20090414IPC to Staff 2-3, 16, 26 etc.pdf

1SIDA~POR~
An IDACORP Company
BARTON L. KLINE
Lead Counsel
April 13, 2009
VIA HAND DELIVERY
Idaho PUblic Utilties Commi .
Office of the Secretary ssion
RECEIVED
APR 132009
Jean D. Jewell, Secretary
Idaho Public Utilities Commission
472 West Washington Street
P.O. Box 83720
Boise, Idaho 83720-0074
Boise, Idaho
Re: Case No. IPC-E-09-03
LANGLEY GULCH POWER PLANT
Dear Ms. Jewell:
Enclosed for filing are an original and three (3) copies of the second portion of Idaho
Power Company's responses to the Commission Staffs First Production Request. Idaho
Power Company expects to file its responses to the remaining requests on Tuesday, April
14. In addition, enclosed are four (4) copies of a disk in which electronic files are being
produced by Idaho Power in response to Staffs production requests.
Also, enclosed in a separate envelope are an original and three (3) copies of Idaho
Power Company's confidential responses to the Commission Staffs First Production
Request. In addition, also enclosed are four (4) copies of a disk containing confidential
information in response to Staffs production requests. Please note this information should
be handled in accordance with the Protective Agreements in place between the parties.
In addition, I would appreciate it if you would return a stamped copy of this letter for
Idaho Power's file in the enclosed stamped, self-addressed envelope.
Barton L. Kline
BLK:csb
Enclosures
P.O. Box 70 (83707)
1221 W. Idaho St.
Boise, ID 83702
BARTON L. KLINE, ISB #1526
LISA D. NORDSTROM, ISB #5733
Idaho Power Company
P.O. Box 70
Boise, Idaho 83707
Telephone: [phone]
Facsimile: 208-338-6936
bklineCâidahopower.com
InordstromCâidahopower.com
Idaho Public Utilties Commission
Office of the SecretaryRECEIVED
APR 1 3 2009
Boise, Idaho
Attorneys for Idaho Power Company
Street Address for Express Mail:
1221 West Idaho Street
Boise, Idaho 83702
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MA TIER OF IDAHO POWER
COMPANY'S APPLICATION FOR A
CERTIFICATE OF PUBLIC
CONVENIENCE AND NECESSITY FOR
THE LANGLEY GULCH POWER PLANT.
)
) CASE NO. IPC-E-09-03
)
) IDAHO POWER COMPANY'S
) RESPONSE TO THE COMMISSION
) STAFF'S FIRST PRODUCTION
) REQUEST TO IDAHO POWER
) COMPANY
COMES NOW, Idaho Power Company ("Idaho Powet' or "the Company"), and in
response to the First Production Request of the Commission Staff to Idaho Power
Company dated March 25,2009, herewith submits the following information:
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 1
REQUEST NO.2:Please explain and provide any other supporting
documentation showing how the Company concluded that it should pursue development
of a natural gas-fired CCCT located close to its Treasure Valley load center and that
justified issuance of the 2012 Baseload Request for Proposals (RFP). What water
conditions were assumed in determining these energy and capacity needs? What load
growth assumptions were assumed?
RESPONSE TO REQUEST NO.2: The Company's conclusion to pursue
development of a natural gas-fired CCCT located close to its Treasure Valley load
center is based largely on three factors. The primary factor supporting the Company's
conclusion to develop the CCCT project is its need for an additional base load resource,
which was identified in both the 2004 and 2006 Integrated Resource Plans. In addition
to the need documented in the 2004 and 2006 IRPs, the Company has also been
approached by a number of customers with large loads who are considering locating in
Idaho Power's service territory. These loads are in addition to those included in the
2004 and 2006 IRP. See response to Staffs Request NO.4 for additional information.
The second set of factors, which influenced the Company's decision to switch the
resource from coal-fired to natural gas-fired, included the following: the growing
concern regarding CO2 emissions and climate change, public opposition to coal-fired
power plant development, permitting concerns, the likelihood of future C02 regulations
and the financial risks associated with a coal-fired plant's CO2 emissions, and the fact
that cost-effective carbon capture technology was not commercially available for large
scale coal-fired projects. Given these factors, coal-fired project development was
unrealistic, and Idaho Power decided against pursuing coal-fired resource development.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 2
The third set of factors are related to the lack of success the Company had with
its 2006 Geothermal RFP, CHP project development was slower than anticipated, a
number of PURPA wind projects were not being developed as quickly as originally
anticipated, and the anticipated shift in the timing of Flow Augmentation Releases,
discussed in Idaho Power's response to Staffs Request NO.5.
The water and load conditions used to determine the energy and capacity needs
that justified issuance of the 2012 Baseload RFP were 70th percentile water and load for
average energy and 90th percentile water and 95th percentile load for peak-hour
capacity needs. After the 2006 IRP was released, a series of surplus/deficit
spreadsheets were periodically updated to reflect known or expected changes in
resources or loads and the associated impact on forecast surplus/deficit position. A
surplus/deficit spreadsheet from March 2008 is included on the enclosed CD. The load
forecast used in this spreadsheet was from August 2007.
The response to this Request was prepared by Karl Bokenkamp, General
Manager Power Supply Operations and Planning, Idaho Power Company, in
consultation with Barton L. Kline, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 3
REQUEST NO.3: The 2012 Baseload RFP sought proposals for dispatchable,
first call, non-recallable, physically delivered firm or unit contingent energy commencing
not later than June 1, 2012. The Langley Gulch project, however, has a scheduled
commercial operation date of December 1, 2012. Please explain how the Langley
Gulch project satisfies the RFP given its scheduled commercial operation date is six
months later than required by the RFP.
RESPONSE TO REQUEST NO.3: The Langley Gulch project, as proposed and
evaluated in the 2012 Baseload RFP process, had a forecast first-fire date of February
13, 2012, and a commercial operation date of April 30, 2012, capable of satisfying the
requirement for commencement of energy deliveries not later than June 1, 2012. Based
on that evaluation, the Langley Gulch project was shown to provide substantial cost
savings for customers and the RFP Evaluation Team recommended to the Company's
management that the Langley Gulch project be selected as the successful bidder. The
Company's senior management questioned, given the current financial crisis, whether
the project could be financed. It was determined that the best way to preserve those
cost savings was to defer the on-line date to see if the Commission was willng to
provide ratemaking assurances that would enable the Company to finance the project in
a way that would preserve the significant cost savings for customers.
Section 4.8 of the 2012 Baseload RFP, Reservation of Rights, states that Idaho
Power reserves the right to ". . . modify the RFP Schedule and any provisions contained
herein, for any reason." The decision to delay the on-line date was not prohibited by
the terms of the RFP and, given the current economic crisis, Idaho Power believes that
to delay the project's on-line date for 6 months is in the best interest of customers. The
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 4
short-listed bidders were advised of the possibility of a six month delay and they
confirmed that delaying the project's on-line date would not substantially change their
pricing.
The response to this Request was prepared by Karl Bokenkamp, General
Manager Power Supply Operations and Planning, Idaho Power Company, in
consultation with Barton L. Kline, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 5
REQUEST NO. 16: On June 25, 2008, an Addendum to the RFP was issued
that reduced the proposal size to approximately 300 MW from its original size of 250 to
600 MW. Please explain why this change was made and provide any related internal
correspondence or memoranda.
RESPONSE TO REQUEST NO. 16: As noted in the response to Staffs Request
No.4, two companies could have added over 400 MW of new load to Idaho Powets
system. If one of the company's plans proceeded as anticipated, that company would
have added over 300 MW of new load to Idaho Powets system. Idaho Power and this
company explored the possibility of acquiring up to approximately 600 MW through the
RFP process to serve the additional new load. If this company's project proceeded as
anticipated, or if any other new customers with significant electrical loads decided to
move into Idaho Power's service territory, Idaho Power was going to need more
resources to serve the new load. With this in mind, the RFP was initially released with a
quantity range indicating the Company anticipated acquiring between approximately
250 MW and 600 MW of dispatchable energy. The RFP also indicated the Company
anticipated reaching a final decision on the RFP quantity in June of 2008.
After the RFP was issued on April 1, 2008, Idaho Power continued discussions
with both of the above mentioned companies to determine if the RFP quantity should be
set at approximately 600 MW. By constructing one 500-600 MW CCCT instead of two
250-300 MW CCCT projects, a considerable cost savings was anticipated. However,
selecting the Benchmark Resource was only one of several possible outcomes of the
RFP process. Any agreement to upsize the RFP quantity needed to address what
would happen if a Power Purchase Agreement or a Tollng Agreement was selected,
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 6
and how Idaho Power and its customers would be protected if the new load failed to
materialize. Since Idaho Power had communicated to potential bidders that it
anticipated finalizing the RFP quantity in June of 2008, time was limited. Discussions
with the company anticipating to add over 300 MW of new load continued and a number
of alternatives were explored, but no final agreement was reached. Ultimately, Idaho
Power elected to set the RFP quantity at approximately 300 MW and the addendum
was issued. If Electric Service Agreements with new large loads were signed, or if
Idaho Power received suffcient assurance that new large loads were going to locate in
its service territory, Idaho Power had the option to make multiple awards under the 2012
Baseload RFP process, or to pursue a single award in combination with another
alternative. One alternative considered at the time included installng additional peaking
resources, such as GE's LMS -100 combustion turbines, to serve new large loads if
they materialized.
Reducing the RFP quantity to approximately 300 MW was deemed to be the
most prudent course of action given the uncertainty. Please see the document included
on the enclosed CD for additional supporting discussion.
The response to this Request was prepared by Karl Bokenkamp, General
Manager Power Supply Operations and Planning, Idaho Power Company, in
consultation with Barton L. Kline, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 7
REQUEST NO. 26: If Idaho Power was able to delay the expected commercial
operation of the Langley project from June 1, 2012 to December 1, 2012, why did the
Company stil not have time to prepare detailed design specifications that would have
been needed in order to allow build-and-transfer options in the 2012 Baseload RFP?
RESPONSE TO REQUEST NO. 26: Idaho Powets decision to delay
commercial operation of the plant was not made until early 2009 (after project selection
was made), well after the RFP had been issued and the period for bid submission had
closed.
The response to this Request was prepared by Karl Bokenkamp, General
Manager Power Supply Operations and Planning, in consultation with Barton L. Kline,
Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 8
REQUEST NO. 36: Please provide a copy of the System Impact Study prepared
specifically for the Langley Gulch project.
RESPONSE TO REQUEST NO. 36: The requested information is confidentiaL.
Notwithstanding the foregoing, Idaho Power is willng to make the requested information
available for review by persons covered by the Protective Agreement in place for this
proceeding. Review wil take place at the offces of Idaho Power Company. Please
contact Doug Jones (388-2615) or Cathy Culp (388-2637) to make an appointment to
review this information.
The response to this Request was prepared by Vern Porter, General Manager,
Power Production, Idaho Power Company, in consultation with Barton L. Kline, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 9
REQUEST NO. 37: Please provide estimates by month for the period December
2012 through December 2032 of the number of hours (or capacity factor) at which the
Langley Gulch plant wil be expected to operate to serve Idaho Power's load.
RESPONSE TO REQUEST NO. 37: The capacity factor of the Langley Gulch
project is estimated using Aurora with the IRP2009 assumptions. These assumptions
include a $43 carbon adder, 50th percentile loads, and hydro and EPIS database as of
2008, including the 2008 IRP update preferred portolio resource additions. These
include existing and committed DSM and transmission projects. The period of forecast
shown below is December 2012 through December 2032 and includes all operations of
the Langley Gulch project to serve both Idaho Power Load and Market Sales. Aurora
does not differentiate unit operations for market or native load purposes.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 10
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 11
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 12
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY -13
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 14
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 15
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 16
The response to this Request was prepared by Rick Haener, Power Supply
Planning Analyst, Idaho Power Company, in consultation with Barton L. Kline, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY -17
REQUEST NO. 41: Please describe the fuel procurement strategy Idaho Power
intends to employ for the Langley Gulch plant. Discuss the following:
a. term of likely agreements;
b. quantity of fuel to be purchased on the spot market; and
c. hedging strategies.
RESPONSE TO REQUEST NO. 41: The response to this Request is
confidential and is being produced pursuant to the Protective Agreements executed in
this matter.
The response to this Request was prepared by Karl Bokenkamp, General
Manager Power Supply Operations and Planning, and John Anderson, Energy
Transaction Specialist, Idaho Power Company, in consultation with Barton L. Kline,
Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 18
REQUEST NO. 42: What is Idaho Power's forecast of expected fuel prices for
the Langley Gulch plant for the next twenty-year period? Please provide forecasts in
both a numerical and a graphical format.
RESPONSE TO REQUEST NO. 42: Idaho Power does not have a specific
forecast of expected fuel prices for the proposed Langley Gulch project. However, the
Company does develop a natural gas price forecast that is used in its Integrated
Resource Plan. This forecast is based on the Global Insight, Northwest Power and
Conservation Council, and EIA natural gas price forecasts, as well as NYMEX pricing.
The natural gas price forecast used for the 2009 IRP, in both numerical and graphical
format, is included on the enclosed CD.
The response to this Request was prepared by John Anderson, Energy
Transaction Specialist, and Karl Bokenkamp, General Manager Power Supply Planning,
Idaho Power Company, in consultation with Barton L. Kline, Lead Counsel, Idaho Power
Company.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 19
REQUEST NO. 43: Does Idaho Power have a risk management policy for
acquiring natural gas fuel for any of its existing or planned gas-fired plants? If so,
please provide a copy. If not, does the Company expect to develop a risk management
policy?
RESPONSE TO REQUEST NO. 43: Idaho Power's Energy Risk Management
Policy and the Energy Risk Management Standards developed to implement the Policy
constitute Idaho Powets Energy Risk Management Program and they describe a
process for Idaho Power to quantify the sensitivity of net power supply costs to
movements in energy markets and to manage market-based and operational risks.
Natural gas is one of the permitted commodities under the Standard. Copies of the
requested policy and program are included on the enclosed CD.
The response to this Request was prepared by Karl Bokenkamp, General
Manager Power Supply Operations and Planning, Idaho Power Company, in
consultation with Barton L. Kline, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 20
REQUEST NO. 44: For the proposed Langley Gulch plant,
a. wil an additional fuel management contract be necessary, and
b. wil there be suffcient fuel storage and transportation rights
available without pipeline capacity expansions?
RESPONSE TO REQUEST NO. 44: The response to this Request is
confidential and is being produced pursuant to the Protective Agreements executed in
this matter.
The response to this Request was prepared by John Anderson, Energy
Transaction Specialist, and Karl Bokenkamp, General Manager Power Supply
Operations and Planning, Idaho Power Company, in consultation with Barton L. Kline,
Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 21
REQUEST NO. 46: Please describe and discuss any air quality attainment
issues currently in place at the Langley Gulch site. Does Idaho Power expect any air
quality attainment issues to restrict operation of the Langley Gulch plant in any way?
Please provide copies of any studies done to evaluate air quality at the Langley Gulch
site.
RESPONSE TO REQUEST NO. 46: No air quality attainment issues are
expected at the Langley Gulch site. A Prevention of Significant Deterioration or PSD
operating permit wil be obtained through the Idaho Department of Environmental
Quality. The Company commissioned a study of air quality issues from its
environmental consultant and that study indicated that there should be no operation
restrictions required by this permit. The title of the study is Supplemental Dispersion
Modeling for Proposed Site in Payette County, Idaho.
The requested information is confidentiaL. Notwithstanding the foregoing, Idaho
Power is wiling to make the requested information available for review by persons
covered by the Protective Agreement in place for this proceeding. Review wil take
place at the offces of Idaho Power Company. Please contact Doug Jones (388-2615)
or Cathy Culp (388-2637) to make an appointment to review this information.
The response to this Request was prepared by Vern Porter, General Manager,
Power Production, Idaho Power Company, in consultation with Barton L. Kline, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 22
REQUEST NO. 47: Please provide copies of any new permits Idaho Power has
obtained with local, state or federal air, water, solid waste or land management
agencies for the Langley Gulch site/project. Please also summarize the current status
of all other permits that have not yet been obtained but that wil eventually be necessary
for construction and operation of the plant.
RESPONSE TO REQUEST NO. 47: All of the major permits for the Langley
Gulch project are in process. The following is a summary of the current status of other
permits:
Payette County Land Approval: A Comprehensive Plan Change
application was submitted on March 18, 2009. A public hearing was held with Payette
County's Planning and Zoning for the change on April 9, 2008. After completion of the
comprehensive plan change, a rezone and development agreement application wil be
submitted.
Air Quality Permit from Idaho DEQ - Permit to Construct: Meteorological
data is presently being collected at the site in preparation for submitting an application.
A draft of the Best Available Control Technology ("BACT") analysis has been prepared.
The Permit to Construct application is in draft preparation and is expected to be
submitted in June 2009.
Right-Of-Way from BLM (for transmission and water lines): The
Application for Transportation and Utility Systems and Facilities on Federal Lands was
submitted on October 13, 2008. This BLM authorization wil require a National
Environmental Policy Act ("NEPA") review of affected lands. The Environmental
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 23
Assessment associated with this NEPA review is being worked on and field work is set
to begin this spring.
Joint Application for Permits: Construction of the cooling water pump
station in the Snake River wil require permits from the US Army Corps of Engineers
and the IDWR. This joint application wil be submitted during the design of the water
pump station. This application wil include support permits for construction in waters of
the US, including a Stream Alteration Permit and a Water Quality Certification.
Groundwater Injection Permit: A permit wil be required from the Idaho
Department of Water Resources to inject cooling water discharge into the groundwater
aquifer. Hydro geologic studies wil begin this spring.
Miscellaneous Construction Permits: The contractor wil be required to
obtain miscellaneous construction permits, including, but not limited to, building permits,
electrical and mechanical permits, septic permits, and any construction stormwater
permits.
The response to this Request was prepared by Vern Porter, General Manager,
Power Production, Idaho Power Company, in consultation with Barton L. Kline, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 24
REQUEST NO. 49: Please describe and quantify all solid and liquid wastes that
wil be produced by the plant. Explain how these wastes wil be treated or disposed of.
Wil any additional on-site treatment facilities be necessary?
RESPONSE TO REQUEST NO. 49: Solid waste would include normal trash and
debris and wil likely be disposed of through local refuse vendors. Liquid wastes such
as cooling water discharge and the sewer wil be disposed of through injection wells and
a septic system, respectively, and wil be permitted through state and local agencies.
Oils and greases from equipment wil be recycled through current disposal programs
within IPC's Investment Recovery group.
The response to this Request was prepared by Vern Porter, General Manager,
Power Production, Idaho Power Company, in consultation with Barton L. Kline, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 25
REQUEST NO. 50: Please provide a detailed breakdown of the $427,400,000
Commitment Estimate for the Langley Gulch project, including workpapers and other
documentation, showing categories such as major equipment, replacement parts, site
improvements, substations, transmission improvements, fuel transportation, water
treatment, sales taxes, AFUDC, the cost of Idaho Power oversight and inspection of the
project, the cost of capitalized start-up fuel, etc. Where appropriate, show how the
amounts have been computed and list any assumptions used to compute the amounts.
In the breakdown, clearly identify those amounts that are considered contingencies.
RESPONSE TO REQUEST NO. 50: The breakdown of the Commitment
Estimate, as well as the documentation and workpaper supporting the Commitment
Estimate, are confidential and can be reviewed in the discovery room at the Company's
corporate offce. Please contact Doug Jones at 388-2615 or Cathy Culp at 388-2637 to
arrange a time to review the requested.
The response to this Request was prepared by Vern Porter, General Manager,
Power Production, Idaho Power Company, in consultation with Barton L. Kline, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 26
REQUEST NO. 51: Please describe any contractual (market) products that may
be available that could provide capacity and energy comparable, or nearly comparable,
to that which would be provided in the first five years of the Langley Gulch plant. Please
provide the current price for these products and identify the source from which the
prices have been obtained. Please discuss how the Langley Gulch plant would be
different, better, or worse than such products.
RESPONSE TO REQUEST NO. 51: There are only a few standard market
products that Idaho Power expects to be available to provide capacity and energy that is
comparable, or nearly comparable, to that which would be provided by the Langley
Gulch project during its first five years of operation. Custom or non-standard market
products such as heat rate call options that simulate the characteristics of a combustion
turbine may be available. To get a good assessment of the pricing and availability of
non-standard market products, Idaho Power would need to work with a broker or issue
an RFP for the specific product of interest. Although standard or non-standard market
products may be available, transmission constraints wil limit their ability to be delivered
to Idaho Power's system.
The available standard products include: hourly, daily, monthly, quarterly and
annual heavy load, light load, or flat market purchases. Terms and conditions of the
purchases would be in accordance with the Western Systems Power Pool Agreement,
Service Schedule C, Firm Energy and/or Capacity. The agreements would include
provisions for payment of liquidated damages. The primary liquid trading hubs are Mid
Columbia, Palo Verde, and SP-15 in California.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 27
Current prices for these products are dynamic; however, they can be estimated
from Idaho Power's current forward price curve. This price curved is developed using
information from voice brokers and observing forward transactions and closing prices on
the Intercontinental Exchange ("ICE"). Idaho Power's forward curve which provides
monthly Heavy Load and Light Load prices for Mid-C, Palo Verde, as well as a
confidential estimate of Idaho Powets border prices based upon prices at the Mid C
and Palo Verde trading hubs, is included on the enclosed CD. Based on this curve,
quarterly and annual prices have been estimated. Also, Idaho Power retains broker
forward price sheets which provide market estimates for several products.
One of the benefits of Langley Gulch is that it can be dispatched according to
market conditions. If the market prices are below Langley Gulch's dispatch price, it can
be turned off. Langley Gulch can also be scheduled and ramped to help meet forecast
system loads; it can also provide reserves, assist with integrating wind generation, and
respond to any actual changes in system loads, and having another generator on-line
near Idaho Power's load center increases system reliability. Furthermore, because of
its lower CO2 emissions, Langley Gulch provides Idaho Power with an opportunity to
shift generation from its coal-fired resources to a combined cycle unit located internal to
Idaho Power's load center. In all of these respects, Langley Gulch is better than a
market purchase. A market purchase is simply a flat block of energy delivered to Idaho
Power's receipt point. It is subject to transmission outages and cuts.
Regarding differences, there are fixed costs associated with any generating
resource or transmission asset - this is a significant difference between the Langley
Gulch and a market purchase.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 28
If suffcient transmission capacity was available to Idaho Power's load center,
and if Idaho Power was assured that external resources were available to purchase,
and if natural gas prices were significantly higher and power market prices lower - such
that it would always be cheaper to purchase power from the market than it would be to
generate with Langley Gulch, and if Idaho Power didn't need another resource to assist
with integrating intermittent renewable resources, then market purchases might be a
better alternative.
The response to this Request was prepared by Karl Bokenkamp, General
Manager Power Supply Operations and Planning, and Dave Churchman, Manager
Power Supply Operations, Idaho Power Company, in consultation with Barton L. Kline,
Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 29
REQUEST NO. 52: What is Idaho Power's current forecast of expected firm
wholesale electric energy prices for the next five and ten-year periods for heavy and
light load hours? Please identify the source and date on which the forecasts were
made.
RESPONSE TO REQUEST NO. 52: The response to this Request is
confidential and is being produced pursuant to the Protective Agreements executed in
this matter.
The response to this Request was prepared by Rick Haener, Planning Analyst,
Idaho Power Company, in consultation with Barton L. Kline, Lead Counsel, Idaho Power
Company.
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REQUEST NO. 57: Did Idaho Power consider converting the Danskin or Bennett
Mountain plants to combined cycle as an alternative to the Langley Gulch plant? If so,
please explain why that alternative was rejected and provide a copy of any analysis
completed by Idaho Power justifying this decision.
RESPONSE TO REQUEST NO. 57: In consultation with its engineering
consulting firm, Power Engineers Inc., Idaho Power investigated the idea of converting
the Danskin 1 or Bennett Mountain plants to combined cycle plants. The Company
concluded that converting either of the existing projects to a combined cycle would cost
approximately 10-15 percent more than building a new combined cycle project. In
addition, converting one of the existing projects to a combined cycle would only have
added up to approximately 130 MW of additional capacity. Ultimately, converting simple
cycle projects to combined cycle projects is more costly and the Company elected to
pursue a new combined cycle project for the benchmark resource.
Additionally, converting Bennett Mountain to a combined cycle project, as
proposed by one bidder, would have added less capacity than the full amount of
capacity requested in the RFP and the existing peaker would have been unavailable for
a short amount of time during the process. As proposed, the conversion would not have
been available until the summer of 2013. Also, two different ownership alternatives
were proposed and insuffcient financial detail was provided to evaluate this and a
similar proposaL.
The response to this Request was prepared by Scott Larrondo, Manager Power
Plant Engineering and Construction, and Karl Bokenkamp, General Manager Power
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 31
Supply Operation and Planning, Idaho Power Company, in consultation with Barton L.
Kline, Lead Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 32
REQUEST NO. 58: Please discuss how the operation of the Company's other
thermal plants (Danskin, Bennett Mountain, and coal plants) wil change once the
Langley Gulch plant becomes operationaL. Please provide numerical data showing the
monthly difference in the amount of expected generation from the Danskin,. Bennett
Mountain, and coal plants with and without the Langley Gulch plant.
RESPONSE TO REQUEST NO. 58: The response to this Request is
confidential and is being produced pursuant to the Protective Agreements executed in
this matter.
The response to this Request was prepared by Rick Haener, Planning Analyst,
Idaho Power Company, in consultation with Barton L. Kline, Lead Counsel, Idaho Power
Company.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 33
REQUEST NO. 63: Please discuss the status of Idaho Power's plans to upgrade
the Shoshone Falls project.
RESPONSE TO REQUEST NO. 63: Idaho Power filed an Application to Amend
the Shoshone Falls license on August 17, 2006. In that Application, Idaho Power
proposed to demolish a section of the powerhouse built in 1907 consisting of two small
turbine-generator units and replace it with a new powerhouse and install a 50 megawatt
("MW') turbine-generator unit. Since then, FERC has issued a draft environmental
assessment on February 27, 2007, and a supplemental environmental assessment
("SEA") on December 4, 2007. The SEA concluded that the project proposal would not
constitute a major federal action significantly affecting the quality of the human
environment.
The proposed project expansion was included in the Company's 2008 IRP
Update, with a target commercial operation date late in 2013. The project is also
included in the ongoing draft 2009 IRP efforts.
The Company is anticipating receiving a draft license amendment in the near
future. After receiving the amendment, the Company wil evaluate the amendment's
requirements and reanalyze the project's economic justification. This economic
analysis wil be done in conjunction with other financial and regulatory issues currently
affecting the Company, and after this analysis is complete the Company wil decide
whether to pursue the project.
The response to this Request was prepared by Vern Porter, General Manger,
Power Production, Idaho Power Company, in consultation with Barton L. Kline, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 34
REQUEST NO. 65: Please provide workpapers showing the computation of the
AFUDC estimate discussed on page 12 of Karl Bokenkamp's testimony.
RESPONSE TO REQUEST NO. 65: See response to Staffs Request No. 64.
The response to this Request was prepared by Barton L. Kline, Lead Counsel,
Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 35
REQUEST NO. 69: Please provide all information related to consideration,
evaluation and ranking of potential project sites by Idaho Power's Benchmark Resource
Team. Please identify the sites considered and the factors considered in evaluating
each site. Please include copies of any studies done to evaluate air quality at proposed
sites.
RESPONSE TO REQUEST NO. 69: The selection process by the Benchmark
Resource Team identified sites throughout Southwest Idaho that were within a
reasonable distance of the Treasure Valley load center. These sites were selected after
reviewing existing zoning ordinances, infrastructure availability (such as the Wiliams
natural gas pipeline and transmission), site construction costs, access, equipment
performance, and other various criteria. The team also developed an attribute table that
was used to screen sites during the evaluation. The attribute table was similar to the
non-price criteria described in the baseload RFP documents. The final site selection
was based on consensus by the Benchmark Resource Team. A table of these
attributes is included on the enclosed CD. The sites identified are as follows:
1. Hammett, Elmore County, ID
2. Bennett Mountain Power Plant, Mountain Home, Elmore County, ID
3. Evander Andrews Power Complex, Mountain Home, Elmore
County,ID
4. Endowment Land in Mountain Home, ID
5. Simco Rd. Elmore County, ID
6. Southeast Boise, Ada County, ID
7. Garnett Site, Middleton, ID
8. Sand Hollow Area, Canyon County, ID
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 36
9. Hwy 84 and 130, Payette County, ID (Langley Gulch)
10. EI Paso Rd. Gem County, ID
11. Elgin Rd and Hwy 52, Gem County, ID
12. Payette, Payette County, ID
13. Ontario, Malheur County, OR
An environmental consulting company, Tetra Tech EMI, was hired to analyze the impact
a power plant would have at the air quality to the surrounding areas. Transmission
interconnection costs were obtained for each site by submitting Large Generation
Interconnection Applications ("LGIA"). Water and gas line construction costs were
estimated. A cost comparison of the sites is included on the enclosed CD.
Based on the conclusions of the March 2008 air quality report by Tetra Tech EMI
(included on enclosed CD), sites in Ada and Canyon County were discontinued due to
risks associated with potential non-attainment. Based on economics, it was evident that
the Sand Hollow area in Payette County was a preferred location. Knipe Land Co. was
retained to review potential real estate that was available for sale, and the Hwy 30 and
Interstate-84 site (Langley Gulch) was selected. The Benchmark Resource Team
reviewed the site against the attributes, which resulted in this location being above the
mark for most attributes. By consensus, the team selected the Langley Gulch site.
The air quality study performed for evaluated sites is contained on the included
on the enclosed CD. The title of the study is Review of Potentially Critical Air Quality
Issues for Permitting a Nominal 250-Megawatt Combined Cycle Natural Gas Generation
Unit at Eleven Potential Sites in Southern Idaho. No specific operational limitations are
expected.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 37
The response to this Request was prepared by Vern Porter, General Manager
Power Production, Idaho Power Company, in consultation with Barton L. Kline, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 38
REQUEST NO. 70: Please provide copies of all reports, correspondence, and
electronic communication between Power Engineers and Idaho Power's Benchmark
Resource Team or any of its members related to preparation of the Benchmark
Resource Team's project proposal.
RESPONSE TO REQUEST NO. 70: Please see non-confidential information
included on the enclosed CD. However, as part of the requested information is
considered to be confidential, it is available for examination at the Company's corporate
offce. Please contact Doug Jones (388-2615) or Cathy Culp (388-2637) to make an
appointment to review this information.
The response to this Request was prepared by Vern Porter, General Manager
Power Production, Idaho Power Company, in consultation with Barton L. Kline, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 39
REQUEST NO. 71: Please provide copies of all requests for proposals (RFPs)
issued by the Benchmark Resource Team for key equipment components.
RESPONSE TO REQUEST NO. 71: See the attachment for the RFP issued for
equipment included on the enclosed CD.
The response to this Request was prepared by Vern Porter, General Manager,
Power Production, Idaho Power Company, in consultation with Barton L. Kline, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 40
REQUEST NO. 73: Please provide a copy of the Request for Statement of
Qualifications (RFQ) issued by the Benchmark Resource Team to identify potential
contractors to perform EPC services.
RESPONSE TO REQUEST NO. 73: See attachment included on enclosed disk
for a copy of the RFQ issued for potential EPC services.
The response to this Request was prepared by Vern Porter, General Manager,
Power Production, Idaho Power Company, in consultation with Barton L. Kline, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 41
REQUEST NO. 75: Please provide all documentation related to evaluation of
RFQs for EPC services and the selection of Kiewit and TIC.
RESPONSE TO REQUEST NO. 75: The RFQ process resulted in seven EPC
teams submitting qualifications to the Benchmark Resource Team. These seven teams
were reviewed by the Benchmark Resource Team and the Company's consulting
engineer, Power Engineers, and it was concluded by consensus that there were three
teams to be further evaluated. The short listed teams were: The Shaw Group, URS,
and TIC/Kiewit. Interviews were held with each of these companies that provided
greater insight concerning their approach, processes, design and project staffng,
scheduling, and interaction with owner. These interviews resulted in the conclusion that
while each of the companies were qualified to build the CCCT, TIC/Kiewit was the
desired EPC team. In addition, TIC/Kiewit was the only team willng to work directly
with Idaho Power at no cost to develop the proposal. The Shaw Group and URS
required up to $500,000 each to develop a proposal. The responses from the
prequalification process are included on the enclosed CD.
The response to this Request was prepared by Vern Porter, General Manager
Power Production, Idaho Power Company, in consultation with Barton L. Kline, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 42
REQUEST NO. 78: On page 20, lines 10-18 of Vern Porter's testimony, he
discusses the Benchmark Resource Team's proposal regarding O&M and future capital
expenditures. Please clarify whether the $500,000 per year for capital and maintenance
improvements is included in the Commitment Estimate, and what the consequences wil
be if actual O&M and capital expenditures exceed this amount.
RESPONSE TO REQUEST NO. 78: First, the Company must advise that it
erroneously stated $500,000 per year was included in the Benchmark Team's Proposal
for capital and maintenance improvements. The Benchmark Team's Proposal actually
included $450,000 per year for these improvements. With that said, the $450,000 per
year expenditure for future capital and maintenance improvements was included in the
proposal provided to the RFP Evaluation Team and factored into the selection process.
However, since the Commitment Estimate covers only the cost to construct the plant
and related facilities, the $450,000 is not included in it.
The $450,000 was included in the Benchmark Proposal to account for unknown
capital or O&M improvements. Items such as labor, spare parts, hot gas path
inspection work, vehicles, computers, chemicals, consumables, etc., were included
separately in the proposaL.
At this time, we have no specific projects on which we plan to spend the
$450,000. However, we know by experience there will be projects to repair failures and
upgrades that improve performance or reliability. These projects wil be evaluated on
their merits and return on investment and wil be compared to all proposed Idaho Power
budget items. Only after careful evaluation would these projects move forward.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 43
All of the capital and O&M expenses pertaining to the Langley Gulch power plant
wil be subject to audit and review by the Commission.
The response to this Request was prepared by Vern Porter, General Manager,
Power Supply, Idaho Power Company, in consultation with Barton L. Kline, Lead
Counsel, Idaho Power Company.
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 44
REQUEST NO. 79: For all intervenor requests, please provide the confidential
responses to Staff even if the Company is unable to provide the information to that
party.
RESPONSE TO REQUEST NO. 79: Idaho Power Company wil provide the
requested information.
The response to this Request was prepared by Barton L. Kline, Lead Counsel,
Idaho Power Company.
DATED at Boise, Idaho, this 13th day of April 2009.
~
BARTON L. KLINE
Attorney for Idaho Power Company
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 45
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 13th day of April 2009 I served a true and
correct copy of IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY upon the
following named parties by the method indicated below, and addressed to the following:
Commission Staff
Scott Woodbury
Deputy Attorney General
Idaho Public Utilities Commission
472 West Washington
P.O. Box 83720
Boise, Idaho 83720-0074
Industrial Customers of Idaho Power
Peter J. Richardson, Esq.
RICHARDSON & O'LEARY PLLC
515 North 27th Street
P.O. Box 7218
Boise, Idaho 83702
Dr. Don Reading
Ben Johnson Associates
6070 Hil Road
Boise, Idaho 83703
Invenergy Thermal Development
LLC
Dean J. Miler
McDEVITT & MILLER LLP
420 West Bannock Street
P.O. Box 2564
Boise, Idaho 83701
Wiliam Borders
Assistant General Counsel
Invenergy Thermal Development LLC
One South Wacker Drive, Suite 1900
Chicago, Ilinois 60606
Snake River Allance
Ken Miler
Snake River Allance
P.O. Box 1731
Boise, Idaho 83701
-- Hand Delivered
U.S. Mail
_ Overnight Mail
FAX
-- Email Scott.Woodbury(ãpuc.idaho.gov
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email peterCârichardsonandoleary.com
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email dreading(ãmindspring.com
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email joeCâmcdevitt-miler.com
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email wborders(ãinvenergyllc.com
Hand Delivered
-- U.S. Mail
_ Overnight Mail
FAX
-- Email kmilerCâsnakeriveralliance.org
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 46
Idaho Irrigation Pumpers
Association, Inc.
Eric L. Olsen
RACINE, OLSON, NYE, BUDGE &
BAILEY, CHARTERED
P.O. Box 1391
201 East Center
Pocatello, Idaho 83204-1391
Anthony Yankel
Yankel & Associates, Inc.
29814 Lake Road
Bay Vilage, Ohio 44140
Idaho Conservation League
Betsy Bridge
Idaho Conservation League
710 North Sixth Street
P.O. Box 844
Boise, Idaho 83701
Hand Delivered
-l U.S. Mail
_ Overnight Mail
FAX
-l Email eloCâracinelaw.net
Hand Delivered
-l U.S. Mail
_ Overnight Mail
FAX
-l Email tonyCâyankel.net
Hand Delivered
-l U.S. Mail
_ Overnight Mail
FAX
-l Email bbridgeCâwildidaho.org~CQ
Barton L. Kline
'-
IDAHO POWER COMPANY'S RESPONSE TO THE COMMISSION
STAFF'S FIRST PRODUCTION REQUEST TO IDAHO POWER COMPANY - 47