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HomeMy WebLinkAbout20190926Avista to ICL 1-9.pdfAVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION JURISDICTION: IDAHO CASE NO: AW-E-19-04 REQUESTER: IdahoConservationLeagueTYPE: Production Request REQUEST NO.: ICL-001 DATE PREPARED: 09126/2019 WITNESS: Elizabeth Andrews RESPONDER: Paul Kimball DEPARTMENT: Regulatory Affairs TELEPHONE: (s09) 495-4584 REQUEST: Please provide electronic copies of Company responses to data requests sent by any party in this proceeding. RESPONSE: Please see Avista's response 001C, 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. Enclosed is a CD with all data requests and NON-CONFIDENTIAL responses associated with the current general rate case before the Idaho Public Utilities Commission. Avista will continue to provide copies of data requests, along with corresponding data responses, from all parties to this proceeding as they are received. f,lmC)rnarfl(f, r.J-:: !fr U}rr1 h) Cf.| "o O ry'l AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION JURISDICTION CASE NO: REQUESTER: TYPE: REQUEST NO.: IDAHO AVU-E-19-04 ICL Production Request TCL - OO2 DATE PREPARED: 0912612019WITNESS: Jason Thackston RESPONDER: Jason Thackston DEPARTMENT: Energy Resources TELEPHONE: (s09) 495-8s50 REQUEST: In his testimony on page 21, lines 2I-22 and page 22,lines 1-2, Company Witness Thackston states: "As the costs and technology of clean energy and energy storage continue to improve, and as other markets develop, we anticipate there will be a time when we no longer need Colstrip, and we continue to work with our five co-owners related to the future of the plant." a. Please provide all studies, analysis, communications, memos, or other materials that support the Company's anticipation of when Colstrip will no longer be needed. b. When the Company determines it no longer has a need for Colstrip, must the Company secure approval from the other co-owners of Colstrip Units 3 and4 to retire and shutdown Units 3 and 4, or otherwise terminate the Company's ownership stake in Units 3 and 4? In answering this request, please cite to and provide the relevant Colstrip contract provisions that support the Company's answer. RESPONSE: Please see Avista's response ICL_PR_002C, 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. a) This is a forward looking statement that indicates further improvements in costs, technology, and markets are necessary in order for that anticipation to come to fruition. As such, there are no responsive materials. b) The ownership and operation agreement provides the terms under which Colstrip Units 3 & 4 are operated and maintained. Section 3l of that agreement speaks to circumstances where "the Project can no longer be made capable of producing electricity consistent with Prudent Utility Practice or the requirements of governmental agencies having jurisdiction. . . ." The ownership and operation agreement, including Section 3l of that agreement, speaks for itself. Please see ICL_PR_002C Confidential Attachment A for a copy of this agreement. Page 1 ofl MATS PM outsidercosts Event Q3 2(}18 WorkType Amount o&M 59t7,7L2.52Boiler Cleaning & lnspection BoilerTuning s63,430.83 I nstru me ntatio n Mo nitoring s13,559.21 Testing s551,812.12 Wallblower 578,27O.42 Various Materials (Valves, screens, etc)567,6t2.21 Total $1,692,397.31 Capital Distribution Plates 58SO,OSr.40 I nstal lation of Di stribution Plates 5345,695.51 Desi gn/Engi neeri ng Di stri bution P lates s113,236.43 Total s1,310,013.34 lntemalLabor s38o,0m Grand Total s3,382,410.65 _-- - - _-a - 1r., -----_-_ J ___:11 1- -I I L1 1 1 The table below, provided by Talen Energy, represents the total (Avista's share would be l5% of the amounts provided) charges for the MATS issue for Q3 2018. Please note these amounts may or may not tie to Company's general ledger primarily due to invoice billing and processing. exclusively by shareholders Page 3 of3 AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION JURISDICTION: IDAHO CASE NO: AW-E-19-04 REQUESTER: ICLTYPE: Production Request REQUEST NO.: ICL - 003 DATE PREPARED: 09127 /2019WITNESS: Jason Thackston RESPONDER: Jason Thackston DEPARTMENT: Energy Resources TELEPHONE: (509) 495-8550 REQUEST: In his testimony on page 21, lines 18-21, Company Witness Thackston states: "Colstrip has been an important source of generation in the region and for Avista's customers for over 30 years. It is available to serve our customers when the wind isn't blowing, the sun isn 't shining, or there isn 't enough water flowing down our rivers to generate enough electricity to meet our customers ' energy needs. " a. Please provide any dates Colstrip Units 3 and 4 were shut down during 2018. For each instance, please indicate whether the shutdown was planned our unplanned. If unplanned, please describe the cause and the process by which the unplanned shutdown was resolved. due to pollution control violations in the surlmer of 2018, and please prvide the date range between when Units 3 and 4 were shut down due to these violations and when Units 3 and 4 ultimately resumed providing electricity to Idaho electric customers? b. Please provide the I -hour and lS-hour sustained peak energy demands on Avista's system, in megawatts, for any time periods when Units 3 and 4 were shut down in20l8, and please provide the percentage of these energy demands that Units 3 and 4 would have been expected to meet had they not been shut down. c. Please provide a detailed explanation of how Avista generated and provided sufficient electricity to meet customer needs during each unplanned outage at Colstrip Units 3 and 4 during 2018.d. Colstrip shutdown during the summer of 2018 to address pollution controls administered by the Montana Department of Environmental Quality. Please provide a detailed breakout by category of the costs associated with the shutdown of Units 3 and 4 in the summer of 2018, including but not limited to replacement power costs, inspection and testing costs, repair costs, parts and labor costs, pollution control violation costs, and any and all similarly related costs and expenses. e. Please provide the total number and type of pollution control violations Units 3 and 4 violated for the 2018 calendar year. For each violation please indicate any penalty paid, assessed but outstanding, or potentially assessed but as yet unresolved. f. What is the maximum penalty amount that could be assessed for the pollution control limits Colstrip Units 3 and 4 violated in the surrmer of 2018? g. Has the Company included the pollution control penalties or any cost associated with the shutdown in Idaho customer rates? If so, please provide a detailed break-out by category of these costs. If not, does A vista intend to include in Idaho customer rates the costs associated with Colstrip Units 3 and 4 pollution control penalties and/or costs associated with the shutdown in 2018? Page I of3 RESPONSE: Please see Avista's response ICL_PR_003C, which contains TRADE SECRET, PROPRIETARY or CONFIDENTIAL information and exernpt from public view and is separately filed under IDAPA 31.01.01, Rule 067 and233, and Section 9-340D,Idaho Code. a.Please see "ICL_PR_O03C Confidential Attachment A Colstrip Hourly Generation". This document provides the hourly generation for unit 3 and unit 4 for 2018. Please see "ICL_PR_OO3C Confidential Attachment B for 2018 U34 Plant Summary Reports.pdf'. This document lists the outages and their causes via the various GADS (Generation Availability Data System) categories (i.e. planned/unplanned). Talen as operator of the facility seeks to resolve each issue as quickly as possible, generally with onsite staff but supplernented with external resources as necessary. The alleged MATS violation period extended from June 2l'1,2018 to September 6ft, 2018. Although there was outage time associated with the MATS issue, the units provided electricity to Idaho electric customers during these periods when the units were run for troubleshooting and testing to resolve the MATS issue. b. Please see the ICL_PR_O03C Confidential Attachment C (Colstrip Outage Replacement Cost) for the analysis of the cost of replacement power for the Colstrip outages and de-rates. Also shown in that worksheet is the system load for each hour of Colstrip outage or de-rate and the megawatt reduction in generation from the outage or de-rate. c. On the margin, the unplanned outages at Colstrip resulted in either increased power purchases or reduced power sales. Avista's other generation plants dispatch independently of what Colstrip is generatinE, i.e, they dispatch against the market and not to load. The attached analysis of Colstrip replacement power cost assumes that the alternative to Colstrip generation is market power. See ICL_PR_003C Confidential Attachment D - CL3C. d. See part (b) and (g). e. To date, MDEQ has not issued any penalties for the 2018 calendar year. An on-going discussion concerning the alleged violation for 77 days of deviation from the PM emission limitation has not concluded. f. Avista cannot estimate penalty amounts at this time. g. Please see ICL_PR_003C Confidential Attachment E for 2018 O&M and Capital Expenditures for 2018. The information contained in this attachment is Avista's 1502 portion of the total 2018 Expenses incurred by Colstrip. This information is provided in the method received by the Plant Operator and recorded to the general ledger. Any expenses related to the Colstrip MATS issue are embedded within these numbers. The capital costs reflected on the attachment represent total costs related to Colstrip and are not specific to the outage and de-rate. The Company does not track this information on an individual project basis. The amount included on the attachment represents what was recorded to the general ledger, and transferred to plant in the month recorded. Page 2 of3 AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION JURISDICTION CASE NO: REQUESTER: TYPE: REQUEST NO.: TDAHO AVU-E-19-04 ICL Production Request ICL - OO4 DATE PREPARED: 09127 12019WITNESS: Jason Thackston RESPONDER: Thomas C Dempsey DEPARTMENT: GPSS TELEPHONE: (509) 495-4960 REQUEST: In his testimony on page 17, lines 16-21, Company Witness Thackston states: " ... the current coal supply contract for Units 3 and 4 expires at the end of 2019. The Company has been involved in negotiations to extend this contract, but Westmoreland Coal, the owner and operator of the Rosebud Mine that supplies Colstrip, filed for Chapter I I bankruptcy in October 2018. A group of creditors purchased the Rosebud Mine assets, and that goup accepted the current contract and will honor it for the rest of 2019. Negotiations with the creditors for a new contract are ongoing. a. Is Avista requesting revenue for coal supply as part of base rates in this docket? If so, please identify the amount and provide documentation justifuing this amount b. Please explain what a "cost-plus" agreement means, as Avista used this term in reference to the Coal Supply Agreement that govems the cost of fuel for Colstrip Units 3 and 4 in AVU-E-I9-04 Certificate of Service 3 September 11, 2019 Objection by Puget Sound Energy, Inc., Portland General Electric Company, Pacificorp, and A vista Corporation to Joint Chapter 11 Plan of Westmoreland Coal Company and Certain of its Debtor Affiliates at 11, In re: Westmoreland Coal Company, et. Al.,Debtors, (Bankr. S.D. Tex. 2019) (No. 18-35672 (DRJ)) ("In short, the Rejection Notice's failure to include the Coal Supply Agreement as a contract that will be assigned to the Purchaser is not credible because there is no justification for rejecting it, and strikes the Public Utilities as nothing more than a litigation tactic to drive Public Utilities to accept unreasonable commercial terms on the new contract that is supposed to take effect in2020. This is especially true given the Coal Supply Agreement is a'cost-plus'agreement, and is per se profitable for WECO."). c. Is Colstrip able to burn coal from a source other than Rosebud mine according to current air quality permits? Is the Colstrip facility able to receive coal by rail car or truck? RESPONSE: a. Coal supply costs are included in the overall power supply expense in this general rate case. Please see Kalich workpapers, Ehibit No. 7 - Schedules 3 and 5. b. "Cost-plus" refers to the payment structure of the 2nd Amended and Restated Coal Supply Agreement between the owners of Colstrip and Westmorland Rosebud Mining LLC. The price charged for coal includes all of the cost the mine incurs to mine coal plus a return on invested capital, an incentive fee, and federal and state taxes and royalties. Page 1 of2 c. The air permit allows for coal to be burned from a source other than the Rosebud mine. However, the Colstrip facility is not currently configured to receive coal by rail, car, or truck. Page2 of2 AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION JURISDICTION: CASE NO: REQUESTER: TYPE: REQUEST NO.: IDAHO AVU-E-19-04 ICL Production Request ICL - OO5 DATE PREPARED: 09127 12019WITNESS: Jason Thackston RESPONDER: Thomas C Dempsey DEPARTMENT: GPSS TELEPHONE: (509) 495-4960 REQUEST: In his testimony on page 17, lines 6-8, Company Witness Thackston states that the recently passed Washington legislation requiring elimination of energy from Colstrip 3 and 4 by 2025 will not impact any of the capital projects in this case. a. When the Company eliminates energy from Colstrip in 2025, will energy from Colstrip be eliminated in Idaho? b. [f energy from Colstrip continues to be provided to Idaho electric customers after 2025, will Idaho electric customers be solely responsible for A vista's portion of costs associated with Colstrip, such as ongoing capital projects, the coal supply from the Rosebud Mine and ongoing pollution issues covering both air quality and water quality regulations? RESPONSE: a. This is yet to be determined. b. No such determination has been made. Page I ofl AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION JURISDICTION CASE NO: REQUESTER: TYPE: REQUEST NO.: IDAHO AW-E-19-04 ICL Production Request ICL - 006 DATE PREPARED: 09/27 12019WITNESS: Jason Thackston RESPONDER: Thomas C Dempsey DEPARTMENT: GPSS TELEPHONE: (s09) 495-4960 REQUEST: In his testimony on page 14, lines 40-41, Company Witness Thackston states: "Each year Talen, the plant operator, proposes a set of capital projects for Units 3 and 4, as well as for the plant-in-common." a. Please provide the annual business plan and capital budgets for Colstrip Units 3 and 4 for 2018,2019, and2020. b. Please provide all individual capital project summaries related to the Colstrip Units 3and 4 Capital Projects, subject to this proceeding. c. Please provide any documentation of Avista's assessment for each planed capital project that continued spending on Colstrip is a lower cost option that pursuing a replacement resource. RESPONSE: Please see Avista's response ICL_PR_006C, 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. a. Please see ICL PR 006C Confidential Attachment A b. Please see ICL PR 006C Confidential Attachment B c. Avista does not analyze individual capital projects in the context of considering replacement resources, unless project is significant, for example of significance an "SCR". Avista's Integrated Resource Planning group prepares an IRP generally on a biennial basis to study these tlpes of projects. The annual total O&M and capital costs for each resource are considered in total as well as other costs such as incremental fuel. The IRP is a tool used to determine economic viability of a resource over a horizon of the next 20 years. Page 1 ofl AVISTA CORPORATION R-ESPONSE TO REQUEST FOR INFORMATION JURISDICTION CASE NO: REQUESTER: TYPE: REQUEST NO.: IDAHO AW-E-19-04 ICL Production Request ICL - OO7 DATE PREPARED: 09/2712019WITNESS: Jason Thackston RESPONDER: Thomas C Dempsey DEPARTMENT: GPSS TELEPHONE: (509) 495-4960 REQUEST: In his testimony on page 15, lines 1-4, Company Witness Thackston states: "These projects are reviewed by one or more Avista representatives on an individual basis and also as an ownership group. Additionally, Avista and other Company representatives meet with Talen at least every other month to review plant operations including capital projects. a. Please provide all documents, emails, communications, memos, or other internal company documents related to A vista's review of the Colstrip 3 and 4 Capital Projects subject to this proceeding. RESPONSE: Please see the following attachments: ICL_PR_007 Attachment A for the 2018 Avista Internal Documentation.pdf ICL_PR_007 Attachment B for the2019 Avista Internal Documentation.pdf Please also see the response to ICL_PR_006 for the following attachments:. The 2018 Colstrip budget was approved by Avista management on November 6,2017. The 2019 Colstrip budget was rejected by Avista management on November 12,2018. A revised 2019 Colstrip budget was approved by Avista on November 19, 2018. Page 1 ofl JURISDICTION: CASE NO: REQUESTER: TYPE: REQUEST NO.: AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION IDAHO AVU-E- l9-04 Idaho Conservation League Production Request ICL-OO8 DATE PREPARED: 0912012019WITNESS: Mark Thies RESPONDER: Patrick Ehrbar DEPARTMENT: State & Federal Regulation TELEPHONE: (509) 495-8620 REQUEST: REQUEST NO. 8: In his testimony on page I 5, lines 8- 14, Company Witness Thackston states: '7, should also be remembered that the compensation structure for the plant operator is cost-based and does not include a rate of return based on the capital spending at the plant ... so there is no financial incentivefor them to spend needless capital." a. Does the Company's rate of retum on capital investments create a financial incentive to spend capital? RESPONSE: No, the rate of return on capital investment is not an incentive, but rather reflects the cost of capital necessary to attract funding on a reasonable basis so that we can continue to provide safe and reliable service for our customers. Avista has, and will continue to operate the business efficiently to keep costs as low as practicable for our customers, while at the same time ensuring that our energy service is reliable and our customers are satisfied. An efficient, well-run business is not only important to our customers, but also important to investors. We are making significant capital investments in our electric generation, transmission and distribution facilities, natural gas distribution system, and new technology to better serve the needs of our customers. These investments are focused on, among other things, the preservation and enhancement of safety, service reliability and the replacement of aging infrastructure. AVISTA CORPORATION RESPONSE TO REQUEST FOR INFORMATION JURISDICTION: IDAHO CASE NO: AW-E-19-04 REQUESTER: ICLTYPE: Production Request REQUEST NO.: ICL - 009 DATE PREPARED: 09127 12019WITNESS: Jason Thackston RESPONDER: Darrell Soyars DEPARTMENT: Env. Compliance TELEPHONE: (s09) 49s-2860 In his testimony on page 19, lines 9-10, Company Witness Thackston states: "Throughout the years, water has been lost through seepage from the ponds that has contaminated the groundwater on the Colstrip site. a. Please provide the document(s) in which the Company agreed to the construction and operation of the ponds associated with Colstrip Units 3 and 4. b. Please provide documents of A vista's ongoing participation or oversight in the operation of the Colstrip site to ensure compliance with permit requirements. c. At the time the Company approved construction and operation of the ponds associated with Colstrip Units 3 and 4, did the Company know any or all of these ponds would or would likely cause seepage into the groundwater? d. Were all the ponds, for which the Company is responsible, lined with a material to prevent seepage at the time of construction or sometime after? If not, how many ponds, for which the Company is responsible, are unlined and how many are lined? e. At the time the Company approved construction and operation of the ponds associated with Colstrip Units 3 and 4, did the Company know whether or not the bottoms of the ponds would be lined with a material that would prevent seepage? f. Is it the Company's position that the costs of remediating contaminated groundwater caused by seepage from ponds associated with Colstrip Units 3 and 4 should be included in the rates paid by Idaho electric customers? RESPONSE: Parts (a - e) Please refer to the Administrative Order on Consent (AOC) regarding impacts related to wastewater facilities comprising the close-loop system at Colstrip Steam Electric Station, Colstrip Montana between, PPL Montana,LLC as operator of Colstrip and, Montana Department of Environmental Protection found easily at: http ://deq.mt. gov/DEOAdmin/mfs/ColstripSteamElectricStation part (0 Yes, environmental costs are included in customer rates. Page 1 of 1 REQUEST: