20140815Avista to Idaho Forest Group 1-6.pdf

Avista Corp.
1 41 1 East Mission P .O. Box 3727
Spokane. Washington 99220-0500
Telephone [phone]
TollFree 800-727-9170 ;1i:CIt!.i[::
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UTILITIES C0M&tl$iilOi+
August 14,2014
Mr. Dean J. Miller
420 W. Bannock Street
Boise,lD 83701-2564
Re: Production Requests of Idaho Forest Group AVU-E-14-06
Dear Mr. Miller,
Enclosed are originals of Avista's responses to Idaho Forest Group's production requests in the
above referenced docket. Included in this mailing are Avista's responses to production requests
PR 01-06. The electronic versions of the responses were emailed on 08ll4ll4.
Also included are Avista's CONFIDENTIAL responses to PR 01C and 02C. 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 Idaho Forest Group dated, August 13,
2014. They are provided under a sealed separate envelope, marked CONFIDENTIAL.
If there are any questions regarding the enclosed information, please contact Jeanne Pluth at
[phone] or via e-mail at [e-mail]
Rates Coordinator
#tnsTfr
hrp,
Enclosures
CC: Larry Crowley, Idaho Forest Group
Karl Klein,IPUC
Kathy Stockton,IPUC
Mike Louis,IPUC
Don Reading, Clearwater
Pete Richardson, Clearwater
Marv Lewallen, Clearwater (electronic only)
AYISTA CORPORATION
RESPONSE TO REQTTEST FOR TNFORMATTON
ruRISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-G-14-06
Idaho Forest Group
Production Request
Forest Group-0l
DATE PREPARED:
WITNESS:
RESPONDER:
DEPARTMENT:
TELEPHONE:
0811512014
Bill Johnson
Tom Dempsey
Thermal O&M
(509) 4es-4e60
REQUEST:
Please provide copies of all contracts, agreements, memorandums of understanding, and the like,
between Avista (including its predecessors and affiliates) and PP&L Montana LLC (including its
predecessors and affiliates) pertaining to the ownership and operation of Colstrip Unit 4.
RESPONSE:
Please see Avista's response marked IFG_PR_0IC- CONFIDENTIAL Attachment A for all of the
documents pertaining to PPL Montana and Colstrip ownership.
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 REQITEST FOR INFORMATION
ruRISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-G-14-06
Idaho Forest Group
Production Request
Forest Group-02
DATE PREPARED: 0811512014WITNESS: Bill Johnson
RESPONDER: Tom Dempsey
DEPARTMENT: Thermal O&M
TELEPHONE: [phone]
REQUEST:
Please explain in detail the cause or causes of the forced outage of the Colstrip Unit 4 between July
1,2013 until January 22,2014.
RESPONSE:
Please see Avista's response 02C, which contains TRADE SECRET, PROPRIETARY or
CONFIDENTIAL information and exempt from public view and is separately filed under
IDAPA 31.01.01, Rule 067 and233, and Section 9-340D,Idaho Code.
Please see Avista's response to Clearwater Paper Corporation's data request No. 4.
In addition, please see Avista's response marked IFG_PR_02C -Confidential Attachment A for a
copy of the Root Cause Analysis Report on PPL Montana Colstrip 4 Core Failure Event prepared
by Generator Consulting Services, Inc. on November 18, 2013.
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
ruRISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-G-14-06
Idaho Forest Group
Production Request
Forest Group-O3
DATE PREPARED: 0811512014WITNESS: Bill Johnson
RESPONDER: Tom Dempsey
DEPARTMENT: Thermal O&M
TELEPHoNE: (509) 49s-4960
REQTJEST:
Please provide copies of all reports, or any kind or nature, made by Avista or by PP&L Montana
LLC (including its affiliates) made to any federal or state agency explaining the causes of the
Colstrip Unit 4 forced outage between July l, 2013 until January 22,2014 and efforts to repair it.
RESPONSE:
On July 16,2013, the Company reported the outage to the United States Securities and Exchange
Commission. The Form 8-K is attached as IFG_PR_O3 - Attachment A.
In the Company's annual ERM (Energy Recovery Mechanism) review in Washington in March
2014, the Company described the Colstrip outage (Docket No. UE-140540). Please see
IFG_PR_03 - Attachment B for Company Witness Mr. Dempsey's testimony in that case. Mr.
Dempsey also provided as an exhibit the Root Cause Analysis Report on PPL Montana Colstrip 4
Core Failure Event prepared by Generator Consulting Services, Inc. on November 18, 2013.
Please see Avista's response marked IFG_PR_O2C- Confrdential Attachment A for this report.
ln that Washington docket, the Commission staff and the Commission found "that the Colstrip
outage was not the result of imprudent actions on the part of the Company".
{]NITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C.20549
FORM 8.K
CURRENT REPORT
PLIRSUANT TO SECTTON 13 OR rs(d) OF
TIIE SECI.'RITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): July 16,2013
AVISTA CORPORATION
(Exact name of registrant as specified in its charter)
1-3701
(Commission
Jile number)
Washington
(State of other jurisdiction of
incorporation)
141I East Mission Avenue, Spokane, Washington
(Address of principal exccutive offrces)
Registrant's telephone number, including ares code:
}/eb site: http ://www. avistacorp.com
9t-0462470
(LRS. Employer
Identification No.)
99202-2600
(Zip Code)
509-489-0500
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant
under any of the following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule l4a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule l4d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
IFG_PR_O3 Attachment A Page I of3
[ ] Pre-commencement communications pursuant to Rule l3e-4(c) under the Exchange Act (17 CFR 240.13e4(c))
IFG_PR_03 Attachment A Page 2 of 3
Section8-OtherEvents
Item 8.01 Other Events.
Colstrip Generating Project Unit 4 Unplanned Outage
Avista Corporation (Avista Corp. or the Company) owns a 15 percent interest in Units 3 and 4 of the Colstrip Generating Plant
(Colstrip) in southeastern Montana, a coal-fired facility which is operated by PPL Montana, LLC. The nameplate generation rating
attributable to Avista Corp.'s 15 percent interest is233.4 megawatts (MW) with a present capability of 222.0 MW (or approximately
I l7 MW and 111 MW, respectively, per unit).
On July 1,2013, an unplanned outage occurred to Unit 4, with identified damage to the stator and rotor assembly. Initial engineering
estimates show the unit could be out of service for at least six montls and the estimate for total repair costs is approximately $30
million, including labor costs, which will be shared proportionately among all the owners. While the split between capital and
expense has not been fully determined, it is likely that a portion of the repair costs will be capitalized. The plant operator carries
property damage insurance coverage on behalf of the owners and has advised the Company that it is planning to file claims for
potential insurance recovery of the repair work. There is a $2.5 million deductible for each event that is allocated proportionally to
all the owners.
The lost generation of Colstrip Unit 4 will result in a combination of l) lower surplus wholesale sales for Avista, and 2) increased
thermal fuel costs or purchased power costs to replace the energy, which will result in increased net power supply costs for the
Company. Avista's initial estimates show an increase in power supply costs of approximately $12 million system-wide for the
remainder of 2013 as a result of the outage. All of the additional costs will be included in the Energy Recovery Mechanism (ERM)
in Washington and the Power Cost Adjustment in Idaho. After consideration of the impacts of the two recovery mechanisms and the
sharing between the Company and its customers, the outage is estimated to have a negative impact on gross margin (operating
revenues less resource costs) in the range of approximately $6 million to $7 million for the remainder of 2013, which will move the
ERM from a positive position within the 75 percent customers/2S percent Company sharing ratio down to a slightly negative
position within the $4 million deadband.
Even with the expected reduction in eamings as a result of the unplanned outage, the Company is not revising its 2013 earnings
guidance at this time and still expects consolidated eamings to be in the range $l.70 to Sl.90 per diluted share with Avista Utilities
confributing in the range of $ I .64 to $ I .78 per diluted share.
SIGNATI.'RES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its
behalfby the undersigned thereunto duly authorized.
AVISTA CORPORATION
(Registrant)
lsl Mark T. Thies
Date: July 16,2013
Mark T. Thies
Senior Vice President,
Chief Financial Officer, and Treasurer
IFG_PR_03 Attachment A Page 3 of 3
BEFORE THE WASHINGTON UTILITIES AND TRANSPORTATION COMMISSION
DOCKET NO. UE-I4
DIRECT TESTIMONY OF
THOMAS C. DEMPSEY
REPRESENTING AVISTA CORPORATION
IFG_PR_o3 Attachment B
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ExhibitNo. _(TCD-IT)
I. INTRODUCTION
a. Please state your name, business address, and present position with Avista
Corporation.
A. My name is Thomas C. Dempsey. My business address is l4l I East Mission
Avenue, Spokane, Washington, and I am employed by the Company in the Generation
Production and Substation Support Department. My title is Manager, Thermal Operations and
Maintenance.
a. What is your educational background and prior work experience?
A. I am a 1993 graduate of the University of Texas at Austin with a Degree in
Mechanical Engineering. I started my career as a performance engineer at Houston Lighting &
Power in Houston, Texas. While working there I participated in equipment performance testing
activities on a number of gas-fired steam facilities, a coal facility, and several simple-cycle gas
turbine facilities. I started working for Avista in December 1996 as a mechanical production
engineer. In that capacity I participated in a wide variety of hydro and thermal generating station
projects. I joined the Generation Production Substation Support Department in 2014. My
primary responsibilities include operations and maintenance management for all of Avista's
thermal facilities. I am the corporate representative for Colstrip as well. For the last l7 years at
Avista I have had a number of engineering and supervisory roles related to our thermal
generation fleet.
a. What is the scope of your testimony in this proceeding?
A. My testimony will describe the generator outage at Colstrip that caused the plant to
drop below a70o/o availability factor for the year 2013. I will also demonstrate that the outage
Direct Testimony of Thomas C. Dempsey
Avista Corporation
DocketNo. UE-14
IFG_PR_03 Attachment B
Page L
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ExhibitNo. _(TCD-lT)
was not the result of imprudent actions on the part of Avista. Finally, I will note the
recommendations reported in the incident Root Cause Analysis Report.
a. Are you sponsoring any exhibits to be introduced in this proceeding?
A. Yes. I am sponsoring confidential Exhibit No._ (TCD-2C), which includes the
Root Cause Analysis Report on PPL Montana Colstrip 4 Core Failure Event prepared by
Generator Consulting Services, Inc. on November 18, 2013.
U. COLSTRIP OUTAGE
a. Please describe the outage at Colstrip that caused the plant to drop below a
70"/" availability factor for the year 2013.
A. After returning from service subsequent a routine scheduled generator overhaul
that began in May 2013, a generator protective relay tripped the unit at approximately 10:20 pm
on July l, 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.
a. What was the availability factor for 2013?
A. The equivalent availability factor for 2013 for the Colstrip plant (Units 3 and 4)
was 65.87o.
a. Please summarize the analysis undertaken to determine the cause of the
generator failure?
A. Subsequent to the generator failure, PPL Montana (PPL), as owner and operator
of the facility, hired an independent consulting firm (Generator Consulting Services, Inc.) to
perform a root cause analysis, which has been provided as confidential Exhibit No. _(TCD-
Direct Testimony of Thomas C. Dempsey
Avista Corporation
DocketNo. UE-14
IFG_PR_O3 Attachment B
Page2
Page 3 of 5
a.. ExhibitNo. _(TCD-IT)
2C). 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." (ld. at page 5) All of the
overhaul work performed on the generator prior to the failure was performed by Siemens, the
Ori ginal Equ ipment Manufacturer.
a. In your opinion was the Colstrip outage a result of imprudent actions on the
part of Avista?
A. No. In my opinion, the outage on Unit 4 was not the result of imprudent actions
on our part. The outage work was performed by Siemens, the Original Equipment Manufacturer
(OEM). As the OEM, they are the most qualified party able to perform the work. Per Section
5.1 of the Root Cause Analysis report, "ln our opinion, PPL [the Colstrip managing operator] did
everything according to standard indushy 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."l
@xhibit No. _(TCD), at page 46)
a. What is Avista's role in the planning, management and operation of the
Colstrip plant?
A. Avista is a l5Yo owner of the Colstrip 3 and 4, twin-unit, coal fired, generating
facility, and is not directly involved in the day to day operations of the plant. Avista, along with
the other owners of the facility, and according to ownership percentage, provide oversight of the
' gl Cid is Electromagnetic Core Imperfection Detection.
Direct Testimony of Thomas C. Dempsey
Avista Corporation
DocketNo. UE-14
IFG_PR_O3 Attachment B
Page 3
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ExhibitNo. _(TCD-lT)
facility. The operator, PPL, carries out the daily operation of the facility, and develops the
detailed planning for the operation.
a. Please describe the actions the plant owners are taking to hopefully prevent a
future outage of a similar nature.
A. The Root Cause Analysis Report recommends that, "they continue to utilize El
Cid testing and continue to operate and protect their units as they have been doing." (lc[. at page
46)
a. Does that conclude your pre-filed direct testimony?
A. Yes.
Direct Testimony of Thomas C. Dempsey
Avista Corporation
DocketNo. UE-14
IFG_PR_O3 Attachment B
Page 4
Page 5 of 5
AVISTA CORPORATION
RESPONSE TO REQUEST FOR INF'ORMATION
ruRISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-G-14-06
Idaho Forest Group
Production Request
Forest Group-04
DATE PREPARED: 0811512014WITNESS: Bill Johnson
RESPONDER: Tom Dempsey
DEPARTMENT: Thermal O&M
TELEPHONE: [phone]
REQUEST:
Has Avista made demand, or other request, on PP&L Montana LLC (or its affrliates) for
reimbursement of Avista's increased power purchase expenses resulting from the Colstrip Unit 4
forced outage?
RESPONSE:
Please see Avista's response to Clearwater_PR_04c for information on Colstrip insurance
coverage. Avista has not made a demand or request on PP&L Montana LLC for reimbursement of
Avista's increased power purchase expenses resulting from the 2013 Colstrip Unit 4 outage.
A\ISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION: IDAHO DATE PREPARED: 0811412014
CASE NO: AVU-E-14-06 WITNESS: Jeanne Pluth
REQUESTER: Clearwater Paper RESPONDER: Bill JohnsonTYPE: Production Request DEPARTMENT: Power Supply
REQUEST NO.: IFG-O5 TELEPHONE: (509) 49s-4046
REQUEST:
Please refer to witness Pluth work paper entitled "Power Supply Expense Variances." For the line
item entitled "Colstrip Value of Increased Generation," please provide complete detail for the
values shown by month and any assumptions incorporated therein.
RESPONSE:
The worksheet titled "Jul l3-Jun 14 PCA Variance Explain" shows the calculations for Colstrip
Value of Increased Generation on line 63 in the tab labeled "Calculation." The formula is the Mid
Columbia index price times the actual change in generation from the authorized level. The value is
positive (surcharge direction) when the actual generation is less than the authorized level and
negative (rebate direction) when the actual generation is more than the authorized level. The
change in the value of increased generation is netted against the change in actual fuel cost versus
authorized fuel cost to derive the total impact of the change in Colstrip generation.
AVISTA CORPORATION
RESPONSE TO REQITEST FOR TNFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.:
IDAHO
AVU-E-14-06
Clearwater Paper
Production Request
IFG-06
DATE PREPARED: 0811412014WITNESS: Jeanne Pluth
RESPONDER: Bill Johnson
DEPARTMENT: Power Supply
TELEPHONE: (509) 49s-4046
REQUEST:
Please refer to witness Pluth work paper entitled'oPower Supply Expense Variances." For the line
item entitled "Palouse Wind Value of Generation," please provide complete detail for the values
shown by month and any assumptions incorporated therein.
RESPONSE:
The worksheet titled "Jul l3-Jun 14 PCA Variance Explain" shows the calculations for Palouse
Wind Value of Increased Generation on line 118 in the tab labeled "Calculation." The formula is
the Mid Columbia index price times the actual change in generation from the authorized level.
The value is negative (rebate direction) because the actual generation is more than the authorized
level, which is zero because Palouse Wind is not in the authorized PCA authorized expense. The
change in the value of increased generation is netted against the actual Palouse Wind power
purchase expense to derive the total impact of the change in Palouse Wind generation.