize for missing the changes to the rules - I appreciate you sending along the excerpts and we will get our process fixed, especially with the mid-September PGA. As for the customer notice for the PCA, we will insert the customer notice in bills dated Aug 1i- through bills dated Sept l_0. Thanks ! Pat From : Beverly Ba rker [mailto : Beverly. Barker@puc. idaho,gov] Senh Wednesday, August 06,20t4 9:29 AM To: Ehrbar, Pat Subject PCA application, notices and press release Pat - Changes to the Commission's Rules of Procedure took effect earlier this year (02/15/L4), See excerpts attached. Among the changes were information to be provided in Applications, customer notices, and press releases. Perhaps I am overlooking it, but I couldn't find information in the application about how the customer notice will be distributed or when that will happen, e.g., bill insert included in customer bills starting (date) and ending (date). Can you provide that info or direct me to someone who can? Also, I noticed both the notice and press release are missing info regarding the Commission's RSS feeds. Staff will mention this in its comments, but I don't think it requires remedial action on your part with respect to this case. Beverly Barker beve rly. b a rke r@ p u c. i d ah o. gov 208.334.0302 <<Rules of Procedure excerpts.doc>> CleaMater PR 02-Attachment A Page 1 of 1 AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION JURISDICTION: CASE NO: REQUESTER: TYPE: REQUEST NO.: IDAHO AVU-E-14-06 Clearwater Paper Production Request Clearwater-03 DATE PREPARED: WITNESS: RESPONDER: DEPARTMENT: TELEPHONE: 0811412014 N/A Paul Kimball State & Federal Regulation (509) 49s-4s84 REQUEST: Please provide copies of all responses to production requests provided to any other party to this proceeding. RESPONSE: Avista will provide copies of our responses to production requests received from all parties to this proceeding as we complete the responses. AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION JURISDICTION: CASE NO: REQUESTER: TYPE: REQUEST NO.: IDAHO AVU-E-14-06 Clearwater Paper Production Request Clearwater-04 DATE PREPARED: 08114/2014WITNESS: Bill Johnson RESPONDER: Bill Johnson DEPARTMENT: Power Supply TELEPHONE: (509) 49s-4046 REQUEST: Page three of William Johnson's direct testimony states, "Colstrip Unit 4 was unavailable due to a forced outage from July 1,2013 until January 22,2014." A. Please explain and document the circumstances causing the "forced outage." B. Please detail all efforts undertaken to correct the "forced outage." C. Was the event(s) causing the forced outage insured against? If so please provide all documentation related to the insurance (policies, notices, claims etc.). If not, please explain why no insurance was secured against such events. D. Please explain and justifu why Avista's PCA mechanism should cover power supply expenses associated with a forced outage of a coal fired power plant? Provide copies of all Commission's orders relied upon. RESPONSE: Avista's response 04C contains TRADE SECR-ET, PROPRIETARY or CONFIDENTIAL information and exempt from public view and is separately filed under IDAPA 3 I .01 .01 , Rule 067 and233, and Section 9-340D,Idaho Code. A. After returning from service after a routine scheduled generator overhaul that began in May 2013, a generator protective relay tripped the unit at Colstrip at approximately 10:20 pm on July 1, 2013. The unit experienced massive core damage and moderate rotor damage. The subsequent repairs took just under seven months to complete; the unit returned to service on January 23,2014. Subsequent to the generator failure, PPL Montana (PPL), as the operator of the facility, hired an independent consulting firm (Generator Consulting Services, Inc.) to perform aroot cause analysis. This analysis concluded that the cause of the failure was, ". . .most likely inadequate interlaminar insulation permitting shorting between laminations caused during the prior outage by rotor insertion, skid pan damage or air gap baffle installation." All of the overhaul work performed on the generator prior to the failure was performed by Siemens, the Original Equipment Manufacturer (OEM). The Root Cause Analysis report stated: "In our opinion, PPL [the Colstrip managing operator] did everything according to standard industry practice such as hiring the OEM (Siemens) to perform the maintenance, performing El Cid testing on the core, operating their unit according to industry practice, (since there was no indication of mis-operation), and protecting the unit with adequate relay protection. Nothing they did or could have done, could have prevented this failure." B. The forced outage that occurred on Colstrip Unit 4 on July 1st, 2014 resulted from damage to the unit's generator. The generator experienced significant core, rotor, and related equipment damage. The repair involved complete replacement of the core and stator windings and refirbishment of the damaged rotor. A spare rewind kit and a spare rotor were on site and were used in the repair. The new core, however, had to be designed and built at Siemens' generator facility located in North Carolina. C. Yes, there was property insurance for the event. Physical damage insurance covers the cost to repair or replace the physical property damaged by covered perils (generally fire, flood, mechanical breakdown, terrorist act (if elected) and other perils). The amount of coverage is the cost of replacement (or repair), unless the property is not restored to service and coverage may be limited to actual cash value (what the item was worth just before the occurrence). Colstrip owners recovered approximately $26 million of the cost to repair Unit 4. Property insurance is subject to a deductible * the relevant deductible here was $2.5 million. Avista's share of the deductible was l5o/o of the $2.5 million which totaled $375,000. In addition, Avista spent approximately $250,000 in costs not covered by insurance. The majority of the deductible and amount not covered by insurance was for non-capital repair and therefore those costs were recorded as maintenance expense by Avista. These costs are not included in power supply costs and therefore, these costs are not included in the PCA costs. Business intemrption coverage is typically only obtained for merchant plants where revenues are tied to a financing plan for the specific plant. Contrasting with merchant plants, a typical utility with a portfolio of generating plants and access to power from market sources can manage outage risks across their portfolio of resources and their access to energy markets. Also, utilities typically use corporate financing rather than project-specific financing and, therefore, do not need to obtain business intemrption coverage to satisfy financing requirements. Finally, it is worth noting that business intemrption insurance generally has a waiting period of at least 30 days and often 60 or more days before economic losses would be insured. It is our understanding that standard industry practice for the utility industry is that business intemrption coverage is not maintained by utilities, due to limitations of coverage, cost of the coverage, and altematives to manage the risk without insurance. Avista has the ability to manage economic risks from generation outages through other means, including (i) its portfolio of generating resources, and (ii) resource reserves. Please see Clearwater_PR_04C-Confidential Attachment A for a copy of the insurance policy. Please see Clearwater PR 04C- Confidential Attachment B for a copy of the insurance policy endorsement. D. The PCA mechanism covers changes in power supply expenses including changes that increase net power supply costs and changes that reduce power supply costs. Actual power supply expenses are impacted by many factors, including plant outages, whether they are plarured or forced, but also are impacted favorably when thermal availability factors are higher than planned, above-normal hydro conditions, favorable wholesale electric and natural gas prices, additional revenues from the sale of Renewable Energy Credits, and other factors. The primary FERC accounts that are included in the PCA are 555-Purchased Power, 501-Thermal Fuel, 547-Natural Gas Fuel and 447-Sale for Resale. Colstrip fuel costs are included in account 501. The loss of generation at Colstrip Unit 4 from July 1,2013 through January 22,2014 impacted accounts 501, 555 and 447. Reduced generation from Colstrip resulted in reduced fuel expense in account 501 and also in increased power purchase expense and/or reduced wholesale power sales revenue in accounts 555 and 447 respectively. The Commission approved Avista's current PCA methodology in Order 28775 in Case AVU-E-01-1. Please see Clearwater PR O4-Confidential Attachment C for a copy of this order. AVISTA CORPORATION RESPONSE TO REQUEST FOR TNFORMATTON JURISDICTION: CASE NO: REQUESTER: TYPE: REQUEST NO.: IDAHO AVU-E-14-06 Clearwater Paper Production Request Clearwater-05 DATE PREPARED: 0811412014WITNESS: Bill Johnson RESPONDER: Jeanne Pluth DEPARTMENT: State & Fed. Reg. TELEPHONE: (509) 49s-2204 REQUEST: Please provide, in electronic format with all formulae intact where possible, all workpapers and other documents used to calculate the $4,082,573 "Change due to Colstrip Generation and Fuel Expense" from the table on page 4 of Mr. Johnson's testimony. RESPONSE: The Company provided the workpaper used to calculate the $4,082,573 related to Colstrip in the workpaper called "6) Jull3- Junel4 PCA Variance Explain.xlsx" with its orginal f,rling. The Company is providing the same workpaper as Clearwater_PR_05-Attachment A. oNotoN o @(o 6 Ftorrf) N oO(Ot-OO, F- (r)rf, OFF-C) (7) NNrr)(O(OC?ro @ ocl (.) @(O.t- O O.jdJ+rtdt F gqr{ d oct6ioo' od NO6OF6O O ''F- O@OO (.) @oNOFNT g I r{,eO#} O?^iJ,j(#€? ' (r,j,; s @'ee6 q@ (o o oo)G(L (oa Ne, 6N o--N () N- O F(OFO, lf,lc cl, (OO F- u)i-F!- @ Nd;-i x-6<6 * o!! @ (r(Y)C.r@F(O O rn o $O(f)N F- 6r-_x 6-6d6_@_ N- := O- @_(o-o)-croF r..'l o_ oN(ov 0q Nd- KHES $ 3;' P BEB:SE E 6B e SNSB R B- ii+oF N a N@orrl.-rr, I o.oN() 6:-c?,i? q ?riJJ('(a q q@;q ?N (,9 @@@ e N @N o-oo N t-^ o F(OOOi\(O o @$ t 6l$rr,0, C.) 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N*s{ @@ o)o 9,(!lro oY d);oJ o ooo Q)z oe@No- (o- NOtf@(o- .o- FF- @a E'c =E3Efgoor(Ec(Lo-Oo -ogo (O \to) .o, @-dsl cf)N(., o Eo) (,(, Ec o)of !>o >>(! =>o- a(!E 88.N ccb EE E EE (oo)@-6t G.t(t) o Eo)EQ'o!,c =oofoo(L (7' o (Y) o,oG(L !'loFl NEI-l sl.+ 5ltxN(Et =l R:It\ cll<l $:lN(EI =l $lN-I EEI F:.1@l +Htsll<t oltrlr+ -.!lN5I?I IEI ol*sltotF- (l)tol ol5:lF- Olzl IEI c)ro\t@Or-oo 0)oc.E oIJJ&. UJ ={1,E 6fb- F(')- co o)-(,I aoo .E fiE.oEFE 86I -o h(L 6A EE-E E6 8 E5:,$E EEE 8 dqi sf O E 6U q) Frt-t o-o-t z = 6\fq)- o =toP'Ut5-€FI F@ o otr o)=oYoc6E cL l.l-oEo: o=>o 0)IOY tt oc{ocf-, =E at,oNi) Ioootr(! Lo oo o, CLxlu5,l cLfo.o5oosb.oi>o<o o) EEo6 $roo t'.L _t(n 6 =(,0,o6 d, 0)o Eo s(oo)-rr)qqF.l: Na (o-(r)cf,C".ttg AVISTA CORPORATION RESPONSE TO REQITEST FOR INFORMATION ruRISDICTION: CASE NO: REQUESTER: TYPE: REQUEST NO.: IDAHO AVU-E-14-06 Clearwater Paper Production Request Clearwater-06 DATE PREPARED: 0811412014WITNESS: Bill Johnson RESPONDER: Jeanne Pluth DEPARTMENT: State & Fed. Reg. TELEPHONE: (s09) 49s-2204 REQUEST: Mr. Williams states on page three of his direct testimony: "Given that the power purchase rate was lower than retail rates, when the Clearwater purchase contract ended on Jure 30, 2013 and Clearwater chose to use its generation to reduce purchases from Avista, the result was an increase in PCA surcharge deferrals." A. Please provide, in electronic format with all formulae intact where possible, all workpapers and other documents used to calculate the $2,320,289 change due to the purchase contract for Clearwater Paper. B. Has Avistaperformed any studies relating to the base rate impact of the change in the purchase contract? If so, please provide. If not, does Avista believe there is any impact? Please explain tu11y. RESPONSE: A. The Company provided the workpaper used to calculate the$2,320,289 related to the Clearwater purchase contract in the workpaper called "2) July 2013- June 2014 Deferrals - Annual PCA Review-FINAL.xls" with its orginal filing. The Company is providing the same workpaper as Clearwater_PR_06-Attachment A. In addition, please see Clearwater PR_06-Attachment B for the PCA authorized base from the Settlement Stipulation in Case AVU-E-12-08, approved in the last general rate case that was in effect during this annual PCA review period. B. Yes, Avista prepared an analysis that was provided during settlement discussions in the Company's last general rate case. Please see Clearwater PR_06-Attachment C which is a comparison of AVU-E-12-08 key cost of service results at rates in effect at the time. This analysis shows a revenue requirement increase of $1,866,000 resulting from excluding both the (directly assigned) purchased power costs of $19,081,000 and the revenue from the load equal to the generation of $21,043,000 that were included in the Company's twelve months ended Jwrc2012 test year. With the rate increase October 1,2013 the revenue from the load equal to the generation increased to $21,524,000. o oo6(L (oiotoro c{, @6lto N()|-r${NN$.@@ 'j:i{ g1 6,o s* o'@6::6:ro o'Noorto!t@ai,ii'N g)fo oOr:O NN',:O 06:,0 Oo,:o oa:,:ialg +N@66@c{ ar:oiiri iii,or' t"r : F-totr,ao i o r(foo$ o.oONrb b::N*t.i6::o#ii(\l::@c ii::i!t @ooo()or) s,od d.oio s.tPrrt':$-Yr rit0 oi N::@- O.,oo oioS,:idrv6::O0:Ocr:r@:o*i:ii:6 ?-o oGl,oI oO!@ ro:.N aN,!O.Nts",o @ Y.'::l:@ !i:i:::':l e,lo o9:e o6i:.H @- o@N@@o6:!,6:r *':::.:O !O:-N of$N irir::llji qo il.! r$Kri:t@.:o:{Or::fQ i@,€',ij,@ @ e's:+j 6D:,O1..-"lor.:\srsias:or:!oDi:O]'N F. 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E(o -9(J AYISTA CORPORATION RESPONSE TO REQITEST F',OR INFORMATION JURISDICTION: CASE NO: REQUESTER: TYPE: REQUEST NO.: IDAHO AVU-E-14-06 Clearwater Paper Production Request Clearwater-07 DATE PREPARED: 0811412014WITNESS: Bill Johnson RESPONDER: Bill Johnson DEPARTMENT: Power Supply TELEPHONE: (s09) 49s-4046 RE,QUEST: Mr. Williams states on page t}ree of his direct testimony that: "Palouse Wind is currently in included in the authorized level of power supply expense (i.e. is not included in base rates)." A. Do the payments to Palouse Wind include a capacity component? If not please explain why not? If so please document. B. If payments to Palouse do include a capacity component, please explain the rationale for collecting the costs associated with that project on a kWh basis. RESPONSE: No. The Palouse Wind contract does not include a capacity payment. The contract rate is a $/\ztWh number and payment is based on the total energy produced in the month. Wind resources do not provide reliable capacity and Avista does not assume any capacity contribution from Palouse Wind. The Palouse Wind contract does not include acapacity payment. A. B.