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Home My WebLink About20070921IPC to DOE 2-1, 2-2.pdf-,...," Rtvt:\ y -- IDAHO~POWER(ID Luul SEP 2 \ PI"! 2: \ b '" r,' i(\ PUBLIC :~!'-' f.~~' COMM\SSICH.L I , An IDACORP Company BARTON L. KLINE Senior Attorney September 21 2007 Jean D. Jewell , Secretary Idaho Public Utilities Commission 472 West Washington Street P. O. Box 83720 Boise , Idaho 83720-0074 Re:Case No. IPC-07- General Rate Case Filing Dear Ms. Jewell: Please find enclosed an original and two (2) copies of Idaho Power s Response to the Second Production Request of the United States Department of Energy in the above- referenced matter. I would appreciate it if you would return a stamped copy of this transmittal letter in the enclosed self-addressed , stamped envelope. Very truly yours Barton L. Kline BLK:sh Enclosure O. Box 70 (83707) 1221 W. Idaho St. Boise, 1083702 CEj\,i BARTON L. KLINE ISB #1526 LISA D. NORDSTROM ISB #5733 Idaho Power Company O. Box 70 Boise, Idaho 83707 Telephone: (208) 388-2682 FAX Telephone: (208) 388-6936 ZO07 SEP 2 I Pr'l 2: I 7 iDp\HO PUBLIC UTILITIES COMMISSIOi" Attorney for Idaho Power Company Street Address for Express Mail: 1221 West Idaho Street Boise , Idaho 83702 BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION IN THE MATTER OF THE APPLICATION OF IDAHO POWER COMPANY FOR AUTHORITY TO INCREASE ITS RATES AND CHARGES FOR ELECTRIC SERVICE TO ELECTRIC CUSTOMERS IN THE STATE OF IDAHO ) CASE NO. IPC-07- RESPONSE OF IDAHO POWER TO THE SECOND PRODUCTION REQUEST OF THE UNITED STATES DEPARTMENT OF ENERGY COMES NOW , Idaho Power Company ("Idaho Power" or "the Company") and, in response to the United States Department of Energy s Second Set of Interrogatories and Production Requests to Idaho Power Company dated August 27, 2007, herewith submits the following information: RESPONSE OF IDAHO POWER TO THE SECOND PRODUCTION REQUEST OF THE UNITED STATES DEPARTMENT OF ENERGY, Page REQUEST FOR PRODUCTION NO. 2-Referring to test-year costs assigned to Account 555 - Purchased Power: (a)Please explain in detail how Idaho Power classified Account 555.1 costs. (b)Please state and explain in detail the justification for Idaho Power classification of Account 555.1 costs. (c)Please explain in detail how Idaho Power classified Account 555.2 costs. (d)Please state and explain in detail the justification for Idaho Power classification of Account 555.2 costs. (e)Please identify and explain in detail all factors that Idaho Power considers in making an Account 555.1 purchase. (f)Please explain in detail how Idaho Power forecasts Account 555. purchases. (g) Please explain in detail how Idaho Power incorporates and/or reflects Account 555.1 purchases in its plans and procedures to serve its Idaho retail load reliably. RESPONSE TO REQUEST FOR PRODUCTION NO. 2-18 throuQh d Purchased Power (555.1) was classified as energy-related and allocated on that basis in the Company s jurisdictional separation study and the class cost-of-service study. RESPONSE OF IDAHO POWER TO THE SECOND PRODUCTION REQUEST OF THE UNITED STATES DEPARTMENT OF ENERGY, Page 2 The expenses booked to 555.1 are related to the purchase of energy and therefore, are allocated on that basis.This allocation method was adopted from the National Association Regulatory Utility Commissioner Electric Utility Cost Allocation Manual. Co-generation and Small Power Production (555.2), was classified as energy and demand related costs, as calculated on Schwendiman workpaper page 72. $2.million of the 555.2 expense was related to capacity payments. This amount is allocated to jurisdictions and customer classes based on demand. The remainder of the expenses in the account are energy related and therefore, allocated on that basis. The expenses booked to 555.2 are related to the purchase of energy. The portion of the expense related to capacity payments was allocated on a demand basis. The remainder of the account, comprised of payments for the purchase of energy, was allocated to jurisdictions and customers based on energy allocation. The response to this request was prepared by Celeste Schwendiman , Senior Pricing Analyst, Idaho Power Company, in consultation with Barton L. Kline, Senior Attorney and/or Lisa D. Nordstrom , Attorney Idaho Power Company. RESPONSE TO REQUEST FOR PRODUCTION NO. 2-1e and f: Idaho Power Company purchases energy based on two criteria: 1) economic benefit and 2) obligation to serve. In the event that a purchase can be made that is less expensive than an existing resource, the RESPONSE OF IDAHO POWER TO THE SECOND PRODUCTION REQUEST OF THE UNITED STATES DEPARTMENT OF ENERGY , Page 3 Company will opt to purchase power in lieu of generating energy. In the event the Company is short energy to serve its customers , it will purchase the energy. For ratemaking purposes, all 555.1 energy purchases are forecasted using the Aurora model. Please see discussion of the Aurora modeling for this case in Said direct and related exhibits. The response to this request was prepared by Gregory Said , Manager Revenue Requirement, Idaho Power Company, in consultation with Barton L. Kline Senior Attorney and/or Lisa D. Nordstrom , Attorney II , Idaho Power Company. RESPONSE TO REQUEST FOR PRODUCTION NO. 2-1 Q Idaho Power uses economic dispatch principles to serve it loads reliably. In real- time, purchased power is utilized when Idaho Power does not have sufficient resources to meet its loads or when the Company has an opportunity to acquire such resources at costs which are less than the costs of its own resources. In addition , the Company may enter into forward purchased power transactions based upon methodologies contained in its Energy Risk Management Policy Manual. In Order No. 28722, the Idaho Public Utilities Commission (IPUC) initiated an investigation into the Company s hedging and risk management practices. The result was a settlement among the Company, customers, and PUC staff setting forth how the Company would manage purchased power costs going forward.The Company managing" plan was submitted to the IPUC on December 4, 2002 and entitled the Idaho Power Company Energy Risk Management Policy Manual.The manual RESPONSE OF IDAHO POWER TO THE SECOND PRODUCTION REQUEST OF THE UNITED STATES DEPARTMENT OF ENERGY, Page 4 addresses the means by which the Company manages the cost of energy supply with respect to risk tolerances of the stakeholders. On an interim basis the Company has defined market risk as the exposure to adverse movements in regional power prices in conjunction with adverse hydro conditions. The Company has identified the major factors driving variations in purchased power cost , and each year establishes risk guidelines that serve to limit the Company s market risk over a maximum 18-month period. Because the ongoing risk management activity undertaken by the Company is primarily on the behalf of its customers, the annually established risk guidelines limits reflect the desired risk tolerances, which customers , the Company, and regulators want to accept from each factor. The Company then applies hedges to limit risk to these tolerances. These hedges consist of purchases or sales which bring Idaho Power s system closer to balanced thereby serving Idaho retail load reliably and with respect for the risk tolerance of the stakeholders. All purchases required by the Risk Management Policy are reflected in 555. and incorporated into the operating assumptions of the Company s Operating Plan. The Operating Plan serves to quantify the sensitivity of the Company s power supply costs to movements in energy markets, load and generation. The response to this request was prepared by Ric Gale , Vice President of Regulatory Affairs , Idaho Power Company, in consultation with Barton L. Kline, Senior Attorney and/or Lisa D. Nordstrom , Attorney Idaho Power Company. RESPONSE OF IDAHO POWER TO THE SECOND PRODUCTION REQUEST OF THE UNITED STATES DEPARTMENT OF ENERGY, Page 5 REQUEST FOR PRODUCTION NO. 2-: Referring to test-year costs assigned to Account 555., please provide in Excel format a chart showing, for each purchase comprising the Account 555.1 costs , the following: transaction date, duration, type (for example , firm energy), total capacity and/or energy purchased , total cost, applicable pricing mechanism ($/MW, $/MWh, or some combination), and specific prices. RESPONSE TO REQUEST FOR PRODUCTION NO. 2- The test-year costs assigned to Account 555.1 were model output from the Aurora Power Supply model (Exhibit 32). There were no 2007 actual costs, for Account 555., included in the test-year revenue requirement. The response to this request was prepared by Gregory Said , Manager Revenue Requirement, Idaho Power Company, in consultation with Barton L. Kline Senior Attorney and/or Lisa D. Nordstrom, Attorney II, Idaho Power Company. DATED at Boise , Idaho, this g/~ day of September, 2007. BARTON L. KLINE Attorney for Idaho Power Company ---- LISA D. NORDSTROM Attorney for Idaho Power Company RESPONSE OF IDAHO POWER TO THE SECOND PRODUCTION REQUEST OF THE UNITED STATES DEPARTMENT OF ENERGY, Page 6 CERTIFICATE OF SERVICE I HEREBY CERTIFY that on this day of September, 2007, I served a true and correct copy of the within and foregoing document upon the following named parties by the method indicated below, and addressed to the following: Commission Staff Weldon Stutzman Deputy Attorney General Idaho Public Utilities Commission 472 W. Washington (83702) O. Box 83720 Boise, Idaho 83720-0074 Donovan Walker Deputy Attorney General Idaho Public Utilities Commission 472 W. Washington (83702) O. Box 83720 Boise, Idaho 83720-0074 Industrial Customers of Idaho Power Peter J. Richardson , Esq. Richardson & 0' Leary 515 N. 2ih Street O. Box 7218 Boise , Idaho 83702 Don Reading Ben Johnson Associates 6070 Hill Road Boise, Idaho 83702 Idaho Irrigation Pumpers Association, Inc. Eric L. Olsen Racine, Olson , Nye , Budge & Bailey O. Box 1391 201 E. Center Pocatello, Idaho 83204 ~Hand Delivered - U.S. Mail Overnight Mail FAX ----X Email Weldon.stutzmanCWpuc.idaho.qov X Hand Delivered - U.S. Mail Overnight Mail FAX ----X Email Donovan.walkerCWpuc.idaho.qov Hand Delivered --.2LU.S. Mail Overnight Mail FAX Email peterCW richardsonandolearv.com Hand Delivered --.2LU.S. Mail Overnight Mail FAX Email dreadinq CW mindsprinq.com Hand Delivered --.2L U.S. Mail Overnight Mail FAX Email eloCWracinelaw.net RESPONSE OF IDAHO POWER TO THE SECOND PRODUCTION REQUEST OF THE UNITED STATES DEPARTMENT OF ENERGY, Page 7 Anthony Yankel 29814 Lake Road Bay Village, OH 444140 Kroger Co. Fred Meyer and Smiths Michael L. Kurtz Kurt J. Boehm Boehm, Kurtz & Lowry 36 East Seventh Street, Suite 1510 Cincinnati , Ohio 45202 The Kroger Co. Attn: Corporate Energy Manager (G09) 1014 Vine Street Cincinnati, Ohio 45202 Micron Technology Conley Ward Michael C. Creamer Givens Pursley 601 W. Bannock Street O. Box 2720 Boise, Idaho 83701 Dennis E. Peseau , Ph.D. Utility Resources , Inc. 1500 Liberty Street SE , Suite 250 Salem , OR 97302 Department of Energy Lot Cooke Arthur Perry Bruder Office of the Attorney General United States Department of Energy 1000 Independence Ave., SW Washington, DC 20585 Routing Symbol GC- 76 Hand Delivered ---X-U.S. Mail Overnight Mail FAX Email tony~yankel.net Hand Delivered ---X-U.S. Mail Overnight Mail FAX Email mkurtz~bkllawfirm.com kboehm ~ bkllawfirm.com Hand Delivered ---X-U.S. Mail Overnight Mail FAX Email Hand Delivered ---X-U.S. Mail Overnight Mail FAX Email cew~qivenspursley.com mcc~ qivenspursleY.com Hand Delivered ---X- U.S. Mail Overnight Mail FAX Email dpeseau ~ excite.com Hand Delivered - U.S. Mail Overnight Mail FAX-X Email lot.cooke~hq.doe.qov arthur.bruder~ hq.doe.qov RESPONSE OF IDAHO POWER TO THE SECOND PRODUCTION REQUEST OF THE UNITED STATES DEPARTMENT OF ENERGY, Page 8 Dennis Goins Potomac Management Group 5801 Westchester Street O. Box 30225 Alexandria, VA 22310-8225 Hand Delivered - U.S. Mail Overnight Mail FAX --X- Email DGoinsPMG (g)cox.net Dale Swan Ammar Ansari Exeter Associates 5565 Sterrett Place, Suite 310 Columbia, MD 20904 Hand Delivered -L U.S. Mail Overnight Mail FAX Email dswan (g) exeterassociates.com aansari (g) exeterassociates.com jLQ Barton L. Kline RESPONSE OF IDAHO POWER TO THE SECOND PRODUCTION REQUEST OF THE UNITED STATES DEPARTMENT OF ENERGY, Page 9